The effect of low-skilled immigration on women’s labor supply: Theory and evidence from the United States†

A large influx of low-skilled immigrants can have considerable impacts on the labor supply in the destination country. We examine whether and how low-skilled immigration due to the Mariel Boatlift immigration event in 1980, which caused a sudden and exogenous shock to the Miami labor market, affected native women’s labor supply. To understand the underlying mechanism, we build a general equilibrium model incorporating final goods, household services, and labor markets, thereby illustrating the pathways through which low-skilled immigration influences native womens labor supply. Using metropolitan-level data and the synthetic difference-indifferences estimation method, we find that the Mariel Boatlift immigration event increased the working hours of high-skilled women, while decreasing those of low-skilled women. Our results suggest that low-skilled immigration improves the availability of household services and, hence, contributes to achieving women’s empowerment and shrinking the gender gap in labor market outcomes for high-skilled women, but simultaneously widens inequality across women with different skills. JEL classification: D13; J16; J61