“Europe’s Tired, Poor, Huddled Masses,” R. Abramitsky, L.P. Boustan & K. Eriksson (2010)

In the modern era, immigration is expensive: a migrant from Mexico can expect to pay a lawyer $10000 or more to acquire legal status. This, along with skill-based immigration rules, leads the US and other developed countries to positively select immigrants with relatively high skill and wealth in their home countries. When estimating the return to migration, then, this selection must be accounted for. But was it always so, particularly during the era from 1850-1913 when the US essentially had open borders for European migrants? The authors of this recent NBER working paper construct a matched dataset of migrants from Norway to the US in 1865 and 1900. The match they use is brothers where one migrated and one did not. Since first-born brothers in certain rural regions of Norway inherited land, they were less likely to migrate, and therefore birth order can be used as an IV in estimating the increase in wages from migration. The authors find that migrants were negatively selected (more likely to be low skill and poor than the average Norwegian), and that adjusting for this selection, the return to migration was on the order of a doubling of wages for the migrant.

A Fine Theorem