Blog Post

AEIdeas

Immigration has become the economic issue within the Republican Party, with low-skill immigration — both legal and illegal — of particular controversy.

In his book, “Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own,” economist Garett Jones offers this research summary about how less-skilled immigration affects native workers, or US-born residents:

For the rich countries, especially for the well-studied United States, the answer is clear: less-skilled immigration doesn’t do much to the wages of US-born residents. The most pessimistic academic estimates come from Harvard economists George Borjas and Larry Katz, who reported that less-skilled immigration may have pushed down the wages of American high school dropouts by 8%.

That’s a real loss – I would be upset if I had to take an 8% wage cut – but remember, it’s the most pessimistic of the serious estimates. It’s more common to find zero effect or effects that are so close to zero that it’s hard to tell one way or the other. It’s even possible that economists Ottaviano and Peri are right: they claim that less-skilled immigration to the United States has actually raised the wages of the vast majority of US-born workers. Ottaviano and Peri’s story is built around the idea of the division of labor: recent waves of less-skilled immigrants tend to have, for instance, relatively weak English-language skills. For that and other reasons – in the authors’ words, because of different abilities in “language, quantitative skills, relationship skills and so on” – they’re not in direct competition with US-born, less-skilled, less-educated workers. In this view the people in the United States hurt most by recent waves of non-native-English-speaking immigrants are actually people who came as part of previous waves of non-native-English-speaking immigrants. Recent immigrants and older immigrants are substitutes for each other. Non-native English speakers tend to compete with each other for jobs, while US-born English speakers, even those with limited job skills, have sizable areas of the labor market in which they face little direct competition from immigrants. That’s Ottaviano and Peri’s model – only a model, like my own – but after testing their model on recent US data they conclude that wages of US-born citizens are probably about 1% higher as a result of recent immigration. Even US-born workers lacking a high school diploma are predicted to benefit, with wages rising by 1 or 2%. Taken together, immigration is a slight boon and not a peril in Ottaviano and Peri’s estimation. Ottaviano and Peri’s facts match their model, at least for the level of immigration that the United States has experienced in recent years. And while Borjas and his coauthors have criticized Ottaviano and Peri’s methods, the gap between Borjas and the Ottaviano-Peri views on the effects of less-skilled immigration is fairly small, much smaller than you’d expect if you read the heated public debates about less skilled immigration across the rich countries.

Now this isn’t the end of the story. Jones raises the question about whether low-skill immigrants will “tend to vote for policies that will weaken the wealth-creating institutions they’ve enjoyed.” He then adds that this question “has been little studied.”