Effect of Immigration on Jobs, Wages Is Difficult for Economists to Nail Down

Immigrant workers and their supporters rallied on the National Mall on Monday. How immigrant labor has affected wages is the subject of much study by economists, and much debate by policymakers and the public.
Immigrant workers and their supporters rallied on the National Mall on Monday. How immigrant labor has affected wages is the subject of much study by economists, and much debate by policymakers and the public. (By Bill O'leary -- The Washington Post)

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By Nell Henderson
Washington Post Staff Writer
Saturday, April 15, 2006

According to the economic models, it's a no-brainer: a surge of low-skilled immigrants should increase the supply of such workers, driving down wages at the expense of working-class Americans.

Sen. Byron L. Dorgan (D-N.D.), explaining why he opposes legislation to allow more legal immigration, said recently: "I don't think you need a professor to understand that when you import substantial cheap labor, it displaces American workers."

But recent research suggests that the economic impact of immigration is not so simple. The effects are difficult to disentangle from other factors that have dampened wage growth for most workers in recent decades, including new technologies, the decline in manufacturing jobs, the drop in unionization, globalization and recessions.

Yes, an influx of immigrants has helped depress the incomes of the lowest-skilled workers in recent decades, many economists agree. But they argue about the magnitude of the effect; some say it's big while others see it as slight.

Meanwhile, increased immigration -- legal and illegal -- helps keep inflation low, boosts rents and housing values, and benefits the average U.S. taxpayer while burdening some state and local governments, other research finds.

"Immigration provides overall economic gains to a country," wrote economist Albert Saiz, summarizing the literature in a 2003 article for the Federal Reserve Bank of Philadelphia. "Indeed, the U.S. experience as an immigrants' country is one of phenomenal economic growth. However, there are winners and losers in the short run."

The primary losers in this country are workers who do not have high school diplomas, particularly blacks and native-born Hispanics, according to George J. Borjas, a Harvard University economist who has studied immigration for years.

From 1980 through 2000, immigration reduced average wages for the nation's 10 million native-born men without high school educations by 7.4 percent, Borjas wrote in 2004. They earned an average of $25,000 a year in 2000.

Other economists contend that the effect is much smaller -- a wage reduction of close to 1 percent -- and has dissipated as Americans have become better educated. The proportion of the adult labor force, including immigrants, without high-school diplomas has dropped to just 10 percent.

The proportion of immigrants in the U.S. adult urban population nearly doubled from 1980 to 2000, from 9.5 percent to 18 percent, according to census figures cited by David Card, an economist at the University of California at Berkeley, in a paper presented at a Federal Reserve Bank of Philadelphia conference last year. The Washington area mimicked the national trend, with the immigrants' proportion growing from 9.6 percent to 20.6 percent during those two decades.

And immigrants are, on average, less schooled than native-born Americans. Looking at census data from hundreds of the nation's urban areas where immigrants cluster, Card found that in both 1980 and 2000, more than a third of adult immigrants did not have high school diplomas. But the proportion of working-age natives at that education level fell from 23 percent to 13 percent from 1980 to 2000, "more than offsetting the inflow of less-educated immigrants."

The wage gap between high school graduates and dropouts stayed relatively constant from 1979 to 2000, with the graduates earning 25 to 30 percent more, Card wrote.


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