Effects of Low-Skilled Immigration on U.S. Natives: Evidence from Hurricane Mitch

Abstract

Starting in the 1980s, the composition of immigrants to the U.S. shifted towards less-skilled workers. Around this time, real wages and employment of younger and less-educated U.S. workers fell. Some believe that recent shifts in immigration may be partly responsible for the bad fortunes of unskilled workers in the U.S. On the other hand, low-skilled immigrants may complement relatively skilled natives. OLS estimates using Census data show that wages and employment are positively related to immigrant Latin American shares by state and year. However, these estimates are likely to be biased if immigrants move towards regions where there is high demand for their skills. An IV strategy, which exploits a large influx of Central American immigrants towards U.S. Southern ports of entry after Hurricane Mitch and who were quickly legalized, generates positive wage effects for College and High School-educated native men and women and earlier Latin American immigrant men but not for less-educated workers. These results are robust to controls for outmigration by earlier immigrants in response to recent Latin American immigration, suggesting that low-skilled immigrants complement high-skilled natives. We also find some evidence of negative employment effects on less educated natives when we control for potential out-migration, suggesting that recent immigrants may also substitute for less-skilled natives.

The Labor Market Impact of Immigration: A Quasi-Experiment Exploiting Immigrant Location Rules in Germany

“…ECO2008-06395-experiment in which the immigrant inflows into a particular region are not driven by local labor market conditions. The only two examples in the literature that make use of such an experiment to identify the labor market impact of immigration are the Mariel boat-lift analyzed by Card (1990) and the immigration flows as a result of Hurricane Mitch analyzed by Kugler and Yuksel (2008). 3 The main conceptual difference between these studies and the present analysis is that they examine a large exogenous inflow into a single labor market (the city of Miami; Card) or a selected number of local labor markets (southern U.S. states; Kugler and Yuksel), whereas this analysis studies exogenous but homogeneous inflows into all regions in Germany.…”

Cohort size and youth earnings: Evidence from a quasi-experiment

“…In an attempt to explain the small impact of immigration on the wages of local workers, some studies explored the possibility that native workers react to an increase in immigration by moving to another labour market (Borjas et al, 1997;Borjas, 2003;Kugler and Yuksel, 2008).…”

Can International Transfers Be Problematic? Honduran Remittances and Labor Supply Decisions

“…These "environmental refugees" received Temporary Protected Status (TPS) for U.S. immigration. Hurricane Mitch caused damage estimated at 38% of the Honduran GDP, or nearly $1 billion (Kugler and Yuksel 2008;Yang 2008). There were over 20,000 deaths, 1.5 million homeless, and extensive road damage (Kugler and Yuksel 2008).…”

“…Yang and Choi (2007) use rainfall shocks as instruments for exogenous changes in income in a study of whether remittances serve an insurance function. Kugler and Yuksel (2008) use post-Mitch immigration to the United States as an instrument for state Latin American-born population shares.…”