Attenuation Bias in Measuring the Wage Impact of Immigration

Abdurrahman Aydemir, George J. Borjas

NBER Working Paper No. 16229
Issued in July 2010
NBER Program(s):Labor Studies

Although economic theory predicts an inverse relation between relative wages and immigration-induced supply shifts, it has been difficult to document such effects. The weak evidence may be partly due to sampling error in a commonly used measure of the supply shift, the immigrant share of the workforce. After controlling for permanent factors that determine wages in specific labor markets, little variation remains in the immigrant share. We find significant sampling error in this measure of supply shifts in Canadian and U.S. Census data. Correcting for the resulting attenuation bias can substantially increase existing estimates of the wage impact of immigration.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w16229

Published: Abdurrahman Aydemir & George J. Borjas, 2011. "Attenuation Bias in Measuring the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 69-113, 01. citation courtesy of

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