The Impact of High-Skilled Immigrants on the Career Outcomes of Natives

Demirci, Murat, Economics - Graduate School of Arts and Sciences, University of Virginia
Stern, Steven, Department of Economics, University of Virginia
Turner, Sarah, Department of Economics, University of Virginia
Friedberg, Leora, Department of Economics, University of Virginia

The share of college-educated immigrants in the U.S. economy has increased considerably over the last five decades, particularly in science and engineering occupations. In the first chapter of this dissertation, I examine the effects of high-skilled immigrants on natives’ post-secondary degree attainment, employment, and earnings. I develop a dynamic discrete choice model of individual choice regarding bachelor’s degree major, attainment of advanced degree, and occupation. Unlike earlier studies, I model the determination of earnings in equilibrium as an outcome of a market-clearing process. I estimate the model with the Method of Simulated Moments, using data from the Current Population Survey (1964-2010), the American Community Survey, and the National Survey of College Graduates. I use the estimates to simulate a counterfactual economy. The estimates show that, if the population of high-skilled immigrants remained at its 1960 level, the number of native engineering majors would have been 6.1 percent higher and their employment in engineering jobs would have increased by 8.1 percent; however, their average earnings would have been almost no different in engineering and slightly lower in managerial professions. These findings suggest that 1) the impact of immigration on natives’ educational attainment is large, 2) the equilibrium effects offset potential gains in earnings because natives move to fields that are protected from immigration, and 3) natives’ earnings in complementary occupations, such as management, are affected adversely by restricted immigration.

In the second chapter, I analyze how visa policy affects the transition of international students studying at U.S. colleges and universities into the U.S. labor market and its potential consequences on the labor market outcomes of native counterparts. Retention of these students in the United States may contribute to innovation and growth, but may also adversely impact native employment and earnings. Optional Practical Training (OPT) permits international students to work in the United States for a limited period after graduation without holding a formal work visa. The increase in the allowable length of stay for students in science, technology, engineering, and mathematics (STEM) via the OPT program in 2008 provides an opportunity to assess how visa terms affect the supply of high-skilled labor to the U.S. economy. My estimates show that extended visa terms increase the initial entry of international students into the U.S. labor market and lengthen the duration of employment, especially for master’s-level students. I also find that the increase in the labor supply of foreign workers reduces native employment and earnings for recent master’s level STEM graduates.

PHD (Doctor of Philosophy)
Immigration, Higher Education, Dynamic Discrete Choice Models, Labor Market Equilibrium
Issued Date: