Pethokoukis

How does immigration affect US wages and jobs?

Image Credit: Brookings

Image Credit: Brookings

Just what is the economic impact of immigration on US workers? Likely good for wages and good for jobs. The WaPo’s Dylan Matthews outlines some of the research on wages. And, of course, the research tells two different stories. Research that finds immigration raises wages assumes immigrants generally a) don’t do the same jobs as US workers, b) perform work that is complementary to that of US workers:

A 2010 white paper by Gianmarco Ottaviano, Giovanni Peri and Greg Wright found that less expensive immigrant labor has a “positive net effect on native employment.” In another paper, Peri found that U.S. immigration from 1990 to 2006 increased real wages by 2.86 percent. Put together, Peri’s research forms the strongest basis for arguing that immigration increases wages for native-born American workers. Patricia Cortes at Unviersity of Chicago has confirmed his findings …

But research that assumes immigrant labor substitutes for native labor is gloomier:

George Borjas and Lawrence Katz, two Harvard labor economists who tend to be more skeptical of the benefits from immigration, beg to differ. Between 1980 and 2000, U.S. workers saw their wages fall in the short-run by 3.4 percent due to immigration. In the long-run, the economy adjusts such that the overall effect is minimal, but the short term figures are still a cause for concern.

And what about jobs? A 2011 study from AEI and a Partnership For A New American Economy finds the following:

1. Immigrants with advanced degrees boost employment for US natives. This effect is most dramatic for immigrants with advanced degrees from US universities working in science, technology, engineering, and mathematics (STEM) fields. The data comparing employment among the fifty states and the District of Columbia show that from 2000 to 2007, an additional 100 foreign-born workers in STEM fields with advanced degrees from US universities is associated with an additional 262 jobs among US natives. While the effect is biggest for US-educated immigrants working in STEM, immigrants with advanced degrees in general raised employment among US natives during 2000–2007:  

2. Temporary foreign workers—both skilled and less skilled—boost US employment. The data show that states with greater numbers of temporary workers in the H-1B program for skilled workers and H-2B program for less-skilled nonagricultural workers had higher employment among US natives. Specifically:

• Adding 100 H-1B workers results in an additional 183 jobs among US natives.

 • Adding 100 H-2B workers results in an additional 464 jobs for US natives. 

• For H-2A visas for less-skilled agricultural workers, the study found results that were positive, but data were available for such a short period that the results were not statistically significant. 

3. The analysis yields no evidence that foreignborn workers, taken in the aggregate, hurt US employment. Even under the current immigration pattern—which is not designed to maximize job creation, has at least eight million unauthorized workers, and prioritizes family reunification—there is no statistically significant effect, either positive or negative, on the employment rate among US natives. The results thus do not indicate that immigration leads to fewer jobs for US natives.

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11 thoughts on “How does immigration affect US wages and jobs?

  1. Respectfully, I think that the AEI study presents its findings in a manner that is biased towards even greater immigration levels. For example, the study lists the fiscal impact of the average immigrant, the average immigrant with a bachelor degree, and the average immigrant with an advanced degree. It’s all positive! OK, but why wouldn’t you even mention the fiscal impact of the average immigrant WITHOUT a bachelor degree? I mean, there are 3 subcategories of immigrants by education level, so why would you only show data for 2 of the 3 subcategories, and ignore the third?

    • “The three decades . . . from the mid forties to the mid seventies, were the golden age of manual labor.”
      * * *
      Why were times so good for blue collar workers? To some extent they were helped by the state of the world economy.
      * * *
      They were also helped by a scarcity of labor created by the severe immigration restrictions imposed by the Immigration Act of 1924.”
      Paul Krugman, Conscience of a Liberal, Chapter 3 (pages 48-49)

      “Bliss it was in that dawn to be alive, but to be young was very heaven! And so it was for the young adults of the fifties, those fortunate ones born in the low birth rate era of the 1930s.” Wordsworth, the Prelude; Richard Easterlin, Birth and Fortune, Chapter 2

      “A small generation, presumably, would do well if it arrived on the labor market when demand was high. The catch here is unrestricted immigration.
      * * *
      . . . the bright prospects of a small cohort were swamped by competitors from abroad.” Richard Easterlin, Birth and Fortune, Chapter 2, page 33

  2. Hi Mr. Pethokoukis, I wonder if Mr. Matthews is inadvertently misrepresenting the analysis by Professor Borjas and Professor Katz.

    I looked at the table in the Borjas-Katz paper from which Mr. Matthews derived his “Borjas-Katz (2007) Style Estimate”. Mr. Matthews is using the “Long Term (Assuming Complete Elasticity of Capital)” numbers, and he is not comparing them to the “Counterfactual of no Mexican migration”.

    Professors Borjas and Katz seem to prefer the “Short-Term” table when describing what has actually happened between 1980 and 2000, and they prefer to compare to the counterfactual of no Mexican migration in order to isolate the effects of Mexican migration. I say this because in the text of their article, they note that their analysis shows a 7.7% decrease in wages for workers without high school diploma due to Mexican migration, NOT a 4.7% decrease as shown in Mr. Matthew’s table.

    Also, when describing Professor Borjas’s and Professor Katz’s findings, Mr. Matthews states that “[i]n the long run, the economy adjusts such that the overall effect is minimal”, but I find no such statement in the Borjas-Katz paper.

  3. Legal immigration favors (or used to) immigrants with those advanced degrees, welcomed them into this country. Apparently now there are “glitches” in the legal immigration process, with delays causing frustration.
    You don’t make a country better by importing low level workers.
    The effect of these workers has been documented by multiple papers, and it isn’t good for the US. I recall a book I read by Prof Vernon Briggs, now of Cornell, written in 1963, entitled “Chicanos and rural poverty.” I believe Prof Briggs has also testified several times before Congress in recent years re. taking away jobs from legal citizens.
    As noted in an above comment, what a paper says and what the author of an article claims it says can often be two different things.

  4. What bothers me about these studies is that it doesn’t prove causality. They lazily make the assumption that A results in B result without consideration for other variables.

  5. Sorry, but I want to dispute a couple more points in Mr. Matthews’s article.

    First, Professor Peri may have found that immigration increases wages for U.S. natives, but I don’t think Professor Cortes’s paper “confirmed his findings”. She found decreased prices for certain goods and services due to cheap immigrant labor, but she did NOT find that such price reductions led to net increases in real wages for unskilled American workers. (I’m not an economist, so if any of points here and above are wrong, then please correct me.) More later.

  6. Actually, I apologize to Mr. Matthews for something: I said that his table inadvertently misrepresents the Borjas-Katz paper, and I still think the table above is misleading, but the table is not Mr. Matthews’s, it’s from the Hamilton Project at the Brookings Institution.

    Mr. Matthews points out that immigration is good for immigrants. Fair enough, that’s why they come here.

    But now let’s assume for the sake of argument that immigrants never compete for jobs with Americans. In such a scenario, don’t the immigrants compete for jobs with EACH OTHER? And if that’s the case, then isn’t immigration bad for immigrants who are already here?

  7. That’s nice. Now subtract something for the 6 million American citizens who are made unemployed because illegal aliens have taken their jobs – in farming, construction, factories, maintenance, custodial, lawn care, etc.

    • When it comes to a job, I believe everyone is replaceable. There will always be competition no matter what field you work in. If you choose to believe that you are unemployed because an illegal alien “took” your job, it defines complete ignorance. Half of the people that complain of immigrants “stealing” the jobs have most likely never worked in those fields you mentioned above. Its pure ignorance and laziness that makes comments like this irrelevant. While there are 11 million working immigrants there are double if not tripled the amount homeless and begging on the street.

  8. I do see many points from both sides of the argument, both within this website and from outside sources. Personally, I believe that it is irrelevant whether a worker is foreign born or native if he or she is a legal citizen. In such a case, the individual better suited to the job would ideally succeed. However, if an individually is not a legal citizen, he or she must be in some way either 1) removed from the country or 2) fined and provided an opportunity to become a legal citizen. If the individual is detained for a substantial period or given a jail sentence, he or she is only burdening the system due to flaws within the system.

  9. I am sorry, I have noted a foolish error in my previous comment. It would be unjust to force a fine upon illegal immigrants as many of them have fled to the US in search of economic opportunity. Rather they should be given the opportunity to apply for citizenship in exchange for community service or some other progress-oriented assignment.

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