The Economic Impact Of Migrants From Hurricane Maria

Giovanni Peri, Derek Rury and Justin Wiltshire, "The Economic Impact Of Migrants From Hurricane Maria," National Bureau Of Economic Research, August 2020, https://www.nber.org/papers/w27718

“…Using a synthetic control estimation strategy we examine the economic impact of a large inflow of people from Puerto Rico into Orlando in the aftermath of Hurricane Maria, which devastated Puerto Rico in September 2017. We find that aggregate employment in Orlando increased as a result of the inflow, as did employment in the construction and retail sectors. We also find positive overall employment effects on non-Hispanic and less-educated workers, as well as positive effects on compensation for those same subgroups in the retail sector. In the construction sector - which absorbed the preponderance of this migrant labor supply shock - we find that earnings for non-Hispanic and less-educated (workers likely to be natives) decreased by a modest amount. These results together suggest that, while migrant inflows may have small negative impacts on the earnings of likely-native workers in sectors directly exposed to the labor supply shock, employment and earnings of likely native workers in other sectors are positively impacted, possibly by increased local demand…..We aggregate the QCEW data by commuting zone, and implement a synthetic control estimation strategy to measure the impact of these migrant inflows on outcomes in Orlando. We find that overall employment in Orlando increased by 0.4 percent one year after the inflow began, and increased by 4 percent in the construction sector. We view this as evidence the local economy was able to absorb and productively use the additional labor supply brought by this large inflow of immigrants. We also find that, one year after the inflow began, retail-sector employment rose by nearly 1 percent and compensation per worker in the accommodations & food services sector grew by 1.4 percent, which we view as the result of employers responding to growth in local demand for consumer goods and services resulting from the consumption habits of these new arrivals. These results are broadly robust to a series of checks. We perform a secondary analysis with the QWI data, and find that when focusing on subgroups more likely to be native or less-educated, the migration event increased overall employment by 0.8 percent and increased earnings in the retail sector. We also see a decrease in earnings for native workers in the construction sector, which absorbed the majority of the labor supply shock.Our results admit a story in which this migration event yielded concurrent labor supply and consumer demand shocks on the local economy which received the migrants. Orlando’s construction sector, in particular, was exposed to the labor supply shock, while the retail and accommodation & food services portions of the Orlando economy were primarily exposed to the consumer demand shock. The new workers were fully absorbed by the local economy without displacing any native workers and without any overall negative effect on earnings, though there was some downward pressure on construction earnings for natives, specifically. However, native retail employment and earnings were both positively impacted, such that the overall effect on natives was to increase their employment without any clear impact on their earnings…”

New Peri contribution using the natural experiment provided by Hurricane Maria (2017) supports his tack on the Mariel Boatlift. Paper finds that Puerto Rican migration to Orlando driven by Hurricane Maria led to a slight increase (+0.8%) in aggregate native employment and no impact on aggregate wages, though with some small sectoral variation: native construction wages -2.5% (they note this sector absorbed the majority of the labor supply shock), native retail wages +2.1%