1 Orrenius and Zavodny (2008), Cadena (2012), and Giulietti (forthcoming) are the only studies to date that discuss immigrant mobility as a consequence of minimum wage increases.
2 Many immigrants’ reluctance to identify themselves, in addition to legislation that restricts access to benefits, casts doubt on the relevance of using welfare benefits (e.g. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996). Attempts to make residency a requirement for benefit eligibility adds to this concern (e.g. Saenz v. Roe 1999; Maldonado v. Houston 1997).
3 Orrenius, Zavodny, and Lukens (2008) find that the percentage of immigrants in agricultural occupations has been steadily declining over time, while sectors legally bound by minimum wage law, like service and sales, have been growing.
4 The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 restricted immigrant access to many welfare benefit services.
5 The overall increase in participation is the sum of new in-state recipients and new migrant recipients, yet as some states experience in-migration, others will experience out-migration reducing their costs.
6 For a 10% increase in the minimum wage, immigrant hourly earnings rise by 1.62% for men and 1.58% for women when controls for the business cycle are included.
7 Using log hourly wages instead hourly wages produces semi-elasticities, that when converted into cents, are similar to the estimates from the original specification.
8 In a separate analysis, I run an extensive set of specfications estimating the effect of minimum wage increases on the probability of being employed. The resulting estimates show no evidence of disemployment effects. These tables can be provided upon request.
9 As a falsification test, I also run specifications looking at the effect of minimum wage increases on the hourly wages of agricultural workers. Coefficients are consistently negative, small, and no effect is significant. Probit estimates of employment in agriculture on minimum wage changes provides some evidence that increases in the minimum may push low-skilled workers into the agricultural sector–but results are mixed. These results are reported in Appendices Appendix 1 and Appendix 2.
10 Restricting the sample years to 2000-2007 produces very comparable samples. This comparison is reported in Appendix 3.
11 The 2007 mid-year federal minimum wage increase and 2007 state increases in Michigan, Delaware, Maine, New Jersey, and Arkansas, are not included. The ACS sample covers up to 2007, but my specification relies on minimum wage changes from the previous year, so the last minimum wages that are accounted for are in 2006. In a few cases, state minimum wages changed in July or after. The ACS finishes surveying in June so the migration associated with these increases does not contaminate the present year’s count.
12 There are only three state-year observations which fall under this condition. Results are robust to using the higher of the rates.
13 NAICS codes SA07N and SA270. Measures contain both full and part-time workers.
14 Because the effect of minimum wage increases on the number of immigrants is likely proportional to a state’s size, I account for the differential treatment of minimum wages by taking the log of the state counts. This allows me to interpret the coefficient as a percentage of a state’s baseline immigrant population. Appendix 4 reports the results from an alternative log-log specification. These results are similar to those from the semi-log specification.
15 Linear state trends will deal with differential trends in each state’s native population over time, yet I also explicitly control for the total state population in an alternate specification. Results are only slightly affected by its inclusion–the coefficients on the minimum wage are reduced between one to four tenths of a percent.
16 Using a sample which adds immigrants who are not in the labor force, I still find that increases in the minimum wage induce migration. Though as expected, magnitudes are smaller, and the coefficient on the 2 to 4 year specification is significant at the 10% level.
17 Using a sample of low-skilled immigrants from the 1994-2007 CPS, Cadena (2012) finds immigrants move away from states that increase their minimum wage. He credits the decrease in immigration to disemployment effects induced by the change. Corroborating this study, he also finds that recent immigrants are the most sensitive to changes in the minimum wage. Despite using a slightly different sample, if I group all immigrants with less than 10 years in the U.S. and run a similar log-log specification without lags, I get negative elasticities of similar magnitude (-.5,-.4) that are marginally significant at the 10% level.
18 One may be concerned about the inclusion of Alaska and Hawaii’s minimum wage changes due to their geographic remoteness. Since the effect is identified off the changers, removing these two states attenuates the estimates. For immigrants with 2 to 4 years in the U.S. we still see significance at the 5 percent (albeit weaker) but the coefficient drops to.192.
19 If migration decisions are formulated based on expectations and not actual earnings or employment realities, high unemployment rates do not necessarily deter migration (Harris and Todaro 1970). Furthermore, Table 3 indicates that there is not a significant difference in the unemployment rate of states that increased their minimum and those that did not.
20 Estimates using only the states who experienced a minimum wage change drastically reduces the sample to a mere 134 observations and removes useful variation, but the key results from Table 4 still hold. For immigrants with 2 to 4 years in the U.S., a dollar increase in the minimum wage corresponds to a 29% increase in the flow of immigrants also significant at the 5% level. Removing Alaska and Hawaii has effects similar to those discussed earlier, but the coefficient is now significant at the 10% level.
21 They suggest that out migration masks the true unemployment effect. While one possible mechanism, this hypothesis is not directly tested.
22 Specifications with an additional lead in immigration were also tested, but had no economically or statistically meaningful differences compared to the model with a single lead.
23 Using state congressional majorities as an instrument for minimum wage increases cannot account for national level increases in the minimum wage though. Furthermore, some state changes are pegged to inflation.
24 If some states are known to have sanctuary cities that follow certain practices that encourage immigration, these states could be driving the migration results. Estimating equation (1) on a set of “ non-sanctuary states” (states without cities that contain the high concentrations of immigrants), the results mirror the results in Table 4. According to this analysis, historically important destination states cannot be solely responsible for the migration effects. These results are reported in Appendix 6.
25 For example, The Fair Minimum Wage Act of 2007 was implemented in July 2008 and July 2009.
26 To minimize the potential effects of churning, I take a sample of immigrants from countries that consistently sent large shares of refugees to the U.S. between 2000 and 2007. Not all immigrants from these countries were refugees, but they are, on average, less likely to return migrate. Estimating equation (1) by year of arrival for just the sample of “refugees” produces results very similar to those in Table 4.