Minimum Wages and the Labor Market Effects of Immigration

67 Pages Posted: 24 Jul 2017

See all articles by Anthony Edo

Anthony Edo

Paris School of Economics (PSE)

Hillel Rapoport

Paris School of Economics (PSE)

Multiple version iconThere are 2 versions of this paper

Date Written: July 04, 2017

Abstract

We exploit the non-linearity in the level of minimum wages across US States created by the coexistence of federal and state regulations to investigate how minimum wages affect the labor market impact of immigration. We find that the effects of immigration on labor market outcomes of native workers within a given state-skill cell are more negative in U.S. States with low minimum wages (i.e., where the federal minimum wage is binding). The results are robust to instrumenting immigration as well as state minimum wages, and to implementing a difference-in-differences strategy comparing U.S. States where effective minimum wages are fully determined by federal standards over the whole period considered (2000-2013) to U.S. States where this is never the case. Our results therefore underline the important role played by minimum wages in mitigating any adverse labor market effects of immigration.

Keywords: immigration, minimum wage, labor market

JEL Classification: F220, J610

Suggested Citation

Edo, Anthony and Rapoport, Hillel, Minimum Wages and the Labor Market Effects of Immigration (July 04, 2017). CESifo Working Paper Series No. 6547. Available at SSRN: https://ssrn.com/abstract=3005898

Anthony Edo

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Hillel Rapoport (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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