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Measuring Immigration's Effects on Labor Demand: A Reexamination of the Mariel Boatlift

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Author Info

  • Bodvarsson, Örn B.

    ()
    (California State University, Sacramento)

  • Lewer, Joshua J.

    ()
    (Bradley University)

  • Van den Berg, Hendrik

    ()
    (University of Nebraska at Lincoln)

Abstract

It is now well known that exogenous immigration shocks tend to have benign effects on native employment outcomes, thanks to various secondary adjustment processes made possible by flexible markets. One adjustment process that has received scant attention is that immigrants, as consumers of the goods they help produce, contribute to their own demand. We examine the effects of an immigration shock on labor demand by testing a general equilibrium model in which imperfectly substitutable native and immigrant workers spend their wages on a locally produced good. The shock induces three responses: (i) a substitution of immigrants for natives; (ii) out-migration; and (iii) stimulation of labor demand. According to (iii), native wages can fall, stay the same or rise, depending upon the strength of the shock and various product and factor market elasticities. As our test case, we reexamine the 1980 “Mariel Boatlift,” using Wacziarg’s “Channel Transmission” methodology. Our data set includes approximately 6,600 observations for 1979-85 from the Current Population Survey on workers in 9 different retail labor markets and Survey of Buying Power data on retail spending by consumers in Miami and four comparison cities. Our results provide a more complete explanation for why the Boatlift’s overall effects on native wages in Miami were benign: Lower wages due to greater labor supply were offset by higher wages due to greater labor demand. We conclude that the demand-augmenting effect of an immigration shock is a significant secondary adjustment process that must be considered when assessing the distributional effects of immigration.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2919.

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Length: 45 pages
Date of creation: Jul 2007
Date of revision:
Publication status: published in: Labour Economics, 2008, 15 (4), 560-574
Handle: RePEc:iza:izadps:dp2919

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Keywords: immigration; demand; transmission channels; wages;

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Cited by:
  1. Francesca Mazzolari & David Neumark, 2012. "Immigration and product diversity," Journal of Population Economics, Springer, Springer, vol. 25(3), pages 1107-1137, July.
  2. Prantl, Susanne & Spitz-Oener, Alexandra, 2014. "Interacting product and labor market regulation and the impact of immigration on native wages," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 201404, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Tito Boeri & Marta De Philippis & Eleonora Patacchini & Michele Pellizzari, 2014. "Immigration, Housing Discrimination and Employment," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 1414, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Boeri, Tito & De Philippis, Marta & Patacchini, Eleonora & Pellizzari, Michele, 2012. "Moving to Segregation: Evidence from 8 Italian Cities," IZA Discussion Papers, Institute for the Study of Labor (IZA) 6834, Institute for the Study of Labor (IZA).
  5. Mazzolari, Francesca & Numark, David, 2009. "The Effects of Immigration on the Scale and Composition of Demand: A study of California establishments," MPRA Paper, University Library of Munich, Germany 19217, University Library of Munich, Germany.
  6. Chletsos, Michael & Roupakias, Stelios, 2012. "The impact of immigration on the greek labor market," MPRA Paper, University Library of Munich, Germany 39872, University Library of Munich, Germany.
  7. Adriana Kugler & Mutlu Yuksel, 2008. "Effects of Low-Skilled Immigration on U.S. Natives: Evidence from Hurricane Mitch," NBER Working Papers, National Bureau of Economic Research, Inc 14293, National Bureau of Economic Research, Inc.
  8. repec:dgr:uvatin:2007079 is not listed on IDEAS
  9. Michael Clemens, 2013. "The Effect of Foreign Labor on Native Employment: A Job-Specific Approach and Application to North Carolina Farms- Working Paper 326," Working Papers, Center for Global Development 326, Center for Global Development.
  10. Murat Genc & Selim Cagatay & Onur A. Koska & Perihan  O. Saygin, 2013. "Immigration, Enterprises, and Employment in the European Union," EcoMod2013, EcoMod 5694, EcoMod.
  11. König, Jan & Skupnik, Christoph, 2012. "Labor market integration of migrants: Hidden costs and benefits in two-tier welfare states," Discussion Papers, Free University Berlin, School of Business & Economics 2012/5, Free University Berlin, School of Business & Economics.
  12. Chletsos, Michael & Roupakias, Stelios, 2012. "Immigration, Unemployment and Growth: Empirical Evidence from Greece," MPRA Paper, University Library of Munich, Germany 39861, University Library of Munich, Germany.

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