Low-Skilled Immigration and the Labor Supply of Highly Skilled Women
ABSTRACT Low-skilled immigrants represent a significant fraction of employment in services that are close substitutes of household production. This paper studies whether the increased supply of low-skilled immigrants has led high-skilled women, who have the highest opportunity cost of time, to change their time-use decisions. Exploiting cross-city variation in immigrant concentration, we find that low-skilled immigration increases average hours of market work and the probability of working long hours of women at the top quartile of the wage distribution. Consistently, we find that women in this group decrease the time they spend in household work and increase expenditures on housekeeping services. (JEL J16, J22, J24, J61)
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ABSTRACT: What is the greatest single class of distortions in the global economy? One contender for this title is the tightly binding constraints on emigration from poor countries. Vast numbers of people in low-income countries want to emigrate from those countries but cannot. How large are the economic losses caused by barriers to emigration? Research on this question has been distinguished by its rarity and obscurity, but the few estimates we have should make economists' jaws hit their desks. The gains to eliminating migration barriers amount to large fractions of world GDP—one or two orders of magnitude larger than the gains from dropping all remaining restrictions on international flows of goods and capital. When it comes to policies that restrict emigration, there appear to be trillion-dollar bills on the sidewalk.Journal of Economic Perspectives 08/2011; 25(3):83-106. · 4.21 Impact Factor
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ABSTRACT: Over the last several decades, two of the most significant developments in the U.S. labor market have been: (1) rising inequality, and (2) growth in both the size and the diversity of immigration flows. Because a large share of new immigrants arrive with very low levels of schooling, English proficiency, and other skills that have become increasingly important determinants of success in the U.S. labor market, an obvious concern is that such immigrants are a poor fit for the restructured American economy. In this chapter, we evaluate this concern by discussing evidence for the United States on three relevant topics: the labor market integration of immigrants, the socioeconomic attainment of the U.S.-born descendants of immigrants, and the impact of immigration on the wages and employment opportunities of native workers. We show that low-skilled immigrants have little trouble finding paid employment and that the wages they earn are commensurate with their skills. Overall, the U.S.-born second generation has achieved economic parity with mainstream society; for some Hispanic groups, however, this is not the case. Finally, we survey the pertinent academic literature and conclude that, on the whole, immigration to the United States has not had large adverse consequences for the labor market opportunities of native workers.09/2011;
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ABSTRACT: This paper aims to detect whether or not people could work for more years in the presence of a more flourishing and cheaper formal care market, which, in turn, would provide support for people who are still at work and who have to cope with the care of their elderly parents and relatives. We focus on the flow of immigrants as a key variable in order to detect whether or not this channel is at work. We disentangle retirement decisions, first by modelling retirement choice using a simple life-cycle framework in which caring for parents is introduced into the choice set. We then correlate retirement choice with the gap between the foregone salary if early retirement is chosen and the price of formal care. The findings show that immigrants contribute to the postponement of retirement for women only.According to our estimates, we predict that the increase in immigration rate (equal to 4 percentage points) which occurred over the period 2000-2008 raised the retirement age for Italian women (with parents who are still alive) by almost one year, while the impact on men was non-existent.11/2011;
Low-Skilled Immigration and the Labor Supply of Highly
By Patricia Cort´ es and Jos´ e Tessada∗
Low-skilled immigrants represent a significant fraction of employment
in services that are close substitutes of household production. This pa-
per studies whether the increased supply of low-skilled immigrants has
led high-skilled women, who have the highest opportunity cost of time,
to change their time-use decisions. Exploiting cross-city variation in
immigrant concentration, we find that low-skilled immigration increases
average hours of market work and the probability of working long hours
of women at the top quartile of the wage distribution. Consistently, we
find that women in this group decrease the time they spend in household
work and increase expenditures on housekeeping services.
JEL: J61, F22, J22
Keywords: Immigration, Household production, Female labor supply
Low-skilled immigrants work disproportionately in service sectors that are close sub-
stitutes for household production. For example, whereas low-skilled immigrant women
represent 1.9 percent of the labor force, they represent more than 25 percent of the work-
ers in private household occupations and 12 percent of the workers in laundry and dry
cleaning services. Low-skilled immigrant men account for 29 percent of all gardeners in
America’s largest cities although they represent only 3.3 percent of the labor force.
The importance of low-skilled immigrants in certain economic activities has been raised
as part of the discussion on immigration policies.
immigration reform in the United States, The Economist argues that:
For example, in an article about
“... in the smarter neighborhoods of Los Angeles, white toddlers occasionally
shout at each other in Spanish. They learn their first words from Mexican
nannies who are often working illegally, just like the maids who scrub Ange-
lenos’ floors and the gardeners who cut their lawns. ...Californians... depend
on immigrants for even such intimate tasks as bringing up their children.”
(The Economist, “Debate meets reality,” May 17th, 2007.)
If, as found by Patricia Cort´ es (2008), the recent waves of low-skilled immigration have
led to lower prices of services that are close substitutes for household production, we
∗Cort´ es: Boston University School of Management, 595 Commonwealth Avenue, Boston, MA 02215
(email: firstname.lastname@example.org). Tessada: Escuela de Administraci´ on, Pontificia Universidad Cat´ olica de Chile,
Avda. Vicu˜ na Mackenna 4860, Macul, Santiago 7820436, Chile (email: email@example.com). We thank
George-Marios Angeletos, Josh Angrist, David Autor, Marianne Bertrand, Olivier Blanchard, Esther
Duflo, Alexander Gelber, Carol Graham, Michael Kremer, Jeanne Lafortune, Alan Manning, and Stan-
ley Watt for their useful comments and suggestions. We also acknowledge seminar participants at MIT’s
Development and Labor lunches, NBER Labor Studies Meeting, CEA–Univ. de Chile, PUC–Chile, Mary-
land, ZEW’s Workshop on Gender and Labor Markets, the Seventh IZA/SOLE Transatlantic Meeting,
the 2008 IFN Stockholm Conference on Family, Children and Work, and Brookings for helpful comments.
Tessada thanks the Chilean Scholarship Program (MIDEPLAN) for financial support.
2AMERICAN ECONOMIC JOURNAL MONTH YEAR
should expect natives to substitute their own time invested in the production of house-
hold goods with the purchase of the now cheaper services available in the market. The
link between immigration and changes in the prices of these market-provided household
services indicates that even without a direct effect on wages, low-skilled immigration has
the potential to generate effects on natives’ decisions related to time-use.
This paper studies this unexplored channel, focusing particularly on the impact that
low-skilled immigration has on female labor supply. We first develop a simple model to
investigate which groups of the female population are more likely to change their time-
use decisions as prices for household related services decrease; we then test the model’s
predictions using Census data on immigration and labor supply, and information on time
devoted to household work and reported expenditures on housekeeping services.
Our empirical strategy is to exploit the cross-city variation in the concentration of
low-skilled immigrants. To address the potential endogeneity of the location choices of
immigrants, we instrument for low-skilled immigrant concentration using the historical
(1970) distribution of immigrants of a country to predict the location choices of recent
There are two main concerns with the validity of our instrumental variables strategy.
First, cities that attracted more immigrants in 1970 might be systematically different from
other cities, violating the identification assumption. To address this concern we include
specifications that allow cities to experience different decade shocks based on their 1970
value of key variables such as female educational attainment distribution, female labor
force participation, and industry composition. The second concern is that low-skilled
immigration might have an impact on the labor supply of women through other channels
besides lowering prices of household services; in particular, through interactions in market
production. To tackle this issue we present specifications that use men of similar skill
level as a control group and we test that the estimated relative increase in the labor
supply of women as a result of low-skilled immigration is not driven by an increase in
their wages relative to men. The relevance of the household services/time-use decision
mechanism is also tested by comparing the estimated pattern of the immigration effect
by skill level with the pattern predicted by our simple time-use model and by looking at
the mirror decisions of work at home and consumption of household services.
We first estimate reduced form regressions of female labor supply outcomes by wage
groups as a function of the supply of low-skilled workers, as our model predicts that
only women with high wages are the ones who will be affected by the reduction in prices
of household services resulting from a low-skilled immigration influx. We find a large
positive and statistically significant effect of low-skilled immigration on the hours worked
per week of working women at the top quartile of the female wage distribution. Consistent
with our framework, much smaller, but still statistically significant, effects are found for
women above the median, and no effects are found for women with wages below the
median. Looking at women grouped by the median male wage of their occupation and at
women at the top of the educational distribution, we confirm significant positive effects
on the intensive margin of the labor supply of highly skilled women, but find no similar
effects on labor force participation (that is already high in our group of interest).
VOL. VOL NO. ISSUE IMMIGRATION AND FEMALE LABOR SUPPLY3
Occupations with the highest wage levels (such as physicians and lawyers for example)
are also characterized by people having to work long hours in order to have a successful
career.1Low-skilled immigrants, on the other hand, are regarded as providing cheaper
and more flexible household services than those provided by native workers and compa-
nies.2Thus, part of the effects we estimate can come from a match between the services
demanded by women in occupations that require long hours and the more flexible ser-
vices provided by low-skilled immigrants. We test this hypothesis estimating regressions
of indicator variables for working more than 50 and 60 hours on our immigration vari-
able. Focusing on women working in occupations where men have long hours of work,
we find large positive and statistically significant effects of low-skilled immigration in the
probability that women also work long hours.
The sign and statistical significance of all our results are robust to specifications that
use men as a control group and that include city*decade fixed effects. However, the
magnitudes are smaller, between a fourth and a fifth of those that include only women.
This difference likely reflects that men’s time-use decisions might also be affected by
the lower prices of household services, and that part of the effects estimated using the
women sample were coming through other channels, for example, complementarities in
Overall, our estimates suggest that the low-skilled immigration wave of the period
1980-2000 increased by 20 minutes a week the time women in the top quartile of the
wage distribution devote to market work. Our more conservative estimates suggest that
at the very least, 4 of those minutes can be attributed to low-skilled immigrants reducing
prices of household services according to our more conservative estimates. The low-skilled
immigration wave has also increased the probability that women working in occupations
that demand long hours work more than 50 and 60 hours a week by 1.8 and 0.7 percentage
More hours of market work resulting from lower prices of household services should
be reflected in less time devoted to household production. Using data from the recently
released 2003-05 American Time Use Survey and from the 1980 PSID, we find that the
immigration wave of the 1980s and 1990s reduced by close to 7 minutes a week the time
women at the top of the wage distribution spent weekly on household chores.
Finally, using the Consumer Expenditure Survey (CEX) we find that low-skilled immi-
gration have increased the likelihood that highly-skilled women consume market provided
1For example, whereas the cross-occupation average of usual hours worked per week for men is 35.5,
and the share working more than 50 hours is 7.4 percent and more than 60 hours is 2.6 percent, the same
numbers for physicians are 47 hours, 44 percent, and 28 percent, and for lawyers 42 hours, 31 percent,
and 10 percent.
2For example, a study by Domestic Workers United (2006) in New York City reports that nearly half
of domestic workers (most of which are immigrants) work overtime, often more than 50 and 60 hours per
week, and that even when they are working a five-day week, the days extend to 10-12 hours. Zoe Baird,
who lost her chance to be attorney general for hiring illegal immigrants, supposedly placed the following
ad in three local newspapers: “Child Care Nanny. Live-in Nanny for 7 Mo. old Boy in warm family
setting. Light housekeeping, cook dinners. Long term position with appreciative family in beautiful
home. Non-smoker. Driver. Citizen or green card only.” She and her husband received not one response
(Anna Crittenden 2001).
4 AMERICAN ECONOMIC JOURNALMONTH YEAR
household services and their expenditures in these services.
Our findings with respect to highly skilled women have important implications. First,
we provide evidence of a specific channel, different from wages, through which low-skilled
immigration might be affecting the labor supply of highly skilled native workers; in partic-
ular, we find that women with high wages (and potentially their families) are benefitting
from low-skilled immigration because of the reduction in the prices of services that are
close substitutes for household production.3Furthermore, our results suggest that look-
ing purely at the effect on wages might not show all the various effects immigration has
on the different skill groups. This paper, therefore, provides a new perspective on the
literature of the labor market effects of low-skilled immigration, particularly to our un-
derstanding of the effects of immigration across the wage and educational attainment
Second, the results suggest that the availability of flexible housekeeping, including child
care services among others, at low prices might help women in occupations demanding
long hours or irregular work schedules to advance in their careers.5Conflicting demands
of the profession and of the household have been linked to the relative lack of women
in positions of leadership (such as partners in law firms) and in prestigious medical
specializations, such as surgery.6On the other hand, it provides some evidence against
recent theories that highly skilled women are opting out of demanding careers because
they place a higher value on staying home with their children.7Overall, it suggests that
differences in preferences are not the only reason that highly educated women are not
more actively involved in the labor market.
Outline. — The rest of the paper is organized as follows. The next section presents
the theoretical framework. Section II describes the data and the descriptive statistics.
Section III presents the empirical strategy and discusses the main results, and in Section
IV we conclude.
3Phanwadee Khananusapkul (2004) is, to the best of our knowledge, the only previous study that
relates low-skilled immigration with the labor supply of high skilled women. The author finds that an
increase in the proportion of low-skilled female immigrants in a metropolitan area raises the proportion
of private household workers and lowers their wages. She does not, however, find a significant effect on
the labor supply of college educated women.
4See Gordon Hanson (2009) for a recent survey of the literature on the effects of migration.
5Jonah Gelbach (2002) and Michael Baker, Jonathan Gruber and Kevin Milligan (2008) show some
results regarding the labor supply effects of differences in the cost of childcare driven by government
subsidies or the admission rules to public schools. Daniele Coen-Pirani, Alexis Le´ on, and Steven Lu-
gauer (2010) look at the same household production-labor supply connection, but focus in the increased
availability household appliances in the US during the 1960s.
6For example, Mona Harrington and Helen Hsi (2007) say that “While many women with children
negotiate a part-time schedule for family care... they are still less likely to be promoted to partner than
women who stay in firms but do not use part time options” ... “The expectation that an attorney needs
to be available practically 24/7 is a huge impediment to a balanced work/family life.”
7The headline for the October 26, 2003, edition of the New York Times Magazine was “Why don’t
more women get to the top? They choose not to.”
VOL. VOL NO. ISSUE IMMIGRATION AND FEMALE LABOR SUPPLY5
In this section we present a simple time-use model that illustrates the interactions
between wage levels, the decision to purchase household services, the market price of
household services, and labor supply. Its purpose is to derive implications about which
groups of the population are more likely to change their time-use decisions as prices for
household related services decrease. At the end of the section we also investigate if women
who face larger household demands (for example, women with young children) display a
differential sensitivity to prices, and discuss how career concerns might interact with the
price of household services.
An agent allocates her time between leisure, household production, and market work.
She receives a wage w per unit of time devoted to market work.
The agent consumes two goods. First, there is a homogeneous consumption aggregate
that can only be bought in the market; we normalize its price to 1. Second, the agent’s
household requires a certain number of units of a household service to function; this
service can be produced at home or bought in the market at a price p. The household
needs exactly R units of this service; the marginal benefit of units beyond R is 0.
Denote by y the amount of the consumption good, l the hours of leisure, h the hours
of household work, n the hours of market work, x the units of the household service
purchased on the market, and I the non-wage income of the household. Assume that
there is only one working agent per household and normalize total time available to the
agent to 1.
Utility is given by
(1)u(y) + ψ (l),
where u(·) and ψ (·) are concave and satisfy u?(y) → ∞ as y → 0 and ψ?(l) → ∞ as
l → 0. Household production is described by the function f (h), which we assume to have
decreasing marginal returns to time spent at working at home and to satisfy f?(h) → ∞
as h → 0. This condition implies that a person will never outsource all of her household
work. The agent also faces two constraints: a budget constraint and a time constraint
(which can be reduced into a full income constraint).
Four important results arise from the solution of the model. First, people with higher
wages (for a given level of I and p) supply labor in the market. Second, for a given w and
I, a decrease in p might induce a person to purchase market-provided household services,
or to purchase even more. Third, for a given p and I, people with higher wages are more
likely to buy household services. Finally, only those who purchase services will change
their decisions at the margin when p changes.8
8The details of the solution of the model are presented in the Theory Appendix.