Given the tendency of workplace technology (such as computers, for example) to complement skilled labour but substitute for their unskilled counterparts, my third paper builds upon the second paper and asks whether immigrant inflows that increase the ratio of unskilled to skilled labour lead to a fall in the capital intensity of america rcs data production. If the skill mix does in fact influence firms’ use of technology, as is indicated by the results obtained by Lewis (2011) and Lafortune et al. (2015) for the US, this would not only provide insight as to how immigrant supply shocks are absorbed by labour markets, but also as to the extent to which new technology is adopted by firms, and the speed at which this adoption takes place. Further, it may also shed light on the impact that immigration has on productivity and, in turn, potential solutions to the UK’s productivity puzzle.
The empirical approach is broadly similar for each of my three papers; the aim is to obtain the missing counterfactual – outcome that would have ensued had no immigration taken place – and compare this to the change in the labour market outcome that was observed in reality. To do this I will use the spatial correlation approach, a technique which exploits the geographical variation in immigrant concentrations by dividing the labour market into regions and regressing the change in a regional labour market outcome against the immigration-induced supply shock in the respective region.