The Impact of High-Skilled Immigration on Wages of U.S. Natives

Serena Hsueh-Chin Huang, University of Kansas

This paper examines the effect of high-skilled immigrants on wages of U.S. natives using the Scientists and Engineers Statistical Data System (SESTAT) and multiple econometric approaches. The first method estimates the elasticity of substitution between immigrants and natives using a general equilibrium model. The second method uses individual-level instrumental variable (IV) regressions to calculate the impact of increased immigration on wages of natives. Empirical evidence cannot reject the hypothesis that immigrants and natives are perfect substitutes within the same skill group. Furthermore, IV estimates suggest that high-skilled immigration in science and engineering (S&E) reduces wages of similarly educated native workers. These results are consistent with theoretical predictions that increased labor supply puts downward pressure on wages. Moreover, this essay sheds light on wage consequences of immigration in science and engineering and has implications for U.S. policy on high-skilled immigration.