Immigrant-Native Substitutability: The Role of Language Ability
Wage evidence suggests that immigrant workers are imperfectly substitutable for native-born workers with similar education and experience. Using U.S. Censuses and recent American Community Survey data, I ask to what extent differences in language skills drive this. I find they are important. I estimate that the response of immigrants' relative wages to immigration is concentrated among immigrants with poor English skills. Similarly, immigrants who arrive at young ages, as adults, both have stronger English skills and exhibit greater substitutability for native-born workers than immigrants who arrive older. In U.S. markets where Spanish speakers are concentrated, I find a "Spanish-speaking" labor market emerges: in such markets, the return to speaking English is low, and the wages of Spanish and non-Spanish speakers respond most strongly to skill ratios in their own language group. Finally, in Puerto Rico, where almost all workers speak Spanish, I find immigrants and natives are perfect substitutes. The implications for immigrant poverty and regional settlement patterns are analyzed.
The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
“Immigrant-Native Substitutability and The Role of Language” in Immigration, Poverty, and Socioeconomic Inequality, David Card and Steven Raphael, eds. New York: Russell Sage Foundation, 2013, pp 60-97.