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Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis

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  • Monras, Joan

    (Princeton University)

Abstract

How does the US labor market absorb low-skilled immigration? I address this question using the 1995 Mexican Peso Crisis, an exogenous push factor that raised Mexican migration to the US. In the short run, high-immigration states see their low-skilled labor force increase and native low-skilled wages decrease, with an implied local labor demand elasticity of -.7. Internal relocation dissipates this shock spatially. In the long run, the only lasting consequences are for low-skilled natives who entered the labor force in high-immigration years. A simple quantitative many-region model allows me to obtain the counterfactual local wage evolution absent the immigration shock.

Suggested Citation

  • Monras, Joan, 2015. "Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis," IZA Discussion Papers 8924, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8924
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    More about this item

    Keywords

    international and internal migration; local shocks; local labor demand elasticity;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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