Raising the minimum wage has been advanced as complementary policy to comprehensive immigration reform to improve low-skilled immigrants’ economic wellbeing. While adverse labor demand effects could undermine this goal, existing studies do not detect evidence of negative employment effects. We re-investigate this question using data from the 1994 to 2016 Current Population Survey and find that minimum wage increases reduced employment of less-educated Hispanic immigrants, with estimated elasticities of approximately -0.1. However, we also find that the earnings and employment effects of minimum wages on have diminished over the last decade. This finding is consistent with more restrictive state immigration policies and the Great Recession inducing (i) outmigration of low-skilled immigrants, and (ii) shifts of low-skilled immigrants into the informal sector where minimum wage effects are less likely to be bind. Finally, our results show that raising the minimum wage is an ineffective policy tool for reducing immigrant poverty.
Presented in Session 8. Economy, Labor Force, Education, & Inequality