Mexican immigration, occupational clustering, and the local labor market adjustment of African-American workers

Since the 1970s, economic restructuring and shifts in industries have morphed the occupational path of workers, curbing socioeconomic mobility for many—wages of African-American workers which have trended upward in the 1960s and 1970s started stalling beginning in the 1980s. As Hispanic/Mexican immigrants were being absorbed in various industry sectors, researchers have questioned whether unfavorable trends in African-American wages and employment outcomes are tied to Mexican immigration. This paper examines the effect of Mexican immigrants on wages for African-Americans using various estimation methods and finds consistent negative estimates, pointing to an inverse relationship between Mexican immigrants and wages for African-Americans, which is consistent with crowding out and substitution effects. However, in addition, analyses also show that a heavier source of depression of wages for African-Americans stems not just from immigration. In fact, in some ways, occupation clustering and specialization of Mexican immigrants mitigates impact of immigration on African-Americans on a whole range of low-skill occupations. But, all else equal, there appears rather to be a tendency for African-Americans to face an even greater “wage penalty” in more predominantly black occupations. The findings suggest that the interplay of immigration policy and workforce development policies and initiatives should be better understood as part of the conversation to redress factors preventing occupational and wage mobility of disadvantaged minority groups in the labor force. JEL Classification: J61, J62