Shift-share instruments and the impact of immigration / David A. Jaeger (CUNY Graduate Center, University of Cologne, IZA and NBER), Joakim Ruist (University of Gothenburg), Jan Stuhler (Universidad Carlos III de Madrid, IZA, CEPR and CReAM) ; IZA Institute of Labor Economics
VerfasserJaeger, David A. In der Gemeinsamen Normdatei der DNB nachschlagen ; Ruist, Joakim ; Stuhler, Jan In der Gemeinsamen Normdatei der DNB nachschlagen
KörperschaftForschungsinstitut zur Zukunft der Arbeit In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn, Germany : IZA Institute of Labor Economics, January 2018
Elektronische Ressource
Umfang1 Online-Ressource (42 Seiten, 11 ungezählte Seiten) : Diagramme
SerieDiscussion paper ; no. 11307
URNurn:nbn:de:hbz:5:2-148593 Persistent Identifier (URN)
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Shift-share instruments and the impact of immigration [1.07 mb]
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A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants' location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants' past geographic distribution. We present evidence that estimates based on this "shift-share" instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a "multiple instrumentation" procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference.