Census data show that low-skill workers in the United States are increasingly employed in the provision of non-tradeable time-intensive services-such as food preparation and cleaning-that can be broadly thought as substitutes of home production activities. Consumer expenditure data show that the fraction of household spending in these services is increasing with the head's wage rate, consistent with the predictions of standard economic theory. These stylized facts suggest a "consumption story" for how the physical presence and productivity gains of skilled workers might affect the employment and earnings opportunities of unskilled workers. Using the presence of land grant institutions as an instrument for the supply of college graduates (Moretti, 2004), we find that a larger share of skilled individuals in a city workforce is associated with a larger share of unskilled workers being employed in outsourced home production activities. This finding shows that imperfect substitution in production and human capital externalities might not be the only reason why unskilled wages are higher in skilled cities. We also find that the association between wage growth at the top and wage growth at the bottom of a city wage distribution (with respect to the growth at the median) is larger in cities with a larger proportion of low-wage workers employed in outsourced home production activities in a base year. This finding suggests that the steady increase in the market returns to skill in the last three decades, together with somewhat more sluggish changes in consumption patterns, might provide a viable explanation for some of the wage compression in the lower half of the wage distribution observed in the 1990s

In the 1990s, Colombia, the Dominican Republic, Ecuador, Costa Rica, and Brazil passed dual citizenship laws granting their expatriates the right to naturalize in the receiving country without losing their nationality of origin. I estimate the effects of these new laws on naturalization rates and labor market outcomes in the United States. Based on data from the 1990 and 2000 U.S. censuses, I find that immigrants recently granted dual nationality rights are more likely to naturalize relative to immigrants from other Latin American countries. They also experience relative employment and earnings gains, together with drops in welfare use, suggesting that dual citizenship rights not only increase the propensity to naturalize but may also promote economic assimilation. The effects of dual citizenship on improved economic performance, if mediated through naturalization, are consistent with American citizenship conferring greater economic opportunities.

We study the effects of immigration on the diversity of consumption choices. Data from California in the 1990s indicate that immigration is associated with fewer stand-alone retail stores, and a greater number of large and in particular big-box retailers-evidence that likely contradicts a diversity-enhancing effect of immigration. In contrast, focusing on the restaurant sector for which we can better identify the types of products consumed by customers, we find that immigration is associated with increased ethnic diversity of restaurants. This latter effect appears to come in part from the comparative advantage of immigrants in the production of ethnic goods.

No abstract