Studies: Immigration Does Not Depress Wages and Employment

Apr 17, 2013

For comprehensive immigration reform, there’s a consensus that allowing more higher-skilled workers into the United States is an economic plus—Facebook CEO Mark Zuckerberg made the case last week in the Washington Post. But there’s concern that more lesser-skilled foreign workers entering the United States would depress wages and employment opportunities for similarly-skilled U.S. citizens.

Research finds that this won't happen.

Aaron Chalfin and Morris Levy at the University of California-Berkeley determined that immigration has only tiny effects on wages and unemployment rates of U.S. citizens. In their paper presented to the Population Association of American Annual Meeting in New Orleans, Chalfin and Levy used Mexican immigration data to find that “a one percentage point increase in a city's Mexican share [predicted] only a 0.02 percent change in natives' wages overall.” As for unemployment, Chalfin and Levy found that “a one percentage point increase in the Mexican immigrant share is associated with a 0.05 percentage point increase in the unemployment rate among all natives.”

These are pretty-much rounding errors.

Chalfin and Levy concluded, “We find little evidence of a net effect on the wages, unemployment rates or labor force participation rates of U.S. natives in any of sixteen age-skill groups.” This includes both higher and lesser skilled workers.

This paper is in line with an essay by University of California, Davis economic professor Giovanni Peri in a new Migration Policy Institute book, Immigrants in a Changing Labor Market. He examines immigration’s effects on the economy during economic expansions and contractions.

Peri writes, “During downturns, however, new immigrants are found to have a small negative impact on native employment in the short run (but not the long run)” and "lower average income is also likely in the short run." This fits w/ Chalfin’s and Levy’s research. However, Peri writes that during upturns “there is some evidence that immigrants lead to positive job creation, even for less-educated natives” [emphasis mine]. Also, over the long run (seven to ten years) "immigrants do not reduce native employment rates." Instead, they "increase productivity and hence average income."  He concludes [emphasis mine]: “[I]mmigration has a positive long-run effect on the average income of native workers. This effect accrues over some time.”

These papers indicates that despite myth-making and general confusion about the subject, comprehensive immigration reform would improve the lives of lesser and higher-skilled Americans.

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