National Immigration Quotas and Local Economic Growth

Abstract

The introduction of immigration quotas in the 1920s fundamentally changed US migration policy. We exploit this policy change to estimate the effect of immigration on local economic growth and industry development. Our analysis demonstrates that areas with larger pre-existing communities of immigrants of nationalities restricted by the quota system experienced larger population declines in the subsequent decades as the quotas reduced the supply of immigrants to these areas. We then show that the quotas led to negative agglomeration effects in the manufacturing sector, while productivity losses are only visible in urban counties, cities, and immigrant dependent industries. We also …find that the quota system pushed native workers into low-wage occupations.

Keywords: Immigration restrictions, National quota acts, Economic growth

JEL Classification: J11; J61; N12; O11; O47