Working Paper: NBER ID: w26536
Authors: Ran Abramitzky; Philipp Ager; Leah Platt Boustan; Elior Cohen; Casper W. 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 declined 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 – moved into affected urban areas, completely replacing European immigrants. By contrast, the loss of immigrant workers encouraged farmers to shift toward capital-intensive agriculture and discouraged entry from unrestricted workers.
Keywords: Immigration; Economic Impact; Labor Markets; Quotas
JEL Codes: J6; J61; N21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher quota exposure (C58) | Decline in foreign-born share (J11) |
| Decline in foreign-born share (J11) | No increase in occupation-based income for us-born workers (J69) |
| Higher quota exposure (C58) | No change or decline in income for us-born workers (J69) |
| Higher quota exposure (C58) | Significant occupational downgrading in rural and mining areas (J62) |
| Higher quota exposure (C58) | Urban areas attract new workers from Mexico and Canada (R23) |
| Decline in immigrant labor (J69) | Rural areas shift to capital-intensive agricultural practices (Q15) |
| Decline in immigrant labor (J69) | Mining sector contracts (L72) |