Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis

60 Pages Posted: 30 Mar 2015

See all articles by Joan Monras

Joan Monras

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Barcelona Graduate School of Economics (Barcelona GSE)

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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.

Keywords: international and internal migration, local shocks, local labor demand elasticity

JEL Classification: F22, J20, J30

Suggested Citation

Monras, Joan, Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis. IZA Discussion Paper No. 8924, Available at SSRN: https://ssrn.com/abstract=2586427 or http://dx.doi.org/10.2139/ssrn.2586427

Joan Monras (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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