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Immigrants' Labor Supply and Exchange Rate Volatility

Arash Nekoei

American Economic Journal: Applied Economics, 2013, vol. 5, issue 4, 144-64

Abstract: Are an immigrant's decisions affected in real time by her home country's economy? I examine this question by exploiting exchange rate variations as exogenous price shocks to immigrants' budget constraints. I find that in response to a 10 percent dollar appreciation, an immigrant decreases her earnings by 0.92 percent, mainly by reducing hours worked. The exchange rate effect is greater for recent immigrants, married immigrants with absent spouses, Mexicans close to the border, and immigrants from countries with higher remittance flows. A neoclassical interpretation of these findings suggests that the income effect exceeds the cross-substitution effect. Remittance targets offer an alternative explanation.

JEL-codes: F24 F31 J22 J61 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/app.5.4.144
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American Economic Journal: Applied Economics is currently edited by Alexandre Mas

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Handle: RePEc:aea:aejapp:v:5:y:2013:i:4:p:144-64