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Attenuation Bias in Measuring the Wage Impact of Immigration

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  • Abdurrahman Aydemir
  • George J. Borjas

Abstract

Although economic theory predicts an inverse relation between relativewages and immigration-induced supply shifts, it has been difficultto document such effects. The weak evidence may be partly due to samplingerror in a commonly used measure of the supply shift, the immigrantshare of the workforce. After controlling for permanent factors thatdetermine wages in specific labor markets, little variation remainsin the immigrant share. We find significant sampling error in thismeasure of supply shifts in Canadian and U.S. census data. Correctingfor the resulting attenuation bias can substantially increase existingestimates of the wage impact of immigration. (c) 2011 by The University of Chicago. Allrights reserved.

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  • Abdurrahman Aydemir & George J. Borjas, 2011. "Attenuation Bias in Measuring the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 69-113, January.
    • Handle: RePEc:ucp:jlabec:v:29:y:2010:i:1:p:69-113
    DOI: 10.1086/656360
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    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • J0 - Labor and Demographic Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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