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November 6, 2005
Immigration May Actually Lift Overall Wages
Virginia Postrel, as is her custom, points to an anomaly in her most recent "Economic Scene" column for the New York Times which confounds expectations—-and those who would seek to demagogue the immigration issue.
Postrel points to a study (pdf) which finds that immigration during the 1990s actually increased the average wage of the U.S. worker by 2.7%. Some of the study’s key points include:
--When any business expands, including hiring immigrants, workers with complementary skills are hired as well. "Immigrant engineers, for instance, may create demand for native-born patent lawyers and marketing executives," notes Postrel.
--Immigrants typically bring different skills to the U.S. labor force, focusing on different occupations from natives. Such a trend explains why foreign-born tailors, for example, make up over half of all tailors in the U.S.
--Even in similar professions, there is no perfect substitution. A Chinese cook or Japanese sushi chef, for example, is highly unlikely to take cooking jobs at the Central Bar-B-Que in Memphis (to use an example of one of the world’s best barbeque spots).
--Recent immigration, not surprisingly, has had the greatest impact on the least educated, as Postrel observes:
Immigration in the 1990's, they [the study's authors] estimate, raised the wages of native-born high school graduates, college dropouts and college graduates by at least 2.5 percent. By contrast, they estimate that the wages of American-born high school dropouts fell by 2.4 percent because of immigration.
In an interview, however, Professor Peri noted that Americans are increasingly well educated, so that high school dropouts make up a small, rapidly declining portion of today's native-born work force. In 2000, he said, only 9 percent of American-born workers did not have a high school degree.
"If you look at the U.S. labor force," he said, "those people born in the U.S., I am talking about a negative effect for about 9 percent of the population and a positive effect for 91 percent of the population."
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