Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration

Abstract

More than one million new immigrants currently enter the United States every year. In this paper I use 1990 Census data to study the effects of immigrant inflows on the local labor market opportunities of natives and older immigrants. I depart from the previous literature by classifying new immigrants, older immigrants, and natives into distinct skill groups, and focusing on skill- group-specific outcomes within cities. Recent immigrants tend to be disproportionately concentrated in the lowest skill groups, although the makeup of immigrant inflows to individual cities varies with the source countries of the immigrants. An important first question is whether the arrival of new immigrants generates offsetting mobility by natives or earlier immigrants. Using micro-level mobility flows from 1985 to 1990 I find that natives' locational decisions are virtually unaffected by inflows of new immigrants. Earlier immigrants are less likely to move to cities that are drawing new immigrants in their specific skill groups, but on net each new immigrant expands the local population of his or her particular skill group by 1. I find that immigration-induced rises in the relative fraction of the population in specific skill groups generate small reductions in the employment rates of natives and earlier immigrants in the same skill group. The estimated effects on relative wages are smaller still, and not as robust to alternative specifications. Consistent with earlier studies, I conclude that even large inflows of relatively unskilled new immigrants generate surprisingly small effects on the relative labor market performance of less-skilled natives or earlier immigrants.