Impact of Low-Skilled Immigration on the Youth Labor Market

The employment-to-population rate of high-school aged youth has fallen by about 20 percentage points since the late 1980s. The human capital implications of this decline depend on the reasons behind it. In this paper, I demonstrate that growth in the number of less-educated immigrants may have considerably reduced youth employment rates. This finding stands in contrast to previous research that generally identifies, at most, a modest negative relationship across states or cities between immigration levels and adult labor market outcomes. At least two factors are at there is greater overlap between the jobs that youth and less-educated adult immigrants traditionally do, and youth labor supply is more responsive to immigration-induced changes in their wage. Despite a slight increase in schooling rates in response to immigration, I find little evidence that reduced employment rates are associated with higher earnings ten years later in life. This raises the possibility that an immigration-induced reduction in youth employment, on net, hinders youths' human capital accumulation.