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Is the Minimum Wage a Pull Factor for Immigrants?

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  • Corrado Giulietti

Abstract

In this article, the author studies the effects of the minimum wage on immigration. He develops an analytical framework in which immigration is a function of the expected wage in the region of destination. In the analysis, the author exploits the state variation in expected wages stemming from the changes in the U.S. federal minimum wage during 1996–1997 and 2007–2009. The author addresses endogeneity between immigration and the expected wage using an instrumental variable approach. His results provide consistent evidence that the policy induced a sizeable flow of low-skilled immigrants to the United States in both periods. This pull is attributable to the minimum wage increasing immigrants' wages without harming their potential employment outcomes. The author corroborates these findings by showing that the policy did not have any impact on the flow of high-skilled immigrants. The effect on low-skilled immigration is also found when the interstate mobility of immigrants is considered. Finally, changes in the minimum wage only attracted legal immigrants, while undocumented immigrants were not affected.

Suggested Citation

  • Corrado Giulietti, 2014. "Is the Minimum Wage a Pull Factor for Immigrants?," ILR Review, Cornell University, ILR School, vol. 67(3_suppl), pages 649-674, May.
    • Handle: RePEc:sae:ilrrev:v:67:y:2014:i:3_suppl:p:649-674
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    References listed on IDEAS

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    1. Borjas, George J. & Freeman, Richard B. (ed.), 1992. "Immigration and the Work Force," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226066332, December.
    2. Alida Castillo-Freeman & Richard B. Freeman, 1992. "When the Minimum Wage Really Bites: The Effect of the U.S.-Level Minimum on Puerto Rico," NBER Chapters, in: Immigration and the Work Force: Economic Consequences for the United States and Source Areas, pages 177-212, National Bureau of Economic Research, Inc.
    3. George J. Borjas & Richard B. Freeman, 1992. "Immigration and the Work Force: Economic Consequences for the United States and Source Areas," NBER Books, National Bureau of Economic Research, Inc, number borj92-1, March.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Are minimum wages attracting immigrants?
      by Economic Logician in Economic Logic on 2011-02-10 20:47:00

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    Cited by:

    1. Koichi Fukumura & Atsushi Yamagishi, 2020. "Minimum wage competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(6), pages 1557-1581, December.
    2. Corrado Giulietti, 2015. "Do minimum wages induce immigration?," IZA World of Labor, Institute of Labor Economics (IZA), pages 151-151, May.
    3. Madeline Zavodny, 2014. "Who benefits from the minimum wage--natives or migrants?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-98, December.
    4. Thierry Baudassé & Rémi Bazillier & Ismaël Issifou, 2018. "Migration And Institutions: Exit And Voice (From Abroad)?," Journal of Economic Surveys, Wiley Blackwell, vol. 32(3), pages 727-766, July.
    5. Jiwei Chen, 2021. "Do minimum wage increases benefit worker health? Evidence from China," Review of Economics of the Household, Springer, vol. 19(2), pages 473-499, June.
    6. Winters, John V., 2022. "Minimum Wages and Restaurant Employment for Teens and Adults in Metropolitan and Non-metropolitan Areas," IZA Discussion Papers 15499, Institute of Labor Economics (IZA).
    7. Eva Moreno-Galbis, 2020. "Minimum wage and immigrants' participation in the welfare system: evidence from France," AMSE Working Papers 2020, Aix-Marseille School of Economics, France.
    8. Edo, Anthony & Rapoport, Hillel, 2019. "Minimum wages and the labor market effects of immigration," Labour Economics, Elsevier, vol. 61(C).
    9. Daniel Kuehn, 2016. "Spillover Bias in Cross-Border Minimum Wage Studies: Evidence from a Gravity Model," Journal of Labor Research, Springer, vol. 37(4), pages 441-459, December.
    10. Yamagishi, Atsushi, 2019. "Minimum Wages and Housing Rents: Theory and Evidence from Two Countries," MPRA Paper 94238, University Library of Munich, Germany.
    11. Michel Beine & Joël Machado & Ilse Ruyssen, 2020. "Do potential migrants internalize migrant rights in OECD host societies?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1429-1456, November.
    12. Yamagishi, Atsushi, 2021. "Minimum wages and housing rents: Theory and evidence," Regional Science and Urban Economics, Elsevier, vol. 87(C).

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    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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