The Allocation of Immigrant Talent: Macroeconomic Implications for the U.S. and Across Countries

RePEc Short ID: pbi318
ORCID iD: 0000-0001-7323-1932

Birinci, Serdar; Leibovici, Fernando; See, Kurt

doi:10.20955/wp.2021.004

Working Paper Revision

The Allocation of Immigrant Talent: Macroeconomic Implications for the U.S. and Across Countries

Abstract: We quantify the labor market barriers that immigrants face, using an occupational choice model with native-born individuals and immigrants of multiple types subject to wedges that distort their allocations. We find sizable output gains from removing immigrant wedges in the U.S., representing 25% of immigrants' overall economic contribution, and that these wedges alter the impact of alternative immigration policies. We harmonize microdata across 19 economies and exploit cross-country variation in immigrant outcomes and estimated wedges to examine the drivers of differences in wedges and gains from their removal. Finally, we relate the estimated wedges with external cross-country measures of immigrant barriers.

Keywords: immigration; occupational barriers; mobility; misallocation;

JEL Classification: J24; J31; J61;

https://doi.org/10.20955/wp.2021.004