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Immigration and Labor Market (Mis)perceptions
AEA PAPERS AND PROCEEDINGS. VOL. 112 (2022)
Exposure to immigrants often triggers sentiments of hostility and backlash among native-born populations. Among the main concerns identified by surveys, labor market conditions typically rank at the top. We combine a two-way fixed effects model with a Bartik-type 2SLS model to causally estimate the effects of immigration on labor outcomes in Chile, where the foreign-born population almost tripled in five years. While immigration did not systematically affect employment levels, it did cause an increase in unemployment-related concerns. Our results provide a plausible hypothesis to explain the backlash against immigrants: misperception regarding the effect of immigrants on labor market conditions.