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Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession

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  • Brian C. Cadena
  • Brian K. Kovak

Abstract

This paper demonstrates that low-skilled Mexican-born immigrants' location choices respond strongly to changes in local labor demand, which helps equalize spatial differences in employment outcomes for low-skilled native workers. We leverage the substantial geographic variation in labor demand during the Great Recession to identify migration responses to local shocks and find that low-skilled Mexican-born immigrants respond much more strongly than low-skilled natives. Further, Mexican mobility reduced the incidence of local demand shocks on natives, such that those living in metro areas with a substantial Mexican-born population experienced a roughly 50 percent weaker relationship between local shocks and local employment probabilities. (JEL E32, J15, J23, J24, J61, R23)

Suggested Citation

  • Brian C. Cadena & Brian K. Kovak, 2016. "Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 257-290, January.
    • Handle: RePEc:aea:aejapp:v:8:y:2016:i:1:p:257-90
    Note: DOI: 10.1257/app.20140095
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    1. Petri Böckerman & Mika Haapanen, 2013. "The effect of polytechnic reform on migration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 593-617, April.
    2. Kerwin Kofi Charles & Erik Hurst & Matthew J. Notowidigdo, 2013. "Housing Booms, Manufacturing Decline, and Labor Market Outcomes," NBER Working Papers 18949, National Bureau of Economic Research, Inc.
    3. Konstantinos Tatsiramos, 2009. "Geographic labour mobility and unemployment insurance in Europe," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(2), pages 267-283, April.
    4. Antonio Spilimbergo & Gordon H. Hanson, 1999. "Illegal Immigration, Border Enforcement, and Relative Wages: Evidence from Apprehensions at the U.S.-Mexico Border," American Economic Review, American Economic Association, vol. 89(5), pages 1337-1357, December.
    5. Rebecca Diamond, 2016. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000," American Economic Review, American Economic Association, vol. 106(3), pages 479-524, March.
    6. Pia M. Orrenius & Madeline Zavodny, 2010. "Mexican Immigrant Employment Outcomes over the Business Cycle," American Economic Review, American Economic Association, vol. 100(2), pages 316-320, May.
    7. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    8. David A. Jaeger, 2007. "Green Cards and the Location Choices of Immigrants in the United States, 1971–2000," Research in Labor Economics, in: Barry R. Chiswick (ed.), Immigration, volume 27, pages 131-183, Emerald Publishing Ltd.
    9. Jesse Rothstein, 2012. "The Labor Market Four Years into the Crisis: Assessing Structural Explanations," ILR Review, Cornell University, ILR School, vol. 65(3), pages 467-500, July.
    10. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 157-206.
    11. Bartel, Ann P, 1989. "Where Do the New U.S. Immigrants Live?," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 371-391, October.
    12. Brian C. Cadena, 2013. "Native Competition and Low-Skilled Immigrant Inflows," Journal of Human Resources, University of Wisconsin Press, vol. 48(4), pages 910-944.
    13. David Mare & Melanie Morten & Steven Stillman, 2007. "Settlement patterns and the geographic mobility of recent migrants to New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 41(2), pages 163-195.
    14. repec:oup:qjecon:v:129:y:2013:i:1:p:1-59 is not listed on IDEAS
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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