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Abstract:This paper demonstrates that immigration decisions depend on local labor market conditions by documenting the change in low-skilled immigrant inflows in response to supply increases among the US-born. Using pre-reform welfare participation rates as an instrument for changes in native labor supply, I find that immigrants competing with native entrants systematically prefer cities with smaller supply shocks. The extent of the response is substantial: for each native woman working due to reform, 0.5 fewer female immigrants enter the local labor force. These results provide direct evidence that international migration flows tend to equilibrate returns across US local labor markets.
