The Geographical Mobility of the Less-Skilled

by Reihan Salam

Brian C. Cadena and Brian Kovak observe that foreign-born low-skilled workers in the U.S. are more geographically mobile than native-born low-skilled workers:

Recessions lead to particularly poor labour-market outcomes for low-skilled workers (Hoynes 2002; Hoynes, Miller, and Schaller 2012). Moreover, there was a great deal of variance in the depth of the Great Recession from city to city. Some cities such as Detroit, Phoenix, and Sacramento saw job losses as high as 20-25% for low-skilled workers, while others such as Austin and Omaha experienced small rates of employment growth. Without less skilled workers willing to move from the hardest hit markets to cities with better employment prospects, the economy faced the possibility of very unequal changes in employment rates across cities.

There is a group of low-skilled workers, though, who are quite sensitive to labour-market conditions in choosing where to locate: immigrants. George Borjas (2001) showed that newly arriving immigrants tend to select states within the US that offer better wage prospects. Thus, immigrant inflows help “grease the wheels of the labor market” by reducing the variation in wages across locations. In our new paper (Cadena and Kovak 2013), we show that immigrants continued to serve this important function during the Great Recession. We find a substantial reallocation of the low-skilled immigrant population from 2006 to 2010, especially among those from Mexico, with the population shifting systematically toward cities with milder downturns. Roughly 20% of this shift occurred because new arrivals chose relatively stronger labour markets, and the remaining 80% occurred through immigrants who were already in the US migrating internally or leaving the country entirely. [Emphasis added]

Advocates of low-skilled immigration have been drawing attention to Cadena and Kovak’s findings. It is worth noting, however, that Cadena and Kovak’s findings might also constitute a case for relocation vouchers for all low-skilled workers lawfully residing in the U.S., including native-born workers. Moreover, Mexican immigration to the U.S. has been declining as Mexico’s population has aged and as Mexico has grown more prosperous, so if Mexican immigrants are particularly mobile, the fact that less-mobile groups constitute a growing share of the low-skilled influx may well be cause for concern.

For college-educated workers, we see considerable mobility in the expected direction for all demographic groups. In contrast, we find that among those with no more than a high school degree, only foreign-born populations move in substantial numbers to stronger labour markets. Further, responsive mobility among immigrants appears to be driven almost entirely by the Mexican-born. For this group, a percentage point larger (smaller) decline in employment leads to a 0.75 percentage point smaller (larger) growth rate in the Mexican-born population of a city. Figure 1 shows the stark contrast in this relationship for less skilled native-born and Mexican-born men. Each circle represents a city; the x-axis measures the local change in employment from 2006 to 2010, and the y-axis measures the population growth rate over the same period. The figure clearly shows that the native population responds very little to changes in employment, while the Mexican-born respond markedly.

One obvious reason why native-born low-skilled workers might be less mobile is that they can rely on existing social networks and social programs to help them meet their basic economic needs. Cadena and Kovak conclude on the following note:

The welfare gains from the efficient spatial allocation of labor are an important but understudied benefit that should be considered in immigration policymaking. Although our paper does not address the question of whether the U.S. should admit more or fewer less-skilled immigrants, our results imply that it is valuable to maintain immigrants’ geographic flexibility whatever the overall level of immigration. There is no guarantee, of course, that Mexican immigrants will continue to be as responsive under alternative policy regimes. For example, Mexican immigrants are currently much less likely to receive unemployment insurance benefits compared to similarly skilled natives, which likely increases the urgency of finding new employment. Nevertheless, to the extent that immigrants continue to show a greater willingness to move in response to demand changes, our findings demonstrate the benefits of allowing them to do so. The recently passed Senate immigration reform bill (S.744) would create a new temporary guest-worker programme for less skilled workers (W visa) that would not restrict workers to a particular employer or location. Workers would be free to move to markets offering better opportunities, and our analysis implies that this feature would be a welcome component of an immigration policy overhaul. [Emphasis added]

During the first half of the twentieth century, when public social assistance programs were threadbare, there was a massive migration of African Americans, many of whom were low-skilled, to cities in the northern and western United States, where demand for low-skilled labor was relatively high. There is no reason to believe that the culture of the low-skilled native-born population is an insuperable obstacle to geographical mobility. So far from offering a case for a low-skilled influx, Cadena and Kovak’s findings seem to reinforce the argument that we ought to temper the mobility-dampening effects of safety net policies by embracing lump-sum unemployment payments, relocation vouchers, and other mobility-enhancing policies.