Wall Street Journal (Opinion)
By Bob Davis
February 9, 2016
One
of the reasons lower-income workers have taken such a hit over the past
few decades is because of illegal immigration. But how much of a hit is
a matter of great debate
among economists.
Harvard
immigration specialist George Borjas finds that during the 1980s and
1990s, low-skilled immigration reduced the wages of U.S. born
high-school dropouts by about
10%.
His Harvard colleague and sometimes academic collaborator, Lawrence Katz, is more sanguine about the impact.
Increased
immigration has been “at most a small contributor to rising inequality
among pre-existing U.S. residents and to poor income growth for low and
moderate-income
people,” said Mr. Katz, a labor economist. Technological change,
educational deficiencies, global trade and the decline of unions had a
greater effect, he said.
The
debate over the economic effect of immigration comes down to whether
migrants—illegal or not—“substitute” for workers or “complement” them.
If a Mexican construction
worker competes for a job that a U.S. worker could reasonably do, that
substitution essentially increases the supply of workers. That can drive
up unemployment and drive down wages for natives. On the other hand,
cheaper construction workers complement higher-paid
managers by lowering company costs. That makes the firm better able to
win new bids and, in theory, hire more workers, immigrants and natives
alike.
Mr.
Borjas, the Harvard economist, has been among the most prolific
academics arguing that the substitution effect handicaps U.S. workers,
especially those without a high
school diploma, because illegal immigrants tend to be less educated. In
a 2015 paper, examining the effects of a big surge in Cuban low-skilled
immigration to Miami in 1980—the so-called Mariel boatlift—he found
that wages of Miami high school dropouts fell
sharply, as did the wages of those dropouts compared with high-school
graduates.
But
University of California, Berkeley, economist David Card earlier
examined the Marielitos, as they were called, and didn’t find any
significant drop in native wages.
Mr.
Borjas says Mr. Card didn’t dig deep enough into the data to isolate
the effects on high school dropouts, a charge Mr. Card rejects. “The
sample I analyzed was reasonable
and representative,” he said, in a debate that continues.
Some
economists focus on immigrants not simply as competitors for native
workers, but as generators of economic activity who start companies, and
buy goods and services.
If the number of low-skilled Mexican immigrants were to drop by half
because of tougher border enforcement, the unemployment rate among
unskilled natives would increase, calculate economists Giovanni Peri of
the University of California, Davis, and Andri Chassamboulli
of the University of Cyprus, because the U.S. economy would take an
overall hit. The wages of native unskilled workers, however, would rise
because of reduced competition.
Many
of the studies on the effects of immigration were completed when
illegal immigration was steadily increasing, and economists were trying
to assess the effect of greater
competition on low-end jobs. Illegal immigration reached its peak of
12.2 million in 2007 and fell by one million immigrants in 2012,
according to the Pew Research Center in Washington, D.C.
That
should change the economic effects of immigration because fewer
immigrants should give natives more running room. But the example of
Arizona, where the number of
undocumented immigrants has fallen 40% since 2007—the subject of a
front-page story in The Wall Street Journal—shows that isn’t always the
case. While wages have risen in some immigrant-heavy industries such as
construction, landscaping and farm work, there’s
scant evidence that employment has increased for natives.
A
study by Moody’s Analytics for The Wall Street Journal of the effects
of the exodus in Arizona finds that natives and legal Hispanic
immigrants have gotten less than
10% of the jobs vacated by immigrants, in part because the recession
reduced job prospects for all workers. Looking strictly at the years
2008 to 2009, the years of steepest decline in unauthorized immigration,
economists Sarah Bohn, Magnus Lofstrom of the
Public Policy Institute of California and Steven Raphael of the
University of California, Berkeley, find that employment among
low-skilled natives and legal immigrants dropped.
Mark
Zandi, Moody’s chief economist, called the lessons of Arizona
“sobering.” Not only are the lives of undocumented immigrants turned
upside down, he said, the exodus
“reduces employment and output more broadly, as business activity is
disrupted and lost spending by the undocumented hurts businesses that
sell everything from groceries and homes to them.”
For more information, go to: www.beverlyhillsimmigrationlaw.com
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