The Effect of Foreign Labor on Native Employment: A Job-Specific Approach and Application to North Carolina Farms- Working Paper 326

Economists have measured the effects of immigration on native employment primarily with exogenous shifts in the foreign labor supply curve. I suggest an alternative, occupation-specific approach- directly describe, for one job, the native labor supply curve. I apply the method to seasonal farm work in North Carolina, and use two natural experiments to estimate native labor supply. The first natural experiment uses a legal requirement for farmers to demand native workers as perfect substitutes for foreign workers; this describes the level of native labor supply. The second natural experiment uses the spike in US unemployment during the 2007–8 economic crisis; this describes the local slope of native labor supply. The level and slope of native labor supply to this job, at both extensive and intensive margins, are nearly zero. This identifies two effects of foreign labor supply on native employment- a direct effect (close to zero) and indirect effect (positive) via consequent increases in sectoral output and its multiplier effects. I estimate that one U.S. job across all sectors of the North Carolina economy is created by each 1.5–2.3 foreign seasonal farm workers in the short run (Leontieff production), and by each 3.0–4.6 foreign seasonal farmworkers in the long run (Cobb-Douglas production).