Economics & Finance / Economic Theory / Labor Economics

How a Mexican Peso Crisis Reveals the Hidden Impact of Immigration on US Wages & Housing

In 1995, Mexico's peso crisis triggered an unexpected surge in low-skilled immigration to the US. This video breaks down the surprising findings from a landmark study in the Journal of Political Economy. Discover how this natural experiment reveals that immigration initially lowers local wages for low-skilled workers, but the effect vanishes within two years as native workers move. More shocking: in the long run, high-immigration areas actually saw lower home prices—because immigrants flooded the construction industry, cutting building costs. But there's a catch: the generation entering the job market during the peak immigration year suffered lasting wage scars. We explain the dynamic adjustment of labor markets, internal migration, and housing costs, using clear visuals and real data. No jargon, just the raw economics behind one of the most debated topics in America.