Immigration, Internal Migration, and Local Labor Market Adjustment Following the U.S. Housing Bust

Awarded Scholars:
Brian Cadena, University of Colorado-Boulder
Brian Kovak, Carnegie Mellon University
Project Date:
Nov 2011
Award Amount:
$76,231
Project Programs:
The Social and Economic Effects of the Great Recession

When the U.S. housing bubble peaked in mid-2006 and finally burst in 2007, it precipitated the onset of the largest economic downturn since the Great Depression with severe consequences for the housing market. A record 2.9 million foreclosure notices were filed in 2010, 1.2 million were reported in the first half of 2011, and recent reports indicate that foreclosures are on the rise again. Some regions and localities experienced much larger declines in new home construction than others – new construction in Michigan fell 80 percent from 2005 to 2009 while North Dakota fell by only eight percent. Immigrant labor is over-represented in construction-related occupations, and immigrants tend to be geographically more mobile than native workers. This suggests that immigrant workers may have played a key role in helping the labor market adjust to geographical differences in construction industry demand. But we know little about how workers in construction actually responded to changing labor market conditions brought on by the Great Recession. Were immigrant workers more likely to relocate than U.S.-born workers? If so, did they move within the U.S. as the economy declined or were they more likely to go back to their home country? What was the impact of this mobility on wages and employment in local labor markets if it occurred?

Professor Brian Kovak at Carnegie Mellon University and Professor Brian Cadena at the University of Colorado-Boulder propose to tackle these questions to better understand the effect of the recession on internal migration of both immigrant and U.S.-born workers, as well as the effects on immigration and return migration. They will set the stage by exploring the relationship between the extent of subprime lending in local housing markets and the decline in housing construction. They will end by examining how these patterns might have affected local labor market conditions. If more mobile immigrants moved from economically hard-hit markets to those that experienced smaller declines, how did this affect the wages and employment of similarly-skilled U.S.-born workers?

To address these questions, Kovak and Cadena will draw upon a wide variety of data and variables to test a number of key hypotheses. These include data sources such as the American Community Survey – for labor market outcomes and internal migration; Quarterly Workforce Indicators – for construction employment; the Census Bureau New Residential Construction – for housing construction by U.S. labor markets; Federal Reserve Board tabulations – to obtain subprime lending by zip code; the National Occupation and Employment Survey and Northern Border Migration Survey – for indicators of immigration and return migration; and Social Security data – for unemployment insurance payments.

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