The importance of mobile Mexican labor

A novel empirical test reveals that natives living in cities with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in cities with few Mexicans. The reallocation of the Mexican-born workforce among these cities reduced the incidence of local demand shocks on low-skilled natives’ employment outcomes by more than 40 percent.

That is from Brian C. Cadena and Brian K. Kovak.  Here is a related post from Modeled Behavior.  You can think of the mobile Mexican labor as providing risk insurance for low-skilled labor markets.  It is a further interesting question what this result implies for the aggregate impact of immigration on low-skilled wages, but I don’t see that there is a ready answer a priori, at least not based on the results of this paper.  The local geographic swings could be significant, while the aggregate impact could be either high or low.


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