Determining a Positive Causal Relationship of Immigration on Living Standards

Abstract

This project investigates the complex relationship between American citizens and America’s forty million plus immigrants by analyzing changes in the living standards of native-born Americans versus the immigrant population size. We aggregate data collected from the American Community Survey’s Public Use Microdata Samples from 2010 to 2015 at the Public Use Microdata Area level. Using the method of instrumental variables, we assess if and how immigrants affect the living standards of native-born Americans. With the number of ports of entry per state as the instrument, we find preliminary evidence to suggest a positive causal, not just correlational, relationship between percent of immigrants in an area and the average living standard of the area’s native-born citizens. As data availability improves, our methodology will allow for a stronger case to support a causal relationship between immigration and American living standards. It has the potential to provide data-driven policy recommendations that improve the economic opportunities of native-born citizens while also supporting immigration.