May 26, 2015

The minimum wage induces immigration

The minimum wage induces immigration

Empirical research shows that:

  • a minimum wage affects the location choices of immigrants
  • a minimum wage increases the supply of immigrants, tightening job competition for natives
  • minimum wages increase the expected earnings of low-educated immigrants

In a new article published today on IZA World of Labor, economist and Director of Research at the Institute for the Study of Labor, Corrado Giulietti writes that countries with a minimum wage attract more low-skilled immigrants.

By increasing the minimum wage, governments in immigrant destination countries such as the UK, USA, and Germany, are raising the earnings that low-skilled migrants could expect to attain if they were to migrate to their country. Research shows that this acts as an incentive to international migrants to seek employment within these nations over others which offer no minimum wage.

Studies for the US indicate not only that a higher minimum wage induces international immigration, but that it could also lead to the redistribution of immigrants within the country if the minimum wage varies across regions.

Do minimum wages induce immigration? by Corrado Giulietti published on Tuesday May 26, 2015

IZA World of Labor is a free, online resource created by the Institute for the Study of Labor (IZA) in collaboration with Bloomsbury Publishing Plc. Articles focus on global labor economics issues, drawing on empirical, evidence-based research in order to offer pertinent comment and evaluation, and best-practice policy advice.

Corrado Giulietti is the Director of Research at the Institute for the Study of Labor (IZA) in Germany. He has a PHD in Economics from Southampton University, and his main research interests are labor economics, economics of migration, and development economics. Corrado Giulietti joined IZA as a Research Associate in March 2010.