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In a famous paper, David Card studies the effects of immigration on native wages using a natural experiment. In 1980, Cuba temporarily lifted restrictions on emigration, which resulted in a large influx of immigrants into Miami, termed the "Mariel boatlift". Most of these immigrants became low-skilled workers and settled permanently in Miami. Suppose we have data on the wages of all workers in the US in all years between 1970 and 1990.

a) What is the treatment group? What would be a good control group?

b) How would you use the natural experiment to estimate the effect of immigration on native wages? Specify the regression you would run, with all variables clearly defined.

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Operation Management, Management Studies

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