A Comparative Analysis of the Labor Market Impact of International Migration: Canada, Mexico, and the United States

The North American experience with international migration stands in unique contrast to much of the rest of the world. This paper uses microdata drawn from the national censuses of Canada, the United States, and Mexico, and applies the same methodological framework to these data to examine the impact of international migration on the labor market. We find a numerically comparable and statistically significant inverse relation between immigrant-induced shifts in labor supply and wages in each of the three countries: A 10 percent labor supply shift is associated with about a 3 to 4 percent opposite-signed change in wages. Despite the similarity in the wage elasticity, the impact of international migration on the wage structure differs significantly across countries. In Canada, international migration substantially narrowed wage inequality because immigrants in Canada tend to be disproportionately high-skill. In the United States, international migration substantially increased wage inequality because immigrants in the United States tend to be disproportionately low-skill. In Mexico, however, emigration rates are highest in the middle of the skill distribution and lowest at the extremes. As a result, international migration greatly increased relative wages in the middle of the Mexican skill distribution and lowered relative wages at the extremes. Paradoxically, the large-scale migration of workers from Mexico may have reduced slightly the relative wage of the low-skill workers remaining in that country.