Title: The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure | Princeton University - Department of Economics
Headings: The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure
The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure
Our research setting
Unintended consequences of the 1920s quotas—and different effects in rural and urban areas
Conclusion

Content: The new arrivals filled only 50 percent of low-skilled blue-collar positions previously held by immigrants, contributing—as policymakers wanted—to a shift toward more skill-intensive manufacturing practices. However, policymakers did not anticipate that it would be Mexican migrants (who were unrestricted by the quota policy) and not U.S. workers that would ultimately move in to those vacant low-skilled positions in U.S. cities. The post-quota job prospects were less optimistic for U.S.-born workers in rural areas. In rural areas, new quotas resulted in fewer workers, but those workers were not replaced with U.S.-born workers. Instead, land owners largely invested in capital and technology to replace them, forcing many U.S.-born workers to move out of rural areas. An additional unintended consequence was the effect on wages, as we find that the immigration quotas established in the 1920s didn’t boost wages for workers anywhere. In both the urban and rural areas that lost the largest number of immigrant workers, occupation-based earnings of the U.S.-born actually declined after border closure by 0.5 percent for every 1 percentage point difference in quota exposure in urban areas and by 0.3 percent for every 1 percentage point difference in quota exposure in rural areas. Ironically, the new workers that moved in to U.S. cities post-quota created more competition than the immigrant workers policymakers had tried to expel, thereby pushing down wages for workers who’d been there all along. Conclusion
Taken together, our findings suggest that policymakers debating immigration quotas or other restrictions—for example the debate around the 2017 RAISE Act—need to consider the possibility of unintended consequences. Though some argue that immigrants “take jobs” from U.S. workers, and therefore U.S. workers will benefit if immigration is restricted, our research suggests the economic effects of restricting immigration are not so straightforward.