Discussion Paper Details

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Title: The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure

Author(s): Ran Abramitzky, Philipp Ager, Leah Boustan, Elior David Cohen and Casper Worm Hansen

Publication Date: December 2019

Keyword(s): Immigration Restrictions, labor mobility and Local Labor Markets

Programme Area(s): Economic History

Abstract: In the 1920s, the United States substantially reduced immigrant entry by imposing country-specific quotas. We compare local labor markets with more or less exposure to the national quotas due to differences in initial immigrant settlement. A puzzle emerges: the earnings of existing US-born workers decline after the border closure, despite the loss of immigrant labor supply. We find that more skilled US-born workers - along with unrestricted immigrants from Mexico and Canada - move into affected urban areas, completely replacing European immigrants. By contrast, the loss of immigrant workers encouraged farmers to shift toward capital-intensive agriculture and discourage entry from unrestricted workers.

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Bibliographic Reference

Abramitzky, R, Ager, P, Boustan, L, Cohen, E and Hansen, C. 2019. 'The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure'. London, Centre for Economic Policy Research.