Task Specialization, Comparative Advantages, and the Effects of Immigration on Wages
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 compete for similar jobs. In a simple model exploiting comparative advantage, however, we show that if less-educated foreign and native-born workers specialize in performing complementary tasks, immigration will cause natives to reallocate their task supply, thereby reducing downward wage pressure. Using individual data on the task intensity of occupations across US states from 1960-2000, we then demonstrate that foreign-born workers specialize in occupations that require manual tasks such as cleaning, cooking, and building. Immigration causes natives -- who have a better understanding of local networks, rules, customs, and language -- to pursue jobs requiring interactive tasks such as coordinating, organizing, and communicating. Simulations show that this increased specialization mitigated negative wage consequences of immigration for less-educated native-born workers, especially in states with large immigration flows.
We thank Christina Gathman, Gordon Hanson, Andrea Ichino, Anamaria Felicia Ionescu, Peter Lindert, Francesca Mazzolari, Seth Sanders, Nicole Simpson, Geoffrey Woglom, and participants at the NBER Summer Institute on International Trade and Investment 2007, the Annual Economic Demography Workshop 2007, the Workshop in Macroeconomic Research at Liberal Arts Colleges, the CEGE Conference at UC Davis, and seminars at University of Bologna, University at Buffalo, Emory University and UC Irvine for helpful comments and suggestions. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration, and Wages," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 135-69, July.