In a unique historical episode, between April and September of 1980, 120,000 low-skilled Cubans arrived in Miami. The sudden nature and random timing and location of the flow make this an ideal “quasi-experiment” for testing whether labor markets experienced depressed wages and employment opportunities due to the refugee wave. A simplistic concept of labor supply and demand might suggest that “yes” local workers were hurt by the wave, but what is the truth in the data? Economists have been fascinated with this question, and Giovanni Peri and Vasil Yasenov wanted their own look at it.
An early analysis by David Card in 1990 did not find any significant effect on wages. Since then, economists have developed better econometric tools and more rigorous understanding of the “treatment–control” framework. Peri and Yasenov compared Miami to a statistically carefully selected combination of cities whose labor market behaved very similarly to Miami up to 1979. They then followed Miami and this “control city” post-1980 with a focus on non-Cuban low-skilled workers.
Using this modern and more accurate method they did not find any systematic evidence of depressed wages or employment due to the large refugee flow. Many Cubans already lived in Miami and were entrepreneurs, and they were probably willing to expand employment and absorb the newcomers. They specialized in different jobs, increasing demand for labor rather than merely competing with it.
So why are we still looking at this event years later, and what can we learn today? Peri and Yasenov: “This research highlights the importance of analyzing empirical evidence, rather than relying on simplistic models, to inform our understanding on the potential effect of immigrants on native workers.”
Read the full study in the Journal of Human Resources: “The Labor Market Effects of a Refugee Wave: Synthetic Control Method Meets the Mariel Boatlift,” by Giovanni Peri and Vasil Yasenov.
Giovanni Peri is a professor of economics at the University of California, Davis, a Research Associate of the National Bureau of Economic Research in Cambridge, Massachusetts and a Research Fellow at IZA Institute of Labor Economics in Bonn, Germany. Vasil Yasenov is a postdoctoral scholar at the Goldman School of Public Policy at the University of California, Berkeley and a Research Affiliate at IZA Institute of Labor Economics in Bonn, Germany.