Immigration And Self-Selection
NBER Working Paper No. 2566
Self-selection plays a dominant role in determining the size and composition of immigrant flows. The United States competes with other potential host countries in the "immigration market". Host countries vary in their "offers" of economic opportunities and also differ in the way they ration entry through their immigration policies. Potential immigrants compare the various opportunities and are non-randomly sorted by the immigration market among the various host countries. This paper presents a theoretical and empirical analysis of this marketplace. The theory of immigration presented in this paper describes the way in which immigrants are sorted among host countries in terms of both their observed and unobserved characteristics. The empirical analysis uses Census data from Australia, Canada, and the United States and shows that U.S. "competitiveness" in the immigration market has declined significantly in the postwar period.