This paper exploits the non-linearity in the level of minimum wages across U.S.
States created by the coexistence of federal and state regulations to identify the impact
of immigration on the labor market outcomes of native workers. We find that the
effects of immigration on the wages and employment of native workers within a given
state-skill cell are more negative in U.S. States with low minimum wages (i.e., where
the federal minimum wage is binding). We also find that high minimum wages tend to
reduce the displacement effect of native workers (i.e., out-of-state migration) caused by
immigration. The results are robust to instrumenting immigration and state effective
minimum wages, and to implementing a difference-in-differences approach comparing
U.S. States where effective minimum wages are fully determined by the federal minimum
wage over the whole period considered (2000-2013) to U.S. States where this is
never the case. Taken together, our results underline the important role played by minimum
wages in mitigating the adverse labor market effects of low-skilled immigration. |
