Imperfect Substitution between Immigrants and Natives: A Reappraisal

George J. Borjas, Jeffrey Grogger, Gordon H. Hanson

NBER Working Paper No. 13887
Issued in March 2008
NBER Program(s):   ITI   LS

In a recent paper, Ottaviano and Peri (2007a) report evidence that immigrant and native workers are not perfect substitutes within narrowly defined skill groups. The resulting complementarities have important policy implications because immigration may then raise the wage of many native-born workers. We examine the Ottaviano-Peri empirical exercise and show that their finding of imperfect substitution is fragile and depends on the way the sample of working persons is constructed. There is a great deal of heterogeneity in labor market attachment among workers and the finding of imperfect substitution disappears once the analysis adjusts for such heterogeneity. As an example, the finding of immigrant-native complementarity evaporates simply by removing high school students from the data (under the Ottaviano and Peri classification, currently enrolled high school juniors and seniors are included among high school dropouts, which substantially increases the counts of young low-skilled workers ). More generally, we cannot reject the hypothesis that comparably skilled immigrant and native workers are perfect substitutes once the empirical exercise uses standard methods to carefully construct the variables representing factor prices and factor supplies.

download in pdf format
   (233 K)

email paper

This paper is available as PDF (233 K) or via email.

Supplementary materials for this paper:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13887

Users who downloaded this paper also downloaded these:
Ottaviano and Peri w11672 Rethinking the Gains from Immigration: Theory and Evidence from the U.S.
Peri and Sparber w13389 Task Specialization, Comparative Advantages, and the Effects of Immigration on Wages
Borjas w14796 The Analytics of the Wage Effect of Immigration
Ottaviano and Peri w14188 Immigration and National Wages: Clarifying the Theory and the Empirics
Aydemir and Borjas w16229 Attenuation Bias in Measuring the Wage Impact of Immigration
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us