Should We Invade Mexico? - Americans forget is
that the U.S. is located next to a failed state that is promising to descend
even further into chaos – not California, the other one. And the Mexicans,
having reached the bottom of the hole they have dug for themselves, just
elected a president who wants to surrender to the cartels and thinks
Mexicans have a “human right” to sneak
into the United States and reconquer it. - KURT SCHLICHTER
An Abundance of New Academic Studies Find Negative Impacts of Immigration
The economic costs and benefits of immigration are routinely measured, weighed, and debated in academic journals. No fair reading of the literature could conclude that economists believe immigration has only costs or only benefits.
Nevertheless, some immigration advocates claim that their benefits-only narrative is backed by scholarly consensus. Vox once ran this ridiculous headline: "There's no evidence that immigrants hurt any American workers". Reason's Shikha Dalmia has absurdly claimed that George Borjas is "literally the only economist of any repute who questions the economic benefits of immigration". ABC News thought it could dispense with the whole notion that immigrants drive down wages with a single-paragraph "fact-check".
It's not difficult to see that the advocates are wrong. In the fall of 2016, the National Academies of Sciences, Engineering and Medicine published a book-length report on the economics of immigration. Chapters 4 and 5 of that report offer a careful, systematic review of the research, both theoretical and empirical, on immigration's wage and employment effects. Anyone who reads those chapters cannot come away believing that immigration is cost-free. For example, Table 5-2 from the report lists several major studies measuring immigration's impact on wages. Notice the negative values in the "Wage Effect" column:
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Since the National Academies' book was published, economists have continued to produce more papers finding costs associated with immigration. What follows is not a formal literature review, but rather a sampling of mainstream research that disproves ridiculous claims such as, "There's no evidence that immigrants hurt any American workers." These findings are not outliers — they are published regularly by mainstream outlets. They are not just the product of George Borjas — he appears only once in the following list. And they are not one-sided or simplistic — the authors routinely stress that they have found both costs and benefits, with the mixture changing depending on their methodological approach. My summaries of these papers follow.
- David A. Jaeger, Joakim Ruist, and Jan Stuhler, "Shift-Share Instruments and the Impact of Immigration", NBER Working Paper No. 24285, February 2018.
Several studies try to isolate the impact of immigration on wages by comparing cities with different levels of immigration. The problem is that immigrants do not choose destination cities randomly. If they choose cities that have rising wages, the negative impact of immigration may be obscured.
This paper shows that a common "instrumental variables" technique to deal with that problem still unintentionally captures more than just the initial impact of immigration. When a local area experiences an influx of immigrants, the wage goes down for a time, but then it rises back toward equilibrium as more businesses come in or other workers leave. Since immigrants tend to go to the same places year after year, the instrumental-variables technique captures both the negative short-term wage effect and the positive "catch-up" wage effect from earlier waves of immigrants. As a result, all of the short-term wage effects estimated using this method appear less negative than they really are.
The authors of this paper provide a long list of prior studies that underestimate negative wage effects because of this faulty method. Giovanni Peri, an economist famous for downplaying the negative impact of immigration, has 12 different papers on the list. - Jason Anastasopoulos, George J. Borjas, Gavin G. Cook, and Michael Lachanski, "Job Vacancies and Immigration: Evidence from Pre- and Post-Mariel Miami", NBER Working Paper No. 24580, May 2018.
It may seem that the Mariel Boatlift has been studied to death, but this is an innovative paper. It uses a database of historical job listings to establish that job vacancies in Miami declined after three mass-immigration events: the initial wave of Cuban refugees after the revolution, the Mariel boatlift, and an additional refugee wave in the mid-1990s. - Christian Dustmann, Uta Schönberg, and Jan Stuhler, "Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment", Quarterly Journal of Economics, 2017, Vol. 132, No. 1.
A change in commuting policy led to a sudden increase in Czech workers in a border area of Germany. The result was lower wages and employment levels for natives, particularly for those who are older and have less attachment to the labor force. Although this paper focuses on a foreign country, it has important implications for U.S. policy. The tight labor market in the United States has led to employers recruiting from marginalized groups such as high school dropouts, ex-cons, and the disabled. Expanding immigration could short-circuit that employer outreach. As the authors of this paper conclude, "[T]he employment response [to immigration] is almost entirely driven by diminished inflows of natives into work rather than outflows." - Bin Xie, "The Effects of Immigration Quotas on Wages, the Great Black Migration, and Industrial Development", IZA Discussion Paper No. 11214, December 2017.
Restricting immigration in the 1920s raised manufacturing wages and drew black migrants from the South into northern factories. As with the above paper on German workers, this result provides support for the theory that immigration deters natives from moving into emerging labor markets.
Interestingly, immigration restriction also appears to have slowed the growth of electric-powered assembly lines, which illustrates how the relationship between skills and technology has changed over time. Low-skill workers were once needed to man the assembly lines that displaced skilled artisans. Today, technology generally advances with skilled workers — e.g., computer programmers in Silicon Valley. (See the Brunello, et al. paper listed below for more on this point.) - Philipp Ager and Casper Worm Hansen, "Closing Heaven's Door: Evidence from the 1920s U.S. Immigration Quota Acts", Working Paper, October 2017.
This paper also finds that 1920s immigration restrictions benefited black workers. It concludes that wages for white workers dropped, however, which is another indication that immigration has mixed economic effects. It is up to policymakers to decide how to weigh the costs and benefits. - Amy Wax and Jason Richwine, "Low-Skill Immigration: A Case for Restriction", American Affairs, Winter 2017.
The authors combine the "top-down" Census Bureau data on native job losses with "bottom-up" ethnographic research on employer preferences for immigrant labor. They make a strong qualitative case that businesses use immigrants to replace natives in their low-skill workforces. - Maria Hoen, Simen Markussen, and Knut Roed, "Immigration and Social Mobility", IZA Discussion Paper No. 11904, November 2018.
Using administrative data from Norway, the authors find that low-skill immigration has reduced social mobility, causing inequality to increase. Interestingly, they connect their findings to the politics of immigration. Opposition to immigration from lower classes in Norway arises not necessarily from "bigotry", but as a rational response to their weakened economic position. - David Neumark and Cortnie Shupe, "Declining Teen Employment: Minimum Wages, Other Explanations, and Implications for Human Capital Investment", Mercatus Working Paper, February 2018.
The primary focus of this paper is the minimum wage, but it finds some role for immigration in reducing teen employment. Moreover, the authors are skeptical of immigration advocates' argument that teens improved their human capital by substituting school for employment. - Anthony Edo and Hillel Rapoport, "Minimum Wages and the Labor Market Effects of Immigration", IZA Discussion Paper No. 11778, August 2018.
Speaking of the minimum wage, this paper uses state variation in minimum wage laws to show that immigrants tend to lower the wages and employment levels of the natives with whom they compete most directly. Specifically, natives suffer greater wage and employment losses due to low-skill immigration in states with lower minimum wages. Whether increasing the minimum wage would be wise policy is beyond the scope of the paper, but it does show once again that immigrants and natives are — at least to a large extent — substitutes in the labor market. - John Bound, Guarav Khanna, and Nicolas Morales, "Understanding the Economic Impact of the H-1b Program on the U.S", NBER Working Paper No. 23153, February 2017.
General equilibrium models can be highly sensitive to assumptions. It sometimes seems that one can build a model to prove virtually any proposition. In this case, however, the model confirms basic economic theory: High-skill immigration in the 1990s lowered the wage for competing native workers, but reduced consumer prices and increased corporate profits, again illustrating the trade-offs inherent to immigration policy. - Giorgio Brunello, Elisabetta Lodigiani, and Lorenzo Rocco, "Does Low Skilled Immigration Increase Profits? Evidence from Italian Local Labour Markets", IZA Discussion Paper No. 12226, March 2019.
Though its results are likely underestimated due to use of the instrumental-variables technique discussed in the Jaeger et al. paper listed above, this paper finds the usual result that low-skill immigration reduces wages and increases profits in affected industries. The authors speculate that low-skill immigration has retarded Italy's transition to a more high-tech economy. (See the Xie paper above for a discussion of how skills interact with technology.) - Ted Mouw, "The Impact of Immigration on the Labor Market Outcomes of Native Workers: Evidence Using Longitudinal Data from the LEHD", US Census Bureau Center for Economic Studies Paper No. CES-WP-16-56, December 2016.
This paper uses a longitudinal dataset to follow workers over time. It finds that immigration depresses native earnings and employment, although the effects are small as workers move to different regions and industries. - Kathleen Kürschner Rauck and Michael Kvasnicka, "The 2015 European Refugee Crisis and Residential Housing Rents in Germany", IZA Discussion Paper No. 12047, December 2018.
This paper falls at the intersection of economics and culture. It finds that the influx of Syrian refugees to Germany loweredrents in areas where the refugees were most concentrated, despite the sheer increase in people needing housing. The reason is that native Germans did not wish to live near large numbers of refugees. Immigration changes host countries in a variety of ways, and this paper offers a rare quantitative look at how natives sometimes avoid the areas most affected.
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