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Immigrants' Residential Choices and their Consequences

Author

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  • Joan Monras

    (CEMFI)

Abstract
This paper investigates the causes and effects of the spatial distribution of immigrants across US cities. We document that: a) immigrants concentrate in large, high-wage, and expensive cities, b) the earnings gap between immigrants and natives is higher in larger and more expensive cities, and c) immigrants consume less locally than natives. In order to explain these findings, we develop a simple quantitative spatial equilibrium model in which immigrants consume (either directly, via remittances, or future consumption) a fraction of their income in their countries of origin. Thus, immigrants not only care about local prices, but also about price levels in their home country. Hence, if foreign goods are cheaper than local goods, immigrants prefer to live in high-wage, high-price, and high-productivity cities, where they also accept lower wages than natives. Using the estimated model we show that current levels of immigration have reduced economic activity in smaller, less productive cities by around 3 percent, while they have expanded the activity in large and productive cities by around 4 percent. This has increased total aggregate output per worker by around .15 percent.

Suggested Citation

  • Joan Monras, 2018. "Immigrants' Residential Choices and their Consequences," 2018 Meeting Papers 127, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:127
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    References listed on IDEAS

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    Cited by:

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    2. Joan Monras & Javier Vázquez-Grenno & Ferran Elias, 2017. "Understanding the Effects of Legalizing Undocumented Immigrants," RF Berlin - CReAM Discussion Paper Series 1708, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    3. David Albouy & Heepyung Cho & Mariya Shappo, 2021. "Immigration and the pursuit of amenities," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 5-29, January.
    4. Monras, Joan & Vázquez-Grenno, Javier & Elias, Ferran, 2018. "Understanding the Effects of Granting Work Permits to Undocumented Immigrants," CEPR Discussion Papers 12726, C.E.P.R. Discussion Papers.
    5. Amior, Michael, 2020. "Immigration, local crowd-out and undercoverage bias," LSE Research Online Documents on Economics 108490, London School of Economics and Political Science, LSE Library.
    6. Boudreau, Laura & Heath, Rachel & McCormick, Tyler H., 2024. "Migrants, experience, and working conditions in Bangladeshi garment factories," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 196-213.
    7. Frédéric Docquier & Bright Isaac Ikhenaode & Hendrik Scheewel, 2022. "Immigration, welfare, and inequality: How much does the labor market specification matter?," Review of International Economics, Wiley Blackwell, vol. 30(5), pages 1315-1347, November.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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