Immigration and wage dynamics: Evidence from the Mexican Peso crisis

Joan Monras

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: How does the US labor market absorb low-skilled immigration? I address this question using the 1995 Mexican Peso Crisis, an exogenous push factor that raised Mexican migration to the US. In the short run, high-immigration locations see their low-skilled labor force increase and native low-skilled wages decrease, with an implied inverse local labor demand elasticity of at least -.7. Mexican immigration also leads to an increase in the relative price of rentals. Internal relocation dissipates this shock spatially. In the long run, the only lasting consequences are a) lower wages and employment rates for low-skilled natives who entered the labor force in high-immigration years, and b) lower housing prices in high-immigrant locations, since Mexican immigrant workers disproportionately enter the construction sector and lower construction costs. I use a quantitative dynamic spatial equilibrium many-region model to obtain the counterfactual local wage evolution absent the immigration shock, to study the role of local technology adoption in generating wage dynamics, to analyze the role of unilateral state level immigrant restrictive laws, and to study the role of housing markets

Keywords: International and internal migration; local shocks; local labor demand elasticity; local housing markets. (search for similar items in EconPapers)
JEL-codes: F22 J20 J30 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-dem, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2020)
Working Paper: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2018)
Working Paper: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2015)
Working Paper: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2015)
Working Paper: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2015)
Working Paper: Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2015)
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