Immigration: An Economic Threat or Boost? by Prof. Warren Anderson

7/1/2019

Americans often fear that increased migration will depress native wages.

The literature on the impact immigrants have on native-born workers producers conflicting results due to various factors: examination of different time periods, analysis of different countries, and analysis of short run versus long run effects.  Estimating the effects of immigration over decades is extremely difficult in a large, dynamic economy.

Borjas finds that immigrants from 1980 to 2000 lowered the wages of native-born American workers by about 3 percent, with a 9 percent decline for high school dropouts, 5 percent decline for college graduates, and no change for workers with some college. In contrast, Ottaviano and Peri find that from 1990 to 2006 immigrants had a slight small positive impact on all wages – half a percent higher – but about a 1 percent increase in wages for native workers with no high school degree compared to a fall of nearly 7 percent for previous immigrants.

It’s important to distinguish between the short term and long term effects. In the short term, an influx of labor can drive down wages, but in the long run the market can adjust and there will be an increased demand for labor, thereby increasing wages.

A good way to see this is to consider the University of Michigan-Dearborn economics discipline. We have faculty from Russia, Germany, Albania and Greece. It would be easy to think that if we only hired American economists, then more Americans would have jobs at higher wages. However, if we eliminated or severely decreased the number of immigrants allowed into the country then a huge percentage of the UM-Dearborn student body would also disappear, eliminating many academic job.

Overall, finding a minimal long run impact of immigrants on native wages makes intuitive sense. If you don’t worry about a child born in Hawaii lowering you kids’ wages, then why would someone born in Windsor entering our labor force matter? Furthermore, as America’s population ages many states and the federal government face large unfunded liabilities. Letting in prime age immigrants would help alleviate these shortages by providing more taxpayers paying into the system.

 

 

Borjas: The labor demand curve is downward sloping: Reexamining the impact of immigration on the labor market

Ottaviano and Peri: Rethinking the effect of immigration on wages

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