Paving Over Streets of Gold: The Economic Impact of Immigration Restrictions on Sending Regions

Abstract

The Quota Acts of the early 1920s severely restricted European immigration to the United States and effectively ended the ‘Age of Mass Migration’ that saw over 30 million Europeans migrate to America. Using newly constructed data and novel identification, this paper analyzes the economic impacts of mass emigration and subsequent restriction on local sending regions in Southern and Eastern Europe. I obtain town-level emigration rates for the entirety of Europe from administrative records covering the universe of male European migrants who entered through Ellis Island between 1892 and 1924, over 6.6 million individuals. I propose a contagion instrument that uses epidemiological modeling to predict the spread of migration from early emigration locations. I find that emigration had a large positive impact on economic growth, likely driven by migrants returning with savings and increased human capital that facilitated industrialization. Simulating counterfactual unrestricted migration with the epidemiological model, I then estimate the Quota Acts resulted in a 10.6% reduction in GDP per capita by 1938.