Minimum Wage and Mexican and Central American Influx

Abstract

In the 1990s, thirteen American states raised their minimum wage above the federal level, while the other thirty-five contiguous states retained the lower federal standard. An increased minimum wage should reduce employment among the lowest-paid workers, and therefore reduce their influx. Using individual-level data from the 5% Public Use Sample of the 2000 U.S. Census of Population, this research examines the effects of forty-eight contiguous U.S. states' minimum wage policies on the settlement choices of recently arrived Mexican and Central American immigrants. As predicted, the authors found that these Mexican and Central American immigrants were less likely to settle in states that implemented above-federal minimum wages during the 1990s as opposed to settling in states that retained the federal-level minimum wage during that decade. Conversely, states' minimum wage policies had no effect upon the influx of recent immigrants from other countries. These results suggest that states can influence the influx of low-wage immigrants by adjusting their minimum wage.