Self-employment rates and incomes differ significantly by race. We show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller. Equilibrium income distributions have two properties: mean black incomes are lower than mean white incomes, and the returns to ability are lower for black than for white sellers. Able blacks, therefore, are less likely to self-select into the self-employment sector than able whites. Using the 1980 census data, we find that observed racial differences in the self-employment income distributions are consistent with the theoretical predictions.

This paper investigates whether the parameters of labor demand functions are sensitive to alternative methods of estimation.The assumption that the production technology is of the Generalized Leontief type implies that the demand system can be estimated by analyzing cross-section differences in earnings across labor markets, by studying longitudinal changes in earnings within a labor market, or by investigating cross-section differences in labor force participation rates across labor markets.The estimation of these models on the 1970 and 1980 Public Use Samples from the U.S. Census reveals that the estimates of labor demand functions are indeed quite robust to major specification changes.

Although economic theory predicts an inverse relation between relativewages and immigration-induced supply shifts, it has been difficultto document such effects. The weak evidence may be partly due to samplingerror in a commonly used measure of the supply shift, the immigrantshare of the workforce. After controlling for permanent factors thatdetermine wages in specific labor markets, little variation remainsin the immigrant share. We find significant sampling error in thismeasure of supply shifts in Canadian and U.S. census data. Correctingfor the resulting attenuation bias can substantially increase existingestimates of the wage impact of immigration. (c) 2011 by The University of Chicago. Allrights reserved.

The rapid growth in the number of foreign students enrolled in American universities has transformed the higher education system, particularly at the graduate level. Many of these newly minted doctorates remain in the United States after receiving their doctoral degrees, so that the foreign student influx can have a significant impact in the labor market for high-skill workers. Using data drawn from the Survey of Earned Doctorates and the Survey of Doctoral Recipients, the study shows that a foreign student influx into a particular doctoral field at a particular time had a significant and adverse effect on the earnings of doctorates in that field who graduated at roughly the same time. A 10 percent immigration-induced increase in the supply of doctorates lowers the wage of competing workers by about 3 percent.

The large literature that analyzes the impact of immigration on the United States typically focuses on measuring the labor market and fiscal consequences. This literature, however, has ignored the impact of immigration on other sectors of society. One sector that is of great interest is the American university, where the share of nonresident aliens in the graduate student population rose from 5.5 percent in 1976 to 10.5 percent in 1996. Despite the rapid growth in the number of foreign students, little is known about their impact on the educational process. Nevertheless, undergraduates frequently complain that the lack of English language proficiency among many foreign-born Teaching Assistants affects adversely their understanding of the material. This paper addresses the question that is at the heart of these complaints: Do foreign-born teaching assistants have an adverse impact on the scholastic achievement of American undergraduates? To provide empirical evidence on this issue, I use data drawn from a survey of undergraduates enrolled in economics principles classes at a large public university. The data suggest that foreign-born Teaching Assistants have an adverse impact on the class performance of undergraduate students.

My 1987 paper addresses a central question in the economics of immigration: Who are the immigrants? It has been traditionally assumed that immigrants are positively selected-that is, immigrants are more skilled, on average, than the typical person in the source country. One contribution of my theoretical analysis was to show that this assumption is not necessarily consistent with wealth-maximizing behavior. In fact, under some conditions the immigrant flow may be negatively selected.' My original study focused only on the selection bias caused by immigrants endogenously sorting themselves out of the source country's population.2 Guillermina Jasso and Mark Rosenzweig point out that I ignored other types of selection biases in both my theoretical development and empirical framework. These additional biases are due to: (1) the selective emigration of the foreign-born in the United States; and (2) the fact that my empirical work was limited to immigrants originating in 41 source countries. Regarding the first of these points, Jasso and Rosenzweig restate the well-known fact that emigration (or return migration) is an important characteristic of the immigrant experience. Robert Warren and Jennifer Marks Peck (1980), for instance, estimate that perhaps as many as 30 percent of immigrants leave the United States within a decade or two after their arrival. Jasso and Rosenzweig, however, do not examine systematically how the selective emigration of the foreign-born affects either the theory or the empirical analysis. In essence, their criticism simply asserts that selective emigration is likely to cause problems. My 1987 paper, however, already made note of that fact (p. 538). Moreover, the biases caused by emigration were an integral part of my earlier critique of the econometric methodology used by most studies of immigrant earnings determination (Borjas 1985, pp. 466-67). What is obviously needed is the generalization of both my theoretical and empirical frameworks to account for the emigration of the foreign-born. Such a generalization, however, is not provided by Jasso and Rosenzweig and does not yet exist.3 The second point made by Jasso and Rosenzweig deals with the empirical results presented in my paper. Because I limited my analysis to immigrants originating in 41 countries, the sample is not representative and serious selection biases may be at work. Obviously, it is always better to use a more representative sample in the empirical analysis. The data were limited to 41 source countries because I was concerned not only with immigrant wage levels, but also with immigrant wage growth as recorded by the 2/10

The existence of significant wage differentials among "similar" individuals employed by different agencies in the federal government is explored. The theoretical framework proposes that the underlying reason for these differentials may be linked to the political influence exhibited by the constituencies and bureaucracies of federal agencies. The empirical results indicate that employees in federal agencies with small and well-organized constituencies and with bureaucracies that apparently share common interests generally receive higher wage rates. In fact, a small number of variables measuring these political factors explains about two-thirds of interagency wage differentials.

This article studies the role of the family in determining the skill composition and labor market experiences of immigrants in the United States. Our theoretical framework, based on the assumption that family migration decisions maximize household income, shows that the family attenuates the selection characterizing the skills of the immigrant population. The empirical analysis uses the 1970 and 1980 Public Use Samples of the U.S. census and reveals that an immigrant's skills and labor market performance are greatly influenced by the composition of the household at the time of migration and by his placement in the immigration chain.