Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173985
Authors: 
Albert, Christoph
Monras, Joan
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers 11075
Abstract: 
This paper investigates the causes and effects of the spatial distribution of immigrants across US cities. We document that: a) immigrants concentrate in large, high-wage, and expensive cities, b) the earnings gap between immigrants and natives is higher in larger and more expensive cities, and c) immigrants consume less locally than natives. In order to explain these findings, we develop a simple quantitative spatial equilibrium model in which immigrants consume (either directly, via remittances, or future consumption) a fraction of their income in their countries of origin. Thus, immigrants not only care about local prices, but also about price levels in their home country. Hence, if foreign goods are cheaper than local goods, immigrants prefer to live in high-wage, high-price, and high-productivity cities, where they also accept lower wages than natives. Using the estimated model we show that current levels of immigration have reduced economic activity in smaller, less productive cities by around 3 percent, while they have expanded the activity in large and productive cities by around 4 percent. This has increased total aggregate output per worker by around 15 percent.
Subjects: 
spatial equilibrium
location choices
immigration
JEL: 
F22
J31
J61
R11
Document Type: 
Working Paper

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