DOI RECORD
Immigration, Skill Composition, and Regional Prices: Evidence from U.S. MSAs, 2008–2023
Abstract
We estimate the relationship between immigration and local prices using Regional Price Parities and American Community Survey data for 256 U.S. metropolitan areas from 2008 through 2023, excluding 2020. Using shift-share instruments based on past settlement patterns and national immigration trends by country of origin and skill, we show that negligible estimates based on the overall immigrant share conceal sharply different price effects by skill. Low-skilled immigration lowers the all-items regional price index, goods prices, and utility prices, consistent with a cost-reducing role that extends beyond household and personal services. High-skilled immigration raises several price components, especially prices of other services and utilities, consistent with a stronger local demand channel. Further, low-skilled immigration places downward wage pressure primarily on earlier-arrived low-skilled immigrants, and raises employment and wages of high-skilled natives. These patterns suggest that low-skilled immigration lowers some local production and distribution costs while benefiting complementary high-skilled workers.