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Title: Tequila Crisis in Bourbon Street: Migration, Wages, and Adjustment

Citation Type: Miscellaneous

Publication Year: 2013

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Abstract: How does immigration affect natives local wages? A vast literature considers this, much of it focused on Mexican immigration to the United States. Prior work emphasizes the importance of instrumenting for immigrant destinations, the key role of experience-skill cells, and the potential for spillovers to national markets. I build on these, using the Mexican Tequila Crisis of the mid-1990s and the displacement of workers from hurricane Katrina as exogenous push factors inducing migration. Instrumentation thus includes both a time dimension for the shock period, plus a destination dimension as in prior work. A 1% labor supply shock to particular local labor markets decreases wages of low skilled US natives by 1 to 1.5 percent. It also prompts interstate labor reallocation. Fewer low skilled workers migrate to the shocked local labor markets right after the immigrants from the Tequila Crisis or from Katrina arrive. This explains why within five years, national markets adjust, leaving small differential spatial impacts. Whether the immigrants come from Mexico or from Louisiana makes little difference: the effects from both natural experiments are qualitatively and quantitatively very similar.

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Authors: Monras, Joan

Publisher: Columbia University

Data Collections: IPUMS USA, IPUMS CPS

Topics: Labor Force and Occupational Structure, Migration and Immigration

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