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The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure

Jul 2020
Working Paper
By  Ran Abramitzky, Philipp Ager, Leah Boustan, Elior Cohen, Casper W. Hansen

In the 1920s, the United States substantially reduced immigrant entry by imposing country-specific quotas. We compare local labor markets differentially exposed to the quotas due to variation in the national-origin mix of their immigrant population. US-born workers in more exposed areas did not benefit from the immigrant losses and even experienced occupational downgrading. Instead, local economies substituted toward other sources of labor and capital. In urban areas, immigrants were replaced with internal migrants and immigrants from quota-free countries. By contrast, farmers shifted toward capital-intensive agriculture and the immigrant-intensive mining industry contracted, highlighting the unintended consequences of the border closure.