Essays in applied microeconomics

• Main Author: Barcellos, Silvia Helena
• Format: Dissertation
• Language: English
• Published: ProQuest Dissertations & Theses 01-01-2010
• Subjects: Developing countries; Economics; Education; Elasticity of demand; Employment; Estimates; Immigrants; Immigration policy; Innovations; Labor economics; Labor force; Labor market; Labor supply; LDCs; Microeconomics; Migration; Regression analysis; School dropouts; Secondary schools; Studies; Time use; Variables; Wages & salaries
• ISBN: 1124051244; 9781124051246

This dissertation consists of three essays that study the dynamic relationship between immigration and wages in the United States, the impact of legalization on the economic status of the newly legalized immigrants, and boy-girl discrimination in India. The first essay, “The Dynamics of Immigration and Wages” presents a new approach to the analysis of the relationship between immigration and wages based on a panel vector autoregression (VAR) analysis. I develop a flexible model of the joint dynamics of wages, foreign immigration, and internal migration, allowing for capital mobility. I then implement this model empirically using annual CPS data. The VAR analysis of a 26-year panel of US states shows that immigration does not have a significant effect on wages or internal migration. By contrast, wages do affect immigration. The estimated coefficients imply that a 10 percent increase in wages causes up to a 20 percent increase in the rate of immigrant inflow after 3 years. These estimates hide significant heterogeneity: the effect is strongest for low-skill immigrants while it is small and insignificant for high-skill immigrants. My results suggest that the concerns about immigration lowering native workers’ wages are misplaced. I find no evidence that the influx of immigrants decreases wages, neither for the economy as a whole nor for workers who possess the same level of skill. In the second essay, “Legalization and the Economic Status of Immigrants”, I investigate the impact of legalization on the economic outcomes of the legalized population. The 1986 Immigration Reform and Control Act (IRCA) legalized immigrants who could prove continuous residence in the U.S. after 1982. The arbitrary cutoff date on the eligibility criteria causes a discontinuity in the relationship between the year of immigration and the probability of being legal. I use the IRCA natural experiment to identify the causal impacts of legalization on immigrants’ outcomes. Estimates from regression discontinuity and difference-in-differences models show that the policy had a positive and significant effect on the probability that an immigrant is a naturalized citizen. Legalization is also found to have a positive and significant effect on wages, a negative effect on the probability of working on a traditionally illegal occupation, and no significant effect on geographical mobility. The analysis for different demographic groups confirms such conclusions and shows that the estimated effects of legalization are larger for low-educated Latin American immigrants, the group that was disproportionably affected by the policy. The third essay, “Child Gender and Parental Investments in India: are Boys and Girls Treated Differently?”, co-authored with Leandro Carvalho and Adriana Lleras-Muney, proposes a novel identification strategy to properly identify the effects of child gender on parental investments in the presence of male-preferring stopping rules of childbearing. Using data from a time use survey we document gender differences in childcare time which have not been studied before in the context of developing countries. We find that boys receive on average 10 percent more time than girls, this difference being more than two times larger for households with only one young child. We also find suggestive evidence that the quality of childcare given to boys is higher. Moreover, we find that boys are more likely to be vaccinated, to be breastfed longer and to be given vitamin supplementation. In general we find these inputs to be about 10 percent lower for girls. However we find that the effects for anthropometric measures (which are outcomes, not investments) are equivocal, and sensitive in particular to specific standard chosen. We interpret our results as evidence that families discriminate against girls because they have a preference for sons, because the returns to these investments are higher for boys (e.g., men have higher wage rates than girls) or because families that have girls anticipate having larger families.