The Impact of Cross-Border Flows on Markets for Labor, Higher Education, and Goods and Services.

Abstract

The essays of this dissertation examine the determinants of cross-border flows, in the form of immigrants and foreign aid, as well as the impact of those flows on receiving markets. The first essay finds that the composition of immigrant inflows into local markets is a significant determinant of native college enrollment. Theory predicts that increases in relatively unskilled immigrant labor will raise the private return to higher education, while increases in immigrant students will lower the private return. A flexible supply of college enrollment slots amplifies the former effect and mitigates the latter. I find that native college enrollment rates increase in states experiencing inflows of relatively unskilled immigrant labor but do not significantly decrease in response to immigrant student inflows. This native response implies both flexible college supply in the long-run and native college demand that is fairly wage-sensitive.

The second essay, written with Dean Yang, shows that foreign aid inflows do not significantly affect the long-run economic growth of recipient countries. We examine natural disasters and whether aid flows to recipients change when their aid competitors experience disaster shocks. Utilizing this variation in aid inflows with an instrumental variables strategy, we show that aid increases recipient per capita GDP growth in the short- to medium-run due to increased household consumption. However, we find no effect of aid on proxies for human capital investment and factor productivity, nor do we observe any direct impact of aid on long-term growth.

The final essay investigates the self-selection of migrants and whether higher educational quality and informational asymmetries influence migratory patterns by altering the return to skill and the expected wages of migrants. In a theoretical framework, I examine the nature of individuals' jointly determined decisions of educational and employment locations. Using proxy data on worldwide college quality and the extent of information flows across borders, I find no evidence that either measure significantly influences the share of high-skilled immigrants acquiring college education in the United States. Despite potential measurement error in the proxies, I interpret this finding as evidence against the model's explanation for migrant self-selection.