DP14165 The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure
|Author(s):||Ran Abramitzky, Philipp Ager, Leah Boustan, Elior David Cohen, Casper Worm Hansen|
|Publication Date:||December 2019|
|Keyword(s):||Immigration Restrictions, labor mobility, Local Labor Markets|
|JEL(s):||J61, J70, N32|
|Programme Areas:||Economic History|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14165|
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.