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A crucial
question in the current debate over immigration is what impact immigrants
have on the wages of native-born workers. At first glance, it might seem that
the simple economics of supply and demand provides the answer: immigrants
increase the supply of labor; hence they should decrease the wages of native
workers. However, the issue is more complicated than this for two reasons
that have been largely overlooked. First, immigrants and natives tend to
differ in their educational attainment, skill sets, and occupations, and they
perform jobs that often are interdependent. As a result, immigrants do not
compete with the majority of natives for the same jobs. Rather, they
complement the native-born workforce which increases the productivity, and
therefore the wages, of natives. Second, the addition of new workers to the
labor force stimulates investment as entrepreneurs seize the opportunity to
organize these new workers in productive ways that generate profits. When
these two factors are included in the analysis of immigration and wages, it
becomes clear that immigration has a positive effect on the wages of most
native-born workers.
Among the findings of this report:
- Immigrants are
increasingly concentrated among workers with the lowest and highest
levels of education, but comprise a relatively small share of workers in
intermediate groups.
- During the 1990-2004
period, immigration accounted for 20 percent of employment growth among
workers without a high-school diploma and 14.1 percent among workers
with at least a college degree. In contrast, immigration accounted for
9.9 percent of employment growth among workers with only a high-school
diploma and 6.5 percent among those with some college.
- The share of
foreign-born workers within each educational group varies according to
years of experience, sometimes by wide margins. In 2004, for instance,
34.1 percent of workers without a high-school diploma were foreign-born,
but the foreign-born share ranged from 11.6 percent to 49.3 percent
depending on years of experience.
- Since workers with
different levels of experience tend to fill different types of jobs,
even if they have comparable levels of education, this pattern suggests
that natives are in direct competition only with a subset of immigrants
within a given educational group, while benefiting from
complementarities with workers in other experience groups.
- Immigrants tend to
choose different occupations than natives. Since the services provided
by different occupations are not perfectly substitutable for each other,
this implies that natives and immigrants are not perfect substitutes for
each other even if they have similar levels of education and experience.
- During the 1990-2004
period, the 90 percent of native-born workers with at least a
high-school diploma experienced wage gains from immigration that ranged
from 0.7 percent to 3.4 percent depending on education. Native-born
workers without a high-school diploma lost only 1.1 percent of their
real yearly wages due to immigration.
Read the entire report here.
For more information contact Tim Vettel at (202) 742-5608.
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