Full Citation
Title: Immigrants Equilibrate Local Labor Markets: Evidence From The Great Recession
Citation Type: Working Paper
Publication Year: 2013
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Abstract: This paper demonstrates that low-skilled Mexican-born immigrants' location choices in the U.S. respond strongly to changes in local labor demand, and that this geographic elasticity helps equalize spatial differences in labor market outcomes for low-skilled native workers, who are much less responsive. We leverage the wage rigidity that occurred during Great Recession to identify the severity of local downturns, and our results confirm the standard finding that high-skilled populations are quite geographically responsive to employment opportunities while low-skilled populations are much less so. However, low-skilled immigrants, primarily those from Mexico, respond even more strongly than high-skilled native-born workers. These results are robust to a wide variety of controls, a pre-recession falsification test, and two instrumental variables strategies. A novel empirical test reveals that natives living in cities with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in cities with few Mexicans. The reallocation of the Mexican-born workforceamong these cities reduced the incidence of local demand shocks on low-skilled natives' employment outcomes by more than 40 percent.
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Authors: Cadena, Brian C.; Kovak, Brian K.
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Publication Number: 19272
Institution: National Bureau of Economic Research
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Publisher Location: Cambridge, MA
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure, Migration and Immigration
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