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Abstract

This dissertation consists of three essays on the topics of immigration, utilizing economic frameworks to (i) study the rational behaviors and human capital development of immigrants and (ii) study the potential short- and long-run impacts of immigration on wages, growth, and inequality. In particular, these essays develop economics insights into rational choices of immigrants such as their residential and occupational choices; their human capital development such as English language skills; and take these insights to guide empirical work with US data. Chapter 1, Immigrants, Language Barrier, and Assimilation, proposes a model of location choice, time allocation, and learning-from-others to study the three dimensions of immigrant assimilation: economic, linguistic, and spatial. The model shows that the characteristics that govern the newcomers' experience of communication friction and their ability to overcome the language barrier are also determinants of their location choices at arrival and their subsequent human capital development. With US census data 1980-2010, this chapter validates the model's predictions and shows the importance of immigrants' initial English proficiency in their location choice & post-migration wage growth. Chapter 2, Diversity, Growth, and Inequality, provides economic insights on the long-run impact on economic growth and income inequality of immigration. This chapter proposes a simple knowledge diffusion model to theoretically investigate the potential economic impacts of the social friction that arises in meetings between agents from different cultural backgrounds or “groups.” This chapter shows that communication friction has (i) a negative impact on the aggregate human capital accumulation process economy-wide and (ii) asymmetric effects on the majority and minority groups, stronger on the latter, leading to a constant productivity gap between the two. The constant productivity gap persists even when the two groups segregate and cross-group meetings are less frequent. Chapter 3, Regional Impacts of Immigration, utilizes the spatial economics framework to study immigrants' location choices and economic impacts of immigration across regions and industries. In this model, residential and occupational choices of immigrants are driven by their comparative (dis)advantage compared to natives due to the differences in their endowed skills at arrival or their tastes for locations. Through price effect, immigrants' residential and occupational choices subsequently influence the natives' choices, i.e. from relocating to different regions to switching to occupations. In the dynamic setup, the difference between immigrants and natives’ occupational choices is smaller with the duration of immigrants’ stay as they acquire the native-specific skill that closes the comparative (dis)advantages between them and the natives. With US data, this paper shows the difference in residential and locational choices of immigrants compared to natives, captured by the dissimilarity index, increases with immigrants' age but decreases with their English proficiency, years of education, and having US education. Furthermore, the occupational dissimilarity indices decline with immigrants' duration of stay, especially among younger immigrants.

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