During the Great Recession, low-skilled Mexican immigrants were much more likely than low-skilled U.S.-born workers to move away from the hardest-hit urban areas to find better earnings prospects — even if it meant moving cross country or returning to their homeland.
Therefore, contrary to popular anti-immigrant political rhetoric, low-skilled Mexican-born workers did not strain the resources of major U.S. cities during the economic downturn, nor did they crowd out the low-skilled natives for remaining jobs.
Those are among the key findings of a new study published in this month’s issue of American Economic Journal: Applied Economics.
The researchers were Dr. Brian Cadena, a University of Colorado Boulder assistant professor of economics, and Dr. Brian Kovak, a Carnegie Mellon University assistant professor of economics and public policy. Cadena has previously researched and written about migrant labor and economic slumps. Kovak has researched and written about international trade and labor markets.
The two men studied Mexican-born workers — authorized as well as undocumented — and native-born workers. The laborers in their study were all ages 18 to 64; none were enrolled in school. The researchers defined low-skilled workers as those who, at most, hold a high school diploma.
From 2006 through 2010, the hardest-hit U.S. states such as Nevada, Michigan and Florida each saw more than 10 percent of its jobs cut.
Cadena and Kovak found that, during this five-year period, low-skilled Mexican men’s yearly migration rate was 7 percent, compared with only 4 percent among their native-born counterparts. Because of migration, the duration of unemployment among Mexican workers was, on average, 33 percent shorter than that of native-born workers.
“The fact that low-skilled, Mexican immigrants respond so strongly to labor demand shocks is, to our knowledge, novel,” Cadena and Kovak wrote in their article titled, “Immigrants Equilibrate Local Labor Markets.”
“As U.S. policymakers seek ways to normalize the status of unauthorized workers,” the authors wrote, “they should consider the geographic flexibility [that] immigrants provide labor markets when they are free to change locations and employers in response to changing demand conditions.”
Going further, this mobility occurred not only among new arrivals from Mexico, but also among those who were living in this country prior to the Great Recession. Cadena and Kovak found that 78 percent of low-skilled Mexican workers had come to this country before 2006.
The researchers examined 95 U.S. cities in which the proportion of Mexican immigrants varied widely among the overall labor force that lacked a college education. The Mexican-born made up only 1 percent of that population in cities such as St. Louis and Miami, whereas they were more than 40 percent in some cities in Texas and California.
Cadena and Kovak found that, in metropolitan areas where Mexican immigrants made up substantial portions of the low-skilled workforce prior to the Great Recession, changes in employment probabilities for natives had less relationship to local demand conditions than were employment probability changes in cities with few Mexican workers. Low-skilled native workers in areas with substantial numbers of Mexican counterparts were consequently insulated from local demand shocks. Interestingly, natives ended up better off in the hardest-hit cities than in cities with milder downturns. Therefore, Mexican mobility wound up equalizing labor market outcomes across the country, even among the less mobile U.S.-born population.
For example, Orlando, Florida, which had few low-skilled Mexican-born workers prior to the Great Recession, sustained severe job cuts from 2006 to 2010. Orlando saw a decline in the U.S.-born employment to population ratio from 78.6 percent to 66 percent during that period.
However, if Orlando had had a larger, Mexican-born population like that in Phoenix, which suffered a similar employment shock, its native employment to population ratio would have slid to only 68.7 percent — 2.7 percentage points less severe. In the latter scenario, the Mexican migration would have absorbed some of the local shock, acting as an equalizer of sorts.
“This is an important finding,” the authors wrote. “By leaving the most depressed markets, Mexican workers absorbed a disproportionate share of the local employment decline. The presence of highly responsive immigrants increased the overall geographic elasticity of the less-skilled labor force.”
Age, education, family structure and home ownership had no correlation to Mexican workers’ decisions to leave economically depressed cities, according to the researchers. Instead, they concluded, the Mexican workers had a high level of labor force attachment and a greater willingness to move for more favorable market conditions.
Cadena and Kovak found that, for the time period in their study, Mexican-born populations appeared in many more of the nation’s labor markets than did members from any other foreign country.
Specifically, more than half of all U.S. metro areas had a population of working-age adults in which Mexican immigrants made up at least 1 percent. Meanwhile, only 10 percent of these cities had working-age adult populations of at least 1 percent immigrant from another foreign country, with the Philippines leading the way.
So because the Mexican-born workers could tap into robust personal networks among numerous ethnic enclaves, it was relatively easy and inexpensive, the academicians concluded, for people in this demographic to learn about distant job prospects and housing in various U.S. cities, along with the financial costs of moving.
Moreover, low-skilled Mexican-born workers, especially the undocumented, were far less likely than the U.S.-born to have access to unemployment insurance, leaving the former with little incentive to remain in hard-hit cities during the Great Recession and wait for job markets to bounce back.
Cadena and Kovak also found that low-skilled U.S.-born workers tended to move cross-city during the Great Recession — if at all — and longer-distance moves tended to skew toward their places of birth.