Is the Minimum Wage a Pull Factor for Immigrants?

This paper studies the effects of the minimum wage on immigration. I develop an analytical framework in which immigration is a function of the expected wage, which is defined as the product of immigrants’ wage and employment probability in the region of destination. In the empirical analysis I exploit the state variation in expected wages stemming from the changes in the US federal minimum wage that took place in 1996-1997 and 2007-2009. I address the issue of endogeneity between immigration and the expected wage by means of an instrumental variable approach. My results provide consistent evidence that the policy induced a sizeable flow of low-skilled immigrants to the United States in both periods. This is attributable to the minimum wage increasing immigrants’ attainable wages without harming their perspective employment outcomes. I corroborate these findings by showing that the policy did not have any impact on the flow of high-skilled immigrants. The positive effect of the minimum wage on low-skilled migration is also found when I consider the case of interstate mobility of immigrants. Using survey data from Mexico, I finally show that the changes in the federal minimum wage attracted only legal immigrants, while the flows of undocumented immigrants were not affected.