The Credibility Revolution

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

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

Causal Question / Estimand

What is the effect of immigrant inflows on local, occupation-specific labor market outcomes — the wages and employment rates of natives and earlier immigrants across cities? The estimand is the elasticity of occupation-specific wages/employment with respect to relative labor supply, plus the response of native mobility.

Identification Strategy

Immigrant location is endogenous — immigrants sort toward booming cities, biasing OLS. Card instruments the local inflow with the supply-push / ethnic-enclave Shift-Share-Instrument: newly arriving immigrants settle in enclaves established by earlier arrivals, so a city’s predicted inflow is built by interacting the 1980 settlement pattern of each origin-country group across cities (the shares) with national inflows by origin country over the 1980s (the shocks). Identification comes from share exogeneity — historical enclave locations are taken as-if independent of current local demand shocks. Occupations are ranked by skill so that inflows raise relative supply differentially across occupation groups within a city.

Key Assumptions

  • Shift-Share-Instrument — the enclave-based predicted inflow supplies exogenous variation in local immigrant supply.
  • Exclusion-Restriction — historical origin-country settlement shares affect current local wages/employment only through the immigrant supply they induce, not through persistent city-level demand.
  • Relevance — origin-country enclaves are strong predictors of where new immigrants go.

Threats to Validity

Enclave locations may be correlated with durable local demand conditions (gateway cities grow for reasons that also attract immigrants); offsetting native out-migration could mask local effects — Card explicitly tests this and finds native and earlier-immigrant inter-city mobility largely insensitive to inflows.

Setting / Data

1990 U.S. Census; 175 major cities; labor-market outcomes measured by occupation groups (ranked by skill), with immigrant supply constructed from country-of-origin composition.

Key Claims

  • Native and earlier-immigrant intercity mobility rates are insensitive to immigrant inflows — inflows are not simply displaced by native outflows.
  • Occupation-specific wages and employment rates are systematically lower in cities with higher relative supply in that occupation.
  • Immigration over the 1980s reduced wages and employment of low-skilled natives in gateway cities (Miami, Los Angeles) by roughly 1–3 percentage points.

Connections

Citation

Card, D. (2001). Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration. Journal of Labor Economics, 19(1), 22–64.

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