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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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    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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