We investigate the effect of immigration on the labor supply of skilled women, using data on Spain’s large recent immigration wave. We adopt a spatial correlations approach and instrument for current immigration using ethnic networks. We find that female immigration increases the local availability of household services and reduces their price. It also increases the labor supply of skilled native women, by allowing them to return to work earlier after childbirth, and to continue working while caring for elderly dependents. Immigration can account for one third of the recent increase in the employment rate of college-educated women providing child or elderly care.

We acknowledge the support of the Barcelona GSE Research Network and the Government of Catalonia, as well as the Spanish Ministry of Science (grants ECO2008-05721/ECON (Farré), SEJ2007-64340/ECON (González), and ECO2008-02779 (Ortega)).