The Effect of Mexican Immigration on the Wages and Employment of U.S. Natives: Evidence from the Timing of Mexican Fertility Shocks

Aaron J. Chalfin, University of California, Berkeley
Morris Levy, University of California, Berkeley

Recent literature has utilized instrumental variables techniques in order to estimate a causal effect of immigration on labor market outcomes among U.S. natives. We propose a novel instrument to predict the timing and location of U.S.-bound Mexican migrants. Leveraging historical data on the size of lagged state-specific Mexican birth cohorts and a time-invariant measure of Mexican state-U.S. destination migration relations, we decompose the seminal "network" instrument into a portion that is explained by past fertility and a portion that is not. Using this framework, we estimate the effect of Mexican immigration on the wages and employment of U.S. natives in twelve age-skill groups. We report evidence that Mexican immigration causes no change in either the wages, the unemployment rate or the employment-to-population ratio of unskilled U.S. natives in any age group. Estimates are precise, allowing us to rule out anything other than small effects.