This paper uses three years of individual-level data to analyze the determinants of individual preferences over immigration policy in the United States. We have two main empirical results. First, less-skilled workers are significantly more likely to prefer limiting immigrant inflows into the United States. Our finding suggests that, over the time horizons that are relevant to individuals when evaluating immigration policy, individuals think that the U.S. economy absorbs immigrant inflows at least partly by changing wages. Second, we find no evidence that the relationship between skills and immigration opinions is stronger in high-immigration communities.

Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Across a wide range of specifications, we estimate a significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. This is consistent with positive FDI spillovers. We do not generally find significant effects on plant TFP of the foreign-affiliate share of activity in that plant's region. Typical estimates suggest that a 10 percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5 percent. We also use these estimates to calculate the perjob value of these spillovers. These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.

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THE AMERICAN DREAM IS THAT each generation should live twice as well as its predecessor. During the hundred years before 1973, real average hourly earnings rose by 1.9 percent a year. ' At that rate earnings doubled every thirty-six years, and the dream was realized. The dream no longer holds. Since 1973 the United States has failed to match its historic track record. In 1973 average real hourly earnings, measured in 1982 dollars by the consumer price index (CPI), were $8.55. By 1992 they had actually declined to $7.43-a level that had been achieved in the late 1960s. Had earnings increased at their pre-1973 pace, they would have risen by 40 percent to more than $12.00. Or consider average real hourly compensation. This is a more comprehensive measure of the payments to labor because it includes fringe benefits as well as earnings. Between 1973 and 1991, real hourly compensation rose by only 5 percent. However the growth of labor income is measured, it clearly has slumped since 1973. A second ominous development in the American economy has accompanied this slump: a dramatic increase in the inequality of earnings. In This paper reflects research on a Brookings Institution project, "First Among Equals," funded by the Ford Foundation. We are grateful to Martin Neil Baily, Lawrence Katz, Edward Leamer, and John Pencavel and participants at the Brookings Panel and the National Bureau of Economic Research Summer Institute for comments, Lael Brainard and Paul Krugman for helpful discussions, Scott Bradford for research assistance, and Wayne Gray for data. 1. See Johnson and Stafford (1993, p. 1).