LABOR MARKET COMPETITION AND INDIVIDUAL PREFERENCES OVER IMMIGRATION POLICY 137 FIGURE 2.-LABOR MARKET EQUILIBRIUM:THE FACTOR-PROPORTIONS studies of immigration-Card (1990),Altonji and Card ANALYSIS MODEL OR THE AREA-ANALYSIS MODEL (1991),Butcher and Card (1991),LaLonde and Topel (Ws/Wu) (1991),and Goldin (1994)-that have tested for correlations RS RSo between immigrant flows into local labor markets and local native wages. (Ws/Wu) Graphically,the area-analysis model also looks like figure 2,but with the key difference that now this figure represents local and not national conditions.Here,immigration shifts only the local relative supply of labor and thus depresses only local unskilled wages.Given this,the area-analysis (Ws/Wu)o model predicts the following:unskilled (skilled)workers in RD gateway communities should prefer policies to lower(raise) immigration inflows.What about workers in nongateway communities?With no geographic labor mobility over time horizons relevant to individuals when evaluating immigra- (Qs/Qu) tion policy,there should be no correlation between these Skilled labor is subscripted"sand unskilled labor"The R.S schedule is relative supply.and the RD schedule is relative demand.For the factor- workers'skills and their preferences.More generally,with ngenioalhbornarketfortheaeanalysiEmodGL.trepecsadhseparaleloealhbormarkeL some labor mobility,workers in nongateway communities should have qualitatively similar preferences as do workers by the schedule RSo,with initial equilibrium again at E and in gateway communities,but the skills-preferences link (w,/w).Immigration shifts the supply schedule back to should be stronger among the gateway workers. RS',and the national skill premium rises to (w/w)'. Again,for fixed product prices,real wages change,too. IV.Data Description and Empirical Specification This model makes a single prediction about the link from skills to immigration-policy preferences:unskilled(skilled) A.Data Description workers nationwide should prefer policies to lower (raise) immigration inflows.This prediction can also come from We measure immigration-policy preferences by re- the HO model without FPI.Accordingly,evidence of a link sponses to the following question asked in the 1992,1994, between skills and preferences is consistent with both mod- and 1996 NES surveys. els. "Do you think the number of immigrants from foreign countries who are permitted to come to the United C.The Area-Analysis Model States to live should be increased a little,increased a Like the previous model,the area-analysis model also lot,decreased a little,decreased a lot,or left the same assumes a single output sector.The fundamental difference as it is now?" between the two is that this model assumes distinct,geo- This question requires respondents to reveal their general graphically segmented labor markets within a country.This position on the proper direction for U.S.immigration policy. assumption is likely untrue in the very long run,but it may To apply our theory framework to this question,we assume be true over shorter time horizons thanks to frictions such as that respondents think that U.S.immigrant inflows increase information and transportation costs that people (both na-the relative supply of less-skilled workers.As we discussed, tives and immigrants upon arrival)must incur to move.U.S. this assumption clearly reflects the facts about U.S.immi- "local"labor markets are usually defined by states or met- gration in recent decades.Later,we revisit this assumption ropolitan areas.Each local market has its own equilibrium in our data analysis.We constructed the variable Immigra- wages determined by local supply and local demand. tion Opinion by coding responses with a range of 5 (for If there is literally no mobility among local labor markets, those individuals responding "decreased a lot")down to 1 immigrants'wage effects are concentrated entirely in the (for those responding"increased a lot").Thus,higher values gateway communities where they arrive:immigration low- of Immigration Opinion indicate preferences for more- ers(raises)wages for the unskilled(skilled).In contrast,in restrictive policy. a national labor market,immigrants'wage pressures spread beyond gateway communities.Natives can leave gateway 8 The 1992 NES survey asked other questions about immigration-related communities when immigrants arrive,immigrants can move topics that we do not analyze.For example,respondents were asked on to other communities,or natives can choose not to enter whether they think Asians or Hispanics "take jobs away from people already here."We do not focus on this question because it does not gateway communities as they may have planned.In cases explicitly address immigration policy.Moreover,its responses cannot between these two extremes,immigrants affect wages ev- clearly distinguish among our three competing economic models.All our erywhere but to a greater extent in gateway labor markets. models assume full employment,so no natives could have jobs perma- nently"taken away"from immigrants.Moreover,our models are silent on The area-studies framework has guided many empirical the dynamics of adjustment.All three models could have immigrants This content downloaded from 202.120.14.193 on Mon,15 Feb 2016 10:04:26 UTC All use subject to JSTOR Terms and ConditionsLABOR MARKET COMPETITION AND INDIVIDUAL PREFERENCES OVER IMMIGRATION POLICY 137 FIGURE 2.-LABOR MARKET EQUILIBRIUM: THE FACTOR-PROPORTIONS ANALYSIS MODEL OR THE AREA-ANALYSIS MODEL (WS/Wu) RS' RSo (Ws/Wu)A (WsVWu)o Eo RD (QsIQu) Skilled labor is subscripted "s" and unskilled labor "u". 'The RS schedule is relative supply, and the RD schedule is relative demand. For the factor-proportions analysis inodel, this picture represents the single national labor mnarket; for the area-analysis model, it represents each separate local labor market. by the schedule RS,, with initial equilibrium again at E0 and (w/lw1,),. Immigration shifts the supply schedule back to RS', and the national skill premium rises to (w/lw,1)'. Again, for fixed product prices, real wages change, too. This model makes a single prediction about the link from skills to immigration-policy preferences: unskilled (skilled) workers nationwide should prefer policies to lower (raise) immigration inflows. This prediction can also come from the HO model without FPI. Accordingly, evidence of a link between skills and preferences is consistent with both mod￾els. C. The Area-Analysis Model Like the previous model, the area-analysis model also assumes a single output sector. The fundamental difference between the two is that this model assumes distinct, geo￾graphically segmented labor markets within a country. This assumption is likely untrue in the very long run, but it may be true over shorter time horizons thanks to frictions such as information and transportation costs that people (both na￾tives and immigrants upon arrival) must incur to move. U.S. "local" labor markets are usually defined by states or met￾ropolitan areas. Each local market has its own equilibrium wages determined by local supply and local demand. If there is literally no mobility among local labor markets, immigrants' wage effects are concentrated entirely in the gateway communities where they arrive: immigration low￾ers (raises) wages for the unskilled (skilled). In contrast, in a national labor market, immigrants' wage pressures spread beyond gateway communities. Natives can leave gateway communities when immigrants arrive, immigrants can move on to other communities, or natives can choose not to enter gateway communities as they may have planned. In cases between these two extremes, immigrants affect wages ev￾erywhere but to a greater extent in gateway labor markets. The area-studies framework has guided many empirical studies of immigration-Card (1990), Altonji and Card (1991), Butcher and Card (1991), LaLonde and Topel (1991), and Goldin (1994)-that have tested for correlations between immigrant flows into local labor markets and local native wages. Graphically, the area-analysis model also looks like figure 2, but with the key difference that now this figure represents local and not national conditions. Here, immigration shifts only the local relative supply of labor and thus depresses only local unskilled wages. Given this, the area-analysis model predicts the following: unskilled (skilled) workers in gateway communities should prefer policies to lower (raise) immigration inflows. What about workers in nongateway communities? With no geographic labor mobility over time horizons relevant to individuals when evaluating immigra￾tion policy, there should be no correlation between these workers' skills and their preferences. More generally, with some labor mobility, workers in nongateway communities should have qualitatively similar preferences as do workers in gateway communities, but the skills-preferences link should be stronger among the gateway workers. IV. Data Description and Empirical Specification A. Data Description We measure immigration-policy preferences by re￾sponses to the following question asked in the 1992, 1994, and 1996 NES surveys. "Do you think the number of immigrants from foreign countries who are permitted to come to the United States to live should be increased a little, increased a lot, decreased a little, decreased a lot, or left the same as it is now?" This question requires respondents to reveal their general position on the proper direction for U.S. immigration policy. To apply our theory framework to this question, we assume that respondents think that U.S. immigrant inflows increase the relative supply of less-skilled workers. As we discussed, this assumption clearly reflects the facts about U.S. immi￾gration in recent decades. Later, we revisit this assumption in our data analysis. We constructed the variable Immigra￾tion Opinion by coding responses with a range of 5 (for those individuals responding "decreased a lot") down to 1 (for those responding "increased a lot"). Thus, higher values of Immigration Opinion indicate preferences for more￾restrictive policy.8 8 The 1992 NES survey asked other questions about immigration-related topics that we do not analyze. For example, respondents were asked whether they think Asians or Hispanics "take jobs away from people already here." We do not focus on this question because it does not explicitly address immigration policy. Moreover, its responses cannot clearly distinguish among our three competing economic models. All our models assume full employment, so no natives could have jobs perma￾nently "taken away" from immigrants. Moreover, our models are silent on the dynamics of adjustment. All three models could have immigrants This content downloaded from 202.120.14.193 on Mon, 15 Feb 2016 10:04:26 UTC All use subject to JSTOR Terms and Conditions