Paper #1745

Título:

Immigration and wage dynamics: Evidence from the Mexican Peso crisis

Autor:

Joan Monràs

Data:

Agosto 2019

Resumen:

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

Palabras clave:

International and internal migration, local shocks, local labor demand elasticity, local housing markets.

Códigos JEL:

F22, J20, J30

Área de investigación:

Economía Política

Publicado en:

Journal of Political Economy vol. 128 (8), August 2020

Descargar el paper en formato PDF