Computerization and Immigration: Theory and Evidence from the United States

Recent technological changes have been characterized as “routine-substituting,” reducing demand for routine tasks but increasing it for analytical and service tasks. Little is known about how these changes have impacted immigration, or task specialization between immigrants and natives. In this paper we show that such technological progress has been an important determinant of immigration, attracting immigrants who increasingly specialize in manual-service occupations. We also suggest that open- ness to immigration attenuated job and wage polarization for natives resulting from technological changes. We explain these facts with a model of technological progress and endogenous immigration. Simulations show that unskilled immigration attenuates the drop in routine employment proceeding from technological change, enhances skill-upgrading for natives, and raises economy-wide productivity and welfare.