Immigration Responses to Technological Shocks: Theory and Evidence from the United States

The changes in technology that took place in the US during the last three decades have been characterised as “routine-substituting”. According to Autor and Dorn (2013) they have reduced demand for routine tasks, but have increased demand both for cognitive complex tasks and for service jobs. We analyse how these technological changes affected immigration of high and low skilled workers building on the fact that the task specialization of foreign-born is different from that of native workers. The combination of technological change and immigrant flows affected natives' employment and wages. We first present evidence from simple regressions on US labour markets. We then develop and simulate a model that allow us to compare the historical experience with a counterfactual with lower or higher unskilled immigration. Results show that immigration attenuates the technological effects on routine and service workers, but magnifies these effects on analytical workers.