Using Minimum Wage to Identify the Labor Market Effects of Immigration
(takes place at 16:30 p.m. in SLS 5)

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 02.12.2016, 12:15 - 13:30


Presentation by 

Hillel Rapoport (Paris School of Economics)


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.

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