Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession

Brian Cadena and Brian Kovak

No 19272, NBER Working Papers from National Bureau of Economic Research, Inc

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 substantial geographic variation in employment losses that occurred during Great Recession, 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, especially 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. Moreover, we show that natives living in metro areas with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in places with few Mexicans. The reallocation of the Mexican-born workforce reduced the incidence of local demand shocks on low-skilled natives' employment outcomes by roughly 40 percent.

JEL-codes: F22 J21 J61 R23 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-cwa, nep-lab, nep-lma, nep-mig and nep-ure
Note: ITI LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published as Brian C. Cadena & Brian K. Kovak, 2016. "Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 257-90, January.

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Journal Article: Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession (2016)
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