Study Finds that Immigration Has Negligible Effect on Wages of Native US Workers
One of the single biggest issues involved in immigration reform discussions—for both sides, those for immigration reform and those opposed to it—is wages. Good wages, of course, are what are driving many foreign nationals to come to the United States in the first place, and a portion of these immigrants to skirt the immigration process entirely and enter the country illegally. Opponents of immigration reform argue, on the other side, that the more immigrants arrive on US shores, the lower these wages will become, both for immigrant workers and for U.S. citizens in the same jobs.
A new working paper titled “Immigration and National Wages: Clarifying the Theory and the Empirics” recently appeared at NBER Working Papers, authored by economists Gianmarco Ireo Paolo Ottaviano from the University of Bologna and Giovanni Peri from the University of California, Berkeley. The two target this very issue, studying the effects of immigration on the wages of native workers at the national level.
Ottaviano and Peri studied wage and immigration data from 1990-2006 and found that in fact, immigration had a slightly negative effect in the short term on the wages of native workers with no high school degree (-0.7%) and on average wages (-0.4%). In the long run, however, the effects on native workers with no high school degree and average wages across the board was positive: an increase of 0.3% on workers without a high school diploma and an increase of 0.6% on average.
One of the important features of the study was Ottaviano and Peri’s determination that workers with a high school diploma and those without one can be viewed as nearly one in the same in national labor markets, a feature that “strongly dilutes the effects of competition between immigrants and workers with no degree,” as they argue. When they compare native workers versus immigrant workers, then, they find that the ability to be substituted was imperfect. In other words, native and immigrant workers simply aren’t competitive for the same jobs, the fundamental idea behind the theory that immigrant workers keep wages low.
Ottaviano and Peri’s data was roughly in line with a White House report published nearly one year ago that showed similar “small negative effects” on the least skilled workers and overall positive effects on wages. That study also looked at other economic factors that might be impacted by immigrant workers, and found that on average, an immigrant worker will contribute roughly $80,000 in taxes, welfare benefits and social security benefits than the same worker will claim, a net positive contribution.
Even in their most pessimistic findings, the studies undercut arguments made to suggest that immigrant workers create wage problems for native workers with comparable skill sets. The Ottaviano and Peri argument shows negative effects on wages in the short term, but these negative effects remain under 1%, a change likely to be unnoticed in terms of individual workers.