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American Economic Journal: Applied Economics: Vol. 5 No. 4 (October 2013)

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Immigrants' Labor Supply and Exchange Rate Volatility

Article Citation

Nekoei, Arash. 2013. "Immigrants' Labor Supply and Exchange Rate Volatility." American Economic Journal: Applied Economics, 5(4): 144-64.

DOI: 10.1257/app.5.4.144

Abstract

Are an immigrant's decisions affected in real time by her home country's economy? I examine this question by exploiting exchange rate variations as exogenous price shocks to immigrants' budget constraints. I find that in response to a 10 percent dollar appreciation, an immigrant decreases her earnings by 0.92 percent, mainly by reducing hours worked. The exchange rate effect is greater for recent immigrants, married immigrants with absent spouses, Mexicans close to the border, and immigrants from countries with higher remittance flows. A neoclassical interpretation of these findings suggests that the income effect exceeds the cross-substitution effect. Remittance targets offer an alternative explanation.

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Download Data Set (242.59 MB) | Online Appendix (733.44 KB) | Author Disclosure Statement(s) (13.91 KB)

Authors

Nekoei, Arash (Harvard U)

JEL Classifications

F24: Remittances
F31: Foreign Exchange
J22: Time Allocation and Labor Supply
J61: Geographic Labor Mobility; Immigrant Workers

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