Native Competition and Low-Skilled Immigrant Inflows

This paper demonstrates that immigration decisions respond to differences in local labor market conditions by documenting the change in low-skilled immigrant inflows in response to supply increases among the US-born. Using pre-reform welfare participation rates as an instrument for changes in native labor supply, I find that immigrants prefer cities with fewer welfare leavers over cities with larger reform-induced supply shifts. The extent of the selection is substantial: for each additional native woman working in a city as a result of welfare reform, 0.8 fewer female immigrants choose to live and work there. These results provide direct evidence that international migration flows tend to equilibrate returns across US local labor markets.