“How does low skilled immigration affect the labour market of natives?” began Joan Monràs from Columbia University at the seminar. “You will be surprised that despite vast studies on wage benefits of migration, there is no consensus amongst researchers!”

He made use of the Mexican Peso Crisis of the mid-1990s that raised net Mexican migration to the US to identify the causal effect of immigration on local labor markets across time, space, skill and age. Time, because more people are expected to settle in a given year; space, since most Mexicans settle in particular areas; Skill, as most Mexicans are low skill workers and age, because most Mexicans were young approximately 20 years.

The estimation exercise involved three key assumptions. Firstly that natives and immigrants were perfect substitutes implying that the inflow of Mexicans directly affected native wages. Secondly, that all low-skilled workers (high school graduates and high school drop-outs), were perfect substitutes and lastly that other sources of undocumented immigrants were accurate. In this paper “time horizons are crucial!” said Joan amusingly.

After calibrating the model to US state-level data, he found that local labour shock were observed within 5 years and that immigration shock affects interstate reallocation.