Full Citation
Title: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis
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 Peso Crisis of the mid-1990s as an exogenous push factor inducing migration. Instrumentation 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 on impact. It also prompts net interstate labor reallocation. Fewer low skilled native workers migrate to the shocked local labor markets right after the immigrants from Mexico arrive. This explains why within five years, national markets adjust, leaving small differential spatial impacts. To evaluate longer run effects of immigration I build a model with many regions and calibrate it to US states data. Since local labor markets are well connected through internal migration, the potentially large short-run local effects of immigration are shown to dissipate into the much larger national market.
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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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