The Impact of Immigration on Unemployment and Wages in the United States: Evidence from Seven States

Abstract

Immigration and Immigration policies have been a source of debate for political parties in the United States, especially its impact on the labor market. This research investigates how immigration affects unemployment and wages in the U.S. by using a balanced panel dataset of seven states from 2007 to 2019. The states (California, New York, Florida, Texas, New Jersey, Illinois, and Massachusetts) sampled recorded the highest immigrant population and contain key gateway cities. I estimate two models: unemployment growth rate, and wages growth rate. The results of the pooled OLS estimation confirm that immigration has a trivial impact on the U.S. labor market. Immigrant growth shows a positive but statistically insignificant effect on the unemployment growth rate in the United States. In addition, the results reveal a positive but statistically insignificant impact of immigration on the wage growth rate in the United States. Other factors such as GDP growth and college completion show a substantial reducing effect on the unemployment growth rate. For wage growth, the study finds that college completion and unemployment growth can cause a decline, while an increase in the GDP growth rate can significantly improve wage growth. The study recommends that rather than the U.S. government targeting immigration as a way of reducing the unemployment rate, it can focus on growing its GDP and incentivizing citizens to pursue a college education. The growth in GDP will similarly help with wage growth over time all other things being equal.

Date of Award	2022
Original language	American English
Awarding Institution	Eastern Illinois University
Supervisor	Linda Ghent (Supervisor)