1. Reconciling National and Regional Estimates of the Effect of Immigration on U.S. Labor Markets: The Confounding Effects of Native Male Incarceration Trends Steven Raphael & Lucas Ronconi Goldman School of Public Policy UC Berkeley

2. Findings from previous research on the effect of international immigrants on the wages and employment of natives Studies exploiting geographically concentrated immigrant shocks find little evidence of an effect of immigrant labor market competition on native earnings (Card (1990)Hunt (1992) Friedberg (2001)) Studies exploiting geographically concentrated immigrant shocks find little evidence of an effect of immigrant labor market competition on native earnings (Card (1990)Hunt (1992) Friedberg (2001)) Studies exploiting cross-city variation in the relative size of the immigrant population find modest negative effects (Altonji and Card (1991), Pischke and Velling (1997) Card (2001)) Studies exploiting cross-city variation in the relative size of the immigrant population find modest negative effects (Altonji and Card (1991), Pischke and Velling (1997) Card (2001)) National level studies that simulate the effect of immigrants on native earnings or estimate the effects at the national level tend to find larger competition effects (Borjas, Freeman, and Katz (1997)Borjas (2003), (2005)) although Ottaviano and Peri (2005) argue that the effect is concentrated primarily on previous immigrants) National level studies that simulate the effect of immigrants on native earnings or estimate the effects at the national level tend to find larger competition effects (Borjas, Freeman, and Katz (1997)Borjas (2003), (2005)) although Ottaviano and Peri (2005) argue that the effect is concentrated primarily on previous immigrants)

3. Summarizing the implied differences in the findings between the national level and cross-regional research 1980 to 2000 immigrant shock Typical National estimate of ∂lnW/ ∂lnI (-.3) Typical Regional estimate of ∂lnW/ ∂lnI (-.1) All Workers 0.11-3%-1% HS dropouts 0.18-6%-2% HS graduates 0.08-2%-1% Some Coll. 0.09-3%-1% College + 0.13-4%-1%

4. What we do We re-estimate national level reduced-form estimates of the effect of immigration on native labor market outcomes controlling for trends in native male incarceration rates. We re-estimate national level reduced-form estimates of the effect of immigration on native labor market outcomes controlling for trends in native male incarceration rates. We estimate a structural model of the aggregate economy incorporating incarceration trends into the estimation of the model’s parameters and simulate the effects of immigration on native wages. We estimate a structural model of the aggregate economy incorporating incarceration trends into the estimation of the model’s parameters and simulate the effects of immigration on native wages.

6. Channels through which prior incarceration may impact labor market outcomes Former inmates are likely to have fewer years of non- institutionalized labor market experience. Former inmates are likely to have fewer years of non- institutionalized labor market experience. Raphael and Stoll (2004), Raphael (2005) Raphael and Stoll (2004), Raphael (2005) Human capital depreciation while incarcerated Human capital depreciation while incarcerated Employers may categorically exclude formers inmates from consideration Employers may categorically exclude formers inmates from consideration Holzer, Raphael, and Stoll (2005), Pager (2003), Pager and Western (2005). Holzer, Raphael, and Stoll (2005), Pager (2003), Pager and Western (2005). Employers may statistically discriminate against applicants from high-incarceration sub-groups Employers may statistically discriminate against applicants from high-incarceration sub-groups Holzer, Raphael, and Stoll forthcoming, Autor and Scarborough (2005) Holzer, Raphael, and Stoll forthcoming, Autor and Scarborough (2005)

9. Reduced-Form Analysis where i indexes education group, j indexes experience level, and t indexes time. We estimate this model for three native outcomes Average log annual earnings Average log weekly earnings The fraction of the year employed

11. Converting the coefficients on the immigrant share variable into a wage-supply shock elasticity

12. Alternative Factor Price Supply Shock Elasticity Estimates from the Reduced-Form National Level Regressions Unweighted Estimates Weighted Estimates OmittingInst.IncludingInst. Omitting Inst. Including Inst Annual Earnings -0.69-0.42-0.53-0.14 Weekly Wages -0.42-0.23-0.310.01