Labor Studies.

• Position: Bureau News

The NBER's Program on Labor Studies met in Cambridge on April 16. Program Director Richard B. Freeman and Lawrence E Katz, both of NBER and Harvard University, organized this agenda:

George J. Borjas, NBER and Harvard University, "Native Internal Migration and the Labor Market Impact of Immigration"

Steven J. Davis, NBER and University of Chicago, and Magnus Henrekson, Stockholm School of Economics, "Tax Effects on Work Activity, Industry Mix, and Shadow Economy Size: Evidence from Rich-Country Comparisons"

Lawrence F. Katz and Jeffrey B. Liebman, NBER and Harvard University; Jeffrey R. Kling, NBER and Princeton University; and Lisa Sanbonmatsu, NBER, "Moving to Opportunity or Moving to Tranquility? The Effects of Neighborhoods on Low-Income Household Heads"

Caroline M. Hoxby, NBER and Harvard University, "Our Favorite Method of Redistribution: School Spending Equality, Income Equality, and Growth"

Immigrants tend to cluster in a small number of geographic areas. Many studies use this clustering to estimate the wage impact of immigration by relating wage rates across labor markets to some measure of immigrant penetration. These spatial correlations may not measure the true impact of immigration, though, because the internal migration response of native workers helps to re-equilibrate local labor markets. Borjas studies how immigrant supply shocks influence the joint determination of wages and internal migration decisions in local labor markets. His data indicate that immigration is associated with lower wages, lower in-migration rates, higher out-migration rates, and a decline in the growth rate of the native workforce. The native migration response is strong enough to attenuate the measured impact of immigration on wages in a local labor market from 40 to 60 percent, depending on whether the labor market is defined at the state or metropolitan area level.

Guided by a simple theory of task assignment and time allocation, Davis and Henrekson investigate the long-run response to national differences in tax rates on labor income, payrolls, and consumption. The theory implies that higher tax rates reduce work time in the market sector, increase the size of the shadow economy, alter the industry mix of market activity, and twist labor demand, amplifying the negative effects on market work and concentrating effects on the less skilled. The authors also describe conditions whereby cross-country regressions yield unbiased estimates of the total...