Question

(a) Briefly explain how David Card used the Mariel Boatlift to study the effect of immigration on native wages. What was his main finding?

(b) Why is it important for Card's analysis that the Castro's decision to allow Cubans to go freely to the United States was largely unexpected?

Answer 1

1) Overview of the Miami Labor Market Before the Boatlift

For at least a decade prior to the Marie1 Boatlift, Miami was the most immigrantintensive city in the country. Tabulations from the 1980 Census indicate that 35.5% of residents in the Miami Standard Metropolitan Statistical Area (SMSA) were foreign-born,2 compared to 22.3% in Los Angeles, the city with the next-highest immigrant fraction, and 6.1 % nationwide. At the time of the Census, 56% of immigrants in Miami were of Cuban origin. The remaining foreign-born residents, who accounted for 16% of the Miami population, included other Hispanic groups and a broad selection of Caribbean and European nationals. Miami also has a significant black population. The fraction of black residents was 15.0% in 1970 and had increased to 17.3% by the time of the 1980 Census. The large concentrations of both immigrants and blacks makes Miami ideal for studying the effect of increased immigration on the labor market opportunities of black natives.

four major groups in the Miami labor force in 1979: white non-Hispanics; black non-Hispanics; Cubans (foreign-born and native-born); and other Hispanics. For simplicity, I have restricted attention to individuals age 16-6 1, a group that represents roughly 60% of the Miami population. The fractions of Cubans and blacks in the 16-61 age group are 27.2% and 26.3%, respectively, and the fractions of white nonHispanics and non-Cuban Hispanics are 34.4% and 11.1%. Overall. 73% of 16- 61-year-olds participated in the labor force, with somewhat higher rates among whites and Cubans and lower rates among blacks and other Hispanics. Education levels in Miami are somewhat below the national average: the mean of completed education for 16-6 1-year-olds in 1979 was 11.8 years in Miami, compared with 12.2 vears nationwide.

An inflow of immigrants resulting in a one percentage point increase in the fraction of Cubans in Miami xvould lead to a weighted average increase of .95% in the si~pply of labor to occupations held by whites. Under the same conditions the increase would be .99% for blacks, 1.025% for non-Cuban Hispanics, and 1.065%for Cubans themselves. These calculations suggest that the overlap bet,ween the occupational djstributioris of t!le four groups is relatively high.

The Mariel Immigration

Due to the unauthorized nature of the Boatlift, no exact count of the number of Marie1 immigrants is available, and there is little precise information on the characteristics or final destinations of tlie immigrants. This section summarizes some of the available information, including data from the March 1983 Mobility Supplement to the Current Population Survey, which allows Marie1 immigrants to be distinguished from other Cubans.

Most sources estimate the number- of Marie1 immigrants at between 120,000 and 125,000. A recent Census Bureau report (1J.S. Department of C'~ornmerce 1988:9) states that 126,000 refugees entered the LJnited States as "Cuban Entrant,~" (the special immigration status awarded to the Marie1 refugees) between April 1980 and June 198 1. Based on the settlement of earlier Cubans, it is widely assumed that about oile-half of these refugees settled permalently in Miami. The Census Bureau "Experimental County Population Estimates" file shows an increase of 80,500 in the Dade County population between April 1 and July 1 of 1980; 59,800 of these new entrants were age 16-61. My own tabulations from the CPS indicate that the Cuban share of the 16-61 age group increased from 27% in 1979 to 33% in 1981.4A similar increase is registered in CPS-based estimates of the Cuban share of the 16-6 1 -year-old labor force, which changed from 37.2% in 1979 to 44.8% in 1981. Assuming that the Cuban share of the labor force would have remained constant between 1979 and 1981 in the absence of the Boatlift, these figures suggest that the Marie1 immigration added approximately 45,000 to the Miami labor force-an increase of 7%.

From the first days of the Boatlift, the characteristics of the Marie1 immigrants (hereafter referred to as Mariels) have been a subject of controversy. Among those who were permitted to leave Cuba were several hundred inmates of mental hospitals and jails. Many of these individuals were arrested by immigration officials upon their arrival in the United States, and over 1,000 were sent to a special prison facility in Atlanta to await deportation back to Cuba.5 A similar number were arrested for crimes committed in the United States, and they still await determination of their ultimate immigration stat ~Contemporary . ~ reports indicate that the Mariels included a relatively high fraction of less-skilled workers and a high fraction of individuals with low English ability (Business Week 1980).

Although the regular Current Population Survey questionnaire does not distinguish Mariels from other foreign and native-born Cubans, the March 1985 Mobility Supplement survey asked each respondent where he or she lived in March 1980 (one month before the start of the Boatlift).

Mariels have lower labor force attachment and lower occu~ational attainment than other Cubans. Mariels are more heavily concentrated in laborer and service occu~ations. and are less likelv to hold sales. clerical, and craft jobs.

The unadjusted wage gap between Mariels and other Cubans is 34%. Part of this differential is clearly attributable to the lower education levels and younger ages of the Mariels. A simple linear regression for the logarithm of average hourly earnings fitted to the sample of Cubans with earnings in 1984 suggests that the Mariels earned 18% lower wages than other Cubans, controlling for education, potential experience, and gender (the standard error of this estimate is .08). This gap presumably reflects the combination of lower language ability and a shorter assimilation time in the United States among the Mariels, as well as any differences in abilitv or motivation be- , tween the earlier and later Cuban immigrants.

The Effect of the Mariel Immigration on the Miami Labor Market  

Observers in Miami at the time of the Boatlift noted the strain caused by the Marie1 immigration. The homicide rateincreased nearly 30% between 1979 and 1980 (see Wilbanks 1984:142). On the weekend of May 17, 1980, a three-day riot occurred in several black neighborhoods, killing 13. A government-sponsored committee that was set up to investigate the riot identified other long-standing grievances in the black community as its cause, but cited the labor market competition of Cuban refugees as an important background factor.

Another widely cited indicator of the labor market pressure created by the Marie1 influx is the Miami unemployment rate, which rose from 5.0% in April 1980to 7.1% in July. Over the same period state and national unemployment rates followed a similar pattern, suggesting that the changes in Miami were not solely a response to the Marie1 influx. Nevertheless, widespread joblessness of refugees throughout the summer of 1980 contributed to a perception that labor market opportunities for less-skilled natives were threatened by the Marie1 immigrants.

simple averages of wage rates and unemploynlent rates for whites, blacks, Cubans, and other Hispanics in the Miami labor market between 1979 and 1985. For comparative purposes, I have assembled similar data for whites, blacks, and Hispanics in four other cities: Atlanta, Los Angeles, Houston, and Tampa-St. Petersburg. These four cities were selected both because they had relatively large populations of blacks and Hispanics and because they exhibited a pattern of economic growth similar to that in Miami over the late 1970s and early 1980s. A comparison of employment growth rates (based on establishment-level data) suggests that economic conditions were very similar in Miami and the average of the four comparison cities between 1976 and 1984.

Perhaps most obvious is that earnings are lower in Miami than in the comparison cities. The differentials in 1979 ranged from 8% for whites to 15% for blacks. More surprising is that real earnings levels of whites in both Miami and the comparison cities were fairly constant between 1979 and 1983. This pattern contrasts with the general decline in real wages in the U.S. economy over this period (see Round and Johnson 1989:5-6) and underscores the relatively close correspondence between economic conditions in Miami and the comparison cities.

In contrast to the pattern for whites, the trends in earnings for nonwhites and Hispanics differ somewhat between Miami and tlie comparison cities. Black wages in Miami were roughly constant from 1979 to 198 1, fell in 1982 and 1983, arid rose to their previous level in 1984. Black earnings in the comparison cities, on the other hand, show a steady downward trend between 1979 and 1985. These data provide no evidence of a negative inrpact of the Mariel immigration on black wages in Miami. The data do suggest a relative downturn in black wages in Miami during 1982-83. It seems likely, however, that this downturn reflects an unusually severe cyclical effect associated with the 1982-83 recession.

Wage rates for non-Cuban Hispanics in Miami were fairly stable between 1979 and 1085, with only a slight dip in 1983. In contrast, Hispanic wage rates in the coniparisori cities fell about 6 percentage points over this period. Again, there is 120 evidence of a negative effect in Miami, either in the immediate post -l\/lariel period or over the longer run.

Relative to the wages of whites, for example, Cuban wages fell by 6-7 percentage points bet.wTeen 1979 and 1981. Assuming that the wages of earlier Cubarl immigr;ints were constant, this dec.line is consistent with the addicion of 45,000 Mariel workers to the pool of Cubans in the Miami labor force, and with the 34% wage differential between Mariels and other cubans.The simple averages of wages and unemployment rates combine workers of all ages and equalled or exceeded those in the compar- education levels. do not directlv address ison cities from 1982 to 1984. The 1985 the question of whether the ~aiiel immidata indicate a return to the pre-1982 gration reduced the earnings of lesspattern, although the sampling errors are skilled natives in Miami. A more direct large enough to prevent precise infer- answer is provided by the data. In order to identify "less-skilled" workers, Unlike the situation for whites and I fit a linear regression equation for the blacks, there was a sizable increase in logarithm of hourly earnings to workers in Cuban unernployinent rates in Miami the comparison cities.

If the Marie1 immigration reduced the wages of less-skilled natives, one would expect to observe a decline in the wage of workers in the lowest skill quartile, at least relative to workers in the upper quartile. The actual averages show no evidence of this effect. Apart from the temporary increase in relative wages of workers in the lowest quartile between 1979 and 1981, the distribution of non-Cubans' wages in the Miami labor market was remarkably stable between 1979 and 1985. these data provide little evidence of a negative effect of the Marie1 influx on the earnings of natives.

Main Findings:

The experiences of the Miami labor market in the aftermath of the Marie1 Boatlift provide a natural experiment with which to evaluate the effect of unskilled immigration on the labor market opportunities of native workers. The Mariel immigrants increased the labor force of the Miami metropolitan area by 7%. Because most of these immigrants were relatively unskilled, the proportional increase in labor supply to less-skilled occupations and industries was much greater.

Yet, this study shows that the influx of Mariel immigrants had virtually no effect on the wage rates of less-skilled nonCuban workers. Similarly, there is no evidence of an increase in unemployment among less-skilled blacks or ocher nonCuban workers. Rather, the data analysis suggests a remarkably rapid absorptioil of the Mariel immigrants into the Miami labor force, with negligible effects on other groups. Even among the Cuban population there is no iildicatioll that wages or uilemployrnent rates of earlie1 immigrants were substailtially affected by the arrival of the Mariels.

Despite the clear-cut nature of these findings, some cautioil is required in their intermetation. since the Miami labor market is' far from typical of other local labor markets in the United States. Although the arrival of some 60,000 refugees in only a six-month period occasioned probleixis for the Mariel immigrants, in many respects Miami was better prepared to receive them than any other city. In the two decades before the Mariel Boatlift Miami had absorbed a continuing. flow of u Cubans, and in the years since the Boatlift it has continued to receive large numbers of Nicaraguans and other Central Americans. Thus, the Marie1 immigration can be seen as part of a long-run pattern that distinguishes Miami from most other American cities.

Two factors that may have been especially important in facilitating the absorption of the Marie1 immigrants are related to the distinctive character of the Miami labor market. First, Miami's industry structure was well suited to make use of an influx of unskilled labor. This structure, and particularly the high concentration of textile and apparel industries, evolved over the previous two decades in response to earlier waves of immigrants, and may have allowed the Marie1 immigrants to take up unskilled jobs as earlier Cuban immigrants moved to better ones. Second, because of the high concentration of Hispanics in Miami, the lack of Englishspeaking ability among the Mariels may have had smaller effects than could be expected for other immigrants in other cities.

A final factor in the Marie1 immigration is the response of domestic migration. A comparison of Miami growth rates to those in the rest of Florida suggests that the net migration rate of natives and earlier immigrants into the Miami area slowed considerably after the Boatlift. To some extent the Mariels may have displaced other migrants from within the United States who could have been expected to move to Miami.