Scandinavian Working Papers in Economics

Discussion Papers of Business and Economics,
University of Southern Denmark, Department of Business and Economics

No 11/2017: Closing Heaven's Door: Evidence from the 1920s U.S. Immigration Quota Acts

Philipp Ager () and Casper Worm Hansen ()
Additional contact information
Philipp Ager: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Casper Worm Hansen: Department of Economics, Postal: University of Copenhagen

Abstract: The introduction of immigration quotas in the 1920s fundamentally changed U.S. immigration policy. We exploit this policy change to estimate the economic consequences of immigration restrictions for the U.S. economy. The implementation of the quota system led to a long-lasting relative decline in population growth in areas with larger pre-existing immigrant communities of affected nationalities. This effect was largely driven by the policy-restricted supply of immigrants from quota-affected nationalities and lower fertility of first- and second-generation immigrant women. In the more affected areas labor productivity growth in manufacturing declined substantially and native workers were pushed into lower-wage occupations. While native white workers faced sizable earnings losses, black workers benefited from the quota system and improved their relative economic status within the more affected areas.

Keywords: Immigration restrictions; productivity growth; local labor markets; racial wage gap

JEL-codes: J31; J61; N31; O15

50 pages, October 26, 2017

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