Full Citation

Title: How Do Immigration Flows Respond to Labor Market Competition from Similarly-Skilled Natives?

Citation Type: Miscellaneous

Publication Year: 2007

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Abstract: This paper demonstrates that immigration flows respond to differences in labor market conditions by documenting the change in newly arriving low-skilled immigrants location decisions in response to the increase in native employment induced by welfare reform. Previous studies comparing cities receiving large immigrant flows to cities with smaller influxes have found very little effect on natives wages and employment. These results are consistent with a model in which a mobile production factor equilibrates labor market returns across geography. This paper provides direct evidence that immigration flows serve this function, and it is the first to do so using an identifiable source of exogenous variation. The empirical methods I use improve upon previous immigrant location studies by explicitly allowing for unobserved city attributes that potentially differ across sending countries. Using welfare participation rates as an instrument for changes in native labor supply, I find that immigrant flows shifted away from cities with more welfare leavers toward cities with smaller increases in native competition. The results are most consistent with endogenous location selection based on relative labor market prospects, which I present in a random utility discrete choice framework. The extent of this selection is substantial: for each extra native woman working in a city as a result of welfare reform, 0.83 fewer female immigrants choose to live and work there.

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Authors: Cadena, Brian C.

Publisher: University of Michigan

Data Collections: IPUMS USA, IPUMS CPS

Topics: Gender, Labor Force and Occupational Structure, Migration and Immigration, Poverty and Welfare, Race and Ethnicity

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