Though perhaps they're only drops in the ocean, a pair of white papers from the German economic research institute IZA recently consolidated the evidence, analyzing dozens of studies in many different countries over the past decade to see where most of them shook out. With a few outliers, results support the admittedly counterintuitive notion that -- as long as labor markets remain flexible -- immigration actually creates more jobs and can push up wages for native-born workers. Here are the main reasons why that's true.
1. Immigrants fill labor gaps. "Vacancies exist even under high unemployment because native workers and jobs do not always match or because unemployed workers might not want or be qualified for the jobs available," writes Amelie Constant, whose report focused on employment. Immigrants take jobs that might be below their skill levels because they pay more than what they could make in their home countries. Employers also tend to hire immigrants as a substitute for offshoring jobs completely; those positions may not have gone to native workers anyway.
2. Immigrants don't always have access to the same jobs as native workers. Linguistic, cultural, and social barriers often prevent immigrants from competing with existing residents -- which isn't necessarily a good thing for the newcomers, or the earlier immigrants with whom they compete more directly. "In segmented labor markets, immigrants may be slotted for a long time into lower tier jobs as supplements to native workers," Constant writes.
3. Immigrants complement existing capital, technology, and other experts. That applies both to high-skilled foreigners, who allow other researchers and academics to further specialize in their fields, as well as low-skilled immigrants, who free up natives to shift into more complex and communication-intensive professions. "The resulting synergies can lead to job creation, and the economy can accommodate many more workers as the low-skilled help the high-skilled specialize and climb the socio-economic ladder," the report says.
That may explain why there's no correlation between unemployment and immigration rates in developed countries:
4. Labor markets adapt. "An increase in available workers means that existing firms can grow, investing in new plant and equipment, and that new firms may start up," writes Giovanni Peri, who did a meta-survey of wage research. "Unless the immigrant influx is sudden and unexpected, this mechanism operates continuously and allows the local economy to expand and absorb additional immigrant labor without lowering wages."
5. Complementarity increases productivity, which drives wage growth. The aforementioned ways in which employers react to external supplies of labor makes native workers more valuable. "Most studies that explicitly consider these possibilities find positive, sometimes large, productivity effects of increased numbers of immigrant workers," Peri writes. "When the impact of these mechanisms on wages is also accounted for, it seems clear that these mechanisms could offset competition effects, producing the overall nil or positive effects observed in the 27 broad studies of immigration and native wages."
In a recent study of his own, for example, Peri found that a one percent increase in the presence of foreign scientists and engineers increased the wages of college educated workers by 7 to 8 percent.
Overall, according to Peri's study of studies, most estimated the wage effects of immigration as either non-existent or slightly positive.