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.
"Immigrants' Labor Supply and Exchange Rate Volatility." American Economic Journal: Applied Economics,
Time Allocation and Labor Supply
Geographic Labor Mobility; Immigrant Workers