The Impact of Mexican Immigration on U.S. Natives: Evidence from Migrant Flows Driven by Rainfall Shocks

Dean Yang, University of Michigan
Todd Pugatch, University of Michigan

We estimate the effect of Mexican immigration on native labor market outcomes in the United States by using a plausibly exogenous instrument, based on regional rainfall variation in Mexico and historical migration channels between Mexico and the United States, that isolates “push” factors in source regions to identify exogenous changes in the Mexican presence in the U.S. We find that rainfall shocks at the Mexican state level, operating through established migration channels, are strongly correlated with the Mexican labor force share in a panel of U.S. states. Using our instrument to estimate the effect of the Mexican labor force share on native labor market outcomes, we find that the margin of labor market adjustment in response to changes in the Mexican presence in the U.S. is employment, not wages. We also find that these employment effects are concentrated in the middle of the skill distribution.