Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession
This paper demonstrates that low-skilled Mexican-born immigrants' location choices in the U.S. respond strongly to changes in local labor demand, and that this geographic elasticity helps equalize spatial differences in labor market outcomes for low-skilled native workers, who are much less responsive. We leverage the substantial geographic variation in employment losses that occurred during Great Recession, and our results confirm the standard finding that high-skilled populations are quite geographically responsive to employment opportunities while low-skilled populations are much less so. However, low-skilled immigrants, especially those from Mexico, respond even more strongly than high-skilled native-born workers. These results are robust to a wide variety of controls, a pre-recession falsification test, and two instrumental variables strategies. Moreover, we show that natives living in metro areas with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in places with few Mexicans. The reallocation of the Mexican-born workforce reduced the incidence of local demand shocks on low-skilled natives' employment outcomes by roughly 40 percent.
Non-Technical Summaries
- Migration by Mexican-born immigrants dramatically reduces the geographic variability of labor market outcomes among the entire low-...
Published Versions
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 257-90, January. citation courtesy of 
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
