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Recent immigrants as labor market arbitrageurs: Evidence from the minimum wage

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  • Cadena, Brian C.

Abstract

This paper investigates the local labor supply effects of changes to the minimum wage by examining the response of low-skilled immigrants’ location decisions. Canonical models emphasize the importance of labor mobility when evaluating the employment effects of the minimum wage; yet few studies address this outcome directly. Low-skilled immigrant populations shift toward labor markets with stagnant minimum wages, and this result is robust to a number of alternative interpretations. This mobility provides behavior-based evidence in favor of a non-trivial negative employment effect of the minimum wage. Further, it reduces the estimated demand elasticity using teens; employment losses among native teens are substantially larger in states that have historically attracted few immigrant residents.

Suggested Citation

  • Cadena, Brian C., 2014. "Recent immigrants as labor market arbitrageurs: Evidence from the minimum wage," Journal of Urban Economics, Elsevier, vol. 80(C), pages 1-12.
    • Handle: RePEc:eee:juecon:v:80:y:2014:i:c:p:1-12
    DOI: 10.1016/j.jue.2013.10.002
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    More about this item

    Keywords

    Minimum wage; Immigration; Labor mobility; Spatial equilibrium;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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