Working Paper: CEPR ID: DP14165
Authors: Ran Abramitzky; Philipp Ager; Leah Boustan; Elior David Cohen; Casper Worm Hansen
Abstract: In the 1920s, the United States substantially reduced immigrant entry by imposing country-specific quotas. We compare local labor markets with more or less exposure to the national quotas due to differences in initial immigrant settlement. A puzzle emerges: the earnings of existing US-born workers decline after the border closure, despite the loss of immigrant labor supply. We find that more skilled US-born workers – along with unrestricted immigrants from Mexico and Canada – move into affected urban areas, completely replacing European immigrants. By contrast, the loss of immigrant workers encouraged farmers to shift toward capital-intensive agriculture and discourage entry from unrestricted workers.
Keywords: immigration; restrictions; local labor markets; labor mobility
JEL Codes: N32; J61; J70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| immigration quotas (K37) | decline in foreign-born populations (J11) |
| decline in foreign-born populations (J11) | decline in U.S.-born workers' earnings (J39) |
| higher quota exposure (C58) | decline in U.S.-born workers' earnings (J39) |
| arrival of higher-skilled workers (J69) | increased competition among U.S.-born workers (J69) |
| increased competition among U.S.-born workers (J69) | lower average earnings (J31) |
| loss of immigrant workers (J61) | shift towards capital-intensive agricultural practices (Q15) |
| shift towards capital-intensive agricultural practices (Q15) | discourage U.S.-born workers from moving into rural areas (J68) |