No abstract

The popular belief that immigrants have a large adverse impact on the wages and employment opportunities of the native-born population of the receiving country is not supported by the empirical evidence. A 10 percent increase in the fraction of immigrants in the population reduces native wages by 0-1 percent. Even those natives who are the closest substitutes with immigrant labor do not suffer significantly as a result of increased immigration. There is no evidence of economically significant reductions in native employment. The impact on natives' per capita income growth depends crucially on the immigrants' human capital levels.

Mass migration from the former Soviet Union increased the Israeli population by 12% in the first half of the 1990s. This exodus was precipitated by the lifting of emigration restrictions in an unstable USSR and by the open immigration policy of Israel toward Soviet Jews, who faced more restrictive entry policies elsewhere. I use this natural experiment to study the impact of immigration on the labor market outcomes of native Israelis. OLS yields significant reductions in wages and small reductions in employment. However, OLS is biased if the distribution of immigrants across occupations in Israel was not exogenous to relative wage and employment conditions. I instrument for the entry of Russians into an occupation in Israel, using information on their former occupations in the USSR. There is a significant positive correlation between the former presence of the immigrants in an occupation in the USSR and their presence in that occupation in Israel. But the previous occupational choices of Russians abroad were independent of Israeli wage and employment growth subsequent to their migration. IV estimates indicate that immigration did not have an adverse impact on native Israeli labor market outcomes.