Many workers with low levels of educational attainment immigrated to the United States in recent decades. Large inflows of less-educated immigrants would reduce wages paid to comparably-educated native-born workers if the two groups are perfectly substitutable in production. In a simple model exploiting comparative advantage, however, we show that if less-educated foreign and native-born workers specialize in performing different tasks, immigration will cause natives to reallocate their task supply, thereby reducing downward wage pressure. We merge occupational task-intensity data from the O*NET and DOT datasets with individual Census data across US states from 1960-2000 to demonstrate that foreign-born workers specialize in occupations that require manual and physical labor skills while natives pursue jobs more intensive in communication and language tasks. Immigration induces natives to specialize accordingly. Simulations show that this increased specialization might explain why economic analyses commonly find only modest wage and employment consequences of immigration for less-educated native-born workers across U.S. states. This is especially true in states with large immigration flows. show that this increased specialization might explain why economic analyses commonly find only modest wage and employment consequences of immigration for less-educated native-born workers across U.S. states. This is especially true in states with large immigration flows.

This paper calculates the effects of immigration on the wages of native US workers of various skill levels in two steps. In the first step we use labor demand functions to estimate the elasticity of substitution across different groups of workers. Second, we use the underlying production structure and the estimated elasticities to calculate the total wage effects of immigration in the long run. We emphasize that a production function framework is needed to combine own‐group effects with cross‐group effects in order to obtain the total wage effects for each native group. In order to obtain a parsimonious representation of elasticities that can be estimated with available data, we adopt alternative nested‐CES models and let the data select the preferred specification. New to this paper is the estimate of the substitutability between natives and immigrants of similar education and experience levels. In the data‐preferred model, there is a small but significant degree of imperfect substitutability between natives and immigrants which, when combined with the other estimated elasticities, implies that in the period from 1990 to 2006 immigration had a small effect on the wages of native workers with no high school degree (between 0.6% and +1.7%). It also had a small positive effect on average native wages (+0.6%) and a substantial negative effect (−6.7%) on wages of previous immigrants in the long run.

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as well as workshop participants at FEEM Milan, RSAI Philadelphia, UBC Vancouver and UC Berkeley for helpful discussions and suggestions. We thank Elena Bellini for outstanding research assistance. Ottaviano gratefully acknowledges financial support from Bocconi University and FEEM. Peri gratefully acknowledge financial support form UCLA International Institute. Errors are ours. The views expressed herein are those of the author(s) and not necessarily those of the National Bureau of Economic Research.

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Knowledge flows within and across countries may have important consequences for both productivity and innovation. We use data on 1.5 million patents and 4.5 million citations to estimate knowledge flows at the frontier of technology across 147 subnational regions during 1975-1996 within the frame of a gravity-like equation. We estimate that only 20% of average knowledge is learned outside the average region of origin, and only 9% is learned outside the country of origin. However, knowledge in the computer sector flows substantially farther, as does knowledge generated by technological leaders. In comparison with trade flows, we see that knowledge flows reach much farther. External accessible R&D gained through these flows has a strong positive effect on innovative activity for a panel of 113 European and North American regions over 22 years. © 2005 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

This paper contains three important contributions to the literature on international migrations. First, it compiles a new dataset on migration flows (and stocks) and on immigration laws for 14 OECD destination countries and 74 sending countries for each year over the period 1980-2005. Second, it extends the empirical model of migration choice across multiple destinations, developed by Grogger and Hanson (2008), by allowing for unobserved individual heterogeneity between migrants and non-migrants. We use the model to derive a pseudo-gravity empirical specification of the economic and legal determinants of international migration.Our estimates clearly show that bilateral migration flows are increasing in the income per capita gap between origin and destination. We also find that bilateral flows decrease when destination countries adopt stricter immigration laws. Third, we estimate the impact of immigration flows on employment, investment and productivity in the receiving OECD countries using as instruments the "push" factors in the gravity equation.Specifically, we use the characteristics of the sending countries that affect migration and their changes over time, interacted with bilateral migration costs. We find that immigration increases employment, with no evidence of crowding-out of natives, and that investment responds rapidly and vigorously. The inflow of immigrants does not seem to reduce capital intensity nor total factor productivity in the short-run or in the long run. These results imply that immigration increases the total GDP of the receiving country in the short-run one-for-one, without affecting average wages and average income per person.

We are thankful to Greg Wright and Tommaso Colussi for their research assistance. Simone Bertoli and Jesus Fernandez-Huertas provided very helpful comments on an early draft of the paper. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.