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A review of the academic literature on immigration and the American worker

Posted on 08-Dec-2013. Updated on 09-Dec-2013.
Topics: Effects of Immigration on American Workers  

From Center for Immigration Studies:

George J. Borjas has been described by both Business Week and the Wall Street Journal as “America’s leading immigration economist”. He is the Robert W. Scrivner Professor of Economics and Social Policy at the Harvard Kennedy School. He is the recipient of the 2011 IZA Prize in Labor Economics. Professor Borjas is also a Research Associate at the National Bureau of Economic Research and a Research Fellow at IZA. Professor Borjas is the author of several books, including Heaven’s Door: Immigration Policy and the American Economy (Princeton University Press, 1999), and the widely used textbook Labor Economics (McGraw-Hill, 2012), now in its sixth edition. He has published over125 articles in books and scholarly journals. He received his Ph.D. in economics from Columbia University in 1975.

Executive Summary

At current levels of around one million immigrants per year, immigration makes the U.S. economy (GDP) significantly larger, with almost all of this increase in GDP accruing to the immigrants themselves as a payment for their labor services.

For American workers, immigration is primarily a redistributive policy. Economic theory predicts that immigration will redistribute income by lowering the wages of competing American workers and increasing the wages of complementary American workers as well as profits for business owners and other “users” of immigrant labor. Although the overall net impact on the native-born is small, the loss or gain for particular groups of the population can be substantial.

The best empirical research that tries to examine what has actually happened in the U.S. labor market aligns well with economy theory: An increase in the number of workers leads to lower wages. This report focuses on the labor market impact of immigration.

Immigration also has a fiscal impact — taxes paid by immigrants minus the costs they create for government. The fiscal impact is a separate question from the labor market impact. This report does not address the size of the fiscal impact.

Findings

The Standard “Textbook” Model

Illegal Immigration

Measuring the Effects of Immigration Directly

Findings from Recent Studies: Could All Americans Gain from Immigration?

Conclusion

Economists have long known that immigration redistributes income in the receiving society. Although immigration makes the aggregate economy larger, the actual net benefit accruing to natives is small, equal to an estimated two-tenths of 1 percent of GDP. There is little evidence indicating that immigration (legal and/or illegal) creates large net gains for native-born Americans.

Even though the overall net impact on natives is small, this does not mean that the wage losses suffered by some natives or the income gains accruing to other natives are not substantial. Some groups of workers face a great deal of competition from immigrants. These workers are primarily, but by no means exclusively, at the bottom end of the skill distribution, doing low-wage jobs that require modest levels of education. Such workers make up a significant share of the nation’s working poor. The biggest winners from immigration are owners of businesses that employ a lot of immigrant labor and other users of immigrant labor. The other big winners are the immigrants themselves.

Illegal immigration continues to vex the public and policymakers. Illegal immigrants have clearly benefited by living and working in the United States. Many business owners and users of immigrant labor have also benefited by having access to their labor. But some native-born Americans have also lost, and these losers likely include a disproportionate number of the poorest Americans.

Click here for the full report.

Sources:

[1] "Immigration and the American Worker", George Borjas, Center for Immigration Studies, April 2013

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