Labor Protectionism: Minimum Wage and the Labor Market Effects of Immigration

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A new working paper provides some interesting results about the interplay between immigration and minimum wage laws:

Our first empirical strategy exploits the non-linearity of the minimum wage across U.S. States to investigate the role played by the minimum wage in shaping the impact of immigration on the wages and employment of competing native workers. We find that on average, immigration has relatively small detrimental effects on the wages and employment outcomes of competing native workers. The main contribution of this study is not to provide yet another estimate of the wage and employment responses to immigration but, rather, to investigate the role of minimum wages in determining such responses. Indeed, we show that the labor market effects of immigration are heterogeneous across U.S. States characterized by different levels of minimum wage. In particular, we find that the impact of immigration on natives’ labor market outcomes is more negative in states where the effective minimum wage is relatively low. In contrast, sufficiently high minimum wages tend to protect native workers from any adverse wage or unemployment effects of immigration.

Our second empirical methodology uses a difference-in-differences approach. We use cross-state differences in the impact of federal minimum wage adjustments on state effective minimum wages. Over our period of interest, the successive rises in the federal minimum wage have fully affected the states where the effective minimum wage is equal to the federal one (the treatment group), with no impact in high minimum wage states (the control group). Thus, we can estimate the difference between the labor market impact of immigration before and after the federal policy changes between the treatment group and the control group. Our estimates indicate that the detrimental impact of immigration on natives’ wages and employment have been mitigated thanks to the federal minimum wage increases that occurred in three installements between 2007 and 2010.

Taken together, our results indicate that high minimum wages tend to protect employed native workers against competition from immigrants. This may come at the price, obviously, of rendering access to employment more difficult for outsiders such as the unemployed natives and new immigrants, a question we cannot investigate given the limits of our data (pg. 51-52).

Interesting, but not surprising. Case in point, consider my summary of Thomas Leonard’s Illiberal Reformers:

The book meticulously demonstrates that the progressive impulse toward inflating the administrative state was driven largely by self-promotion (i.e, the professionalization of economists), racist ideologies (i.e., the fear of race suicide), and an unwavering faith in science. Not only should the “undesirables” of the gene pool be sterilized, but they should be crowded out of the labor force as well. Those considered “unfit” for the labor market included blacks, immigrants, and women. In order to artificially raise the cost of employing the “unfit,” progressives sought to implement minimum wage (often argued to be a “tariff” on immigrant labor), maximum hours, and working standard legislation.

A “tariff” on immigrant labor indeed.

New Draft Report Covering a Decade of Refugees

A draft report by the U.S. Department of Health and Human Services found that between 2005 and 2014, refugees brought in $63 billion more in government revenue than they cost. As reported by The New York Times,

The draft report…contradicts a central argument made by advocates of deep cuts in refugee totals as President Trump faces an Oct. 1 deadline to decide on an allowable number. The issue has sparked intense debate within his administration as opponents of the program, led by Mr. Trump’s chief policy adviser, Stephen Miller, assert that continuing to welcome refugees is too costly and raises concerns about terrorism.

Advocates of the program inside and outside the administration say refugees are a major benefit to the United States, paying more in taxes than they consume in public benefits, and filling jobs in service industries that others will not. But research documenting their fiscal upside — prepared for a report mandated by Mr. Trump in a March presidential memorandum implementing his travel ban — never made its way to the White House. Some of those proponents believe the report was suppressed.

Well, when you build an entire campaign on anti-immigration/refugee rhetoric, what else can you do?

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Immigrant Integration: European Edition

I’ve written before about how strict labor laws in Europe may be hindering immigrant integration. While I still think these may be barriers to integration, Europe is doing better than is often reported. As Tyler Cowen explains in Bloomberg,

Debates over immigration are fraught with misconceptions. One of the most common is that the integration of Muslims into societies in Western Europe has gone very badly, in large part because terror attacks loom so large in the news. Those attacks are a very real problem, yet they do not reflect the typical reality. A new study from the Bertelsmann Stiftung in Germany shows that Muslim integration in Europe is in fact proceeding at a reasonable pace.

The survey included more than 1,000 Muslims in Germany and about 500 in Austria, France, Switzerland and the U.K. (both immigrants and children of immigrants were included, though not recent refugees). Although this is hardly the first study of its kind, the results offer considerable hope for societies facing integration challenges: The stereotype of an uneducated, unemployed, easily radicalized Muslim migrant does not fit the facts.

The first sign of integration is language skill. About three-quarters of the Muslims born in Germany report German as their first language; 46 percent of foreign-born Muslims do. Overall, language skills improve with each generation, and migrants seem to be resourceful in finding ways to learn an adopted country’s tongue. Muslims immigrants to France and the U.K. often arrive knowing the languages of their new countries.

Only about one in 10 French Muslims report leaving school before age 17; the American high school graduation rate for all attendees is lower, at 83 percent. In Germany, employment for Muslim immigrants is on a par with employment for non-Muslims, though Muslim wages are lower. The rate of unemployment for French Muslims is a disappointing 14 percent, but that looks less troubling when you consider that migrants are relatively young and French youth unemployment as a whole is about 25 percent. Labor market reforms and better economies can help integrate foreign migrants, and Europe is currently showing decent economic growth, again reasons for hope.

Nor do Muslims huddle in Muslim-only communities, apart from the broader population. Some 87 percent of Swiss Muslims report having frequent or very frequent social contact with non-Muslims. In both Germany and France that number is 78 percent, again a sign of assimilation. It is lower in the U.K. (68 percent) and Austria (62 percent), but even those figures show plenty of social intermingling. And migrants across countries report feeling a close connection to the countries they live in, from a high of 98 percent (Switzerland) to a low of 88 percent (Austria).  

Cowen continues,

The study also suggests that integration works better when the migrants are relatively numerous, perhaps because they can create mutual support services. But making that point is unlikely to win many European elections…The good news is that Western European integration of Muslims is further along than many people believe. The bad news is that the process of integration entails significant social change and change sometimes brings turmoil. The human race is improving at this broader challenge only slowly.

Migration and Terrorism

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A new study examines the link between immigrants and terrorism:

In our recent work (Dreher et al. 2017) we provide a detailed analysis of how the number of foreigners living in a country has affected the number of terrorist attacks made by foreigners on citizens of their host countries. According to the raw data, in OECD countries between 1980 and 2010, for every million foreigners in the population, 0.8 terror attacks are committed per year, per country (there were 662 transnational attacks). While it is obvious that the number of attacks increases with the number of people living in a country (after all, with no foreigners in a country, no foreigners would commit any attacks), on average these numbers amount to about one attack by foreigners per year and host country, and 1.3 people die from these attacks in the average country and year.

Transnational terror is dwarfed in absolute numbers by the number of attacks made by the domestic population. In the 20 OECD countries that our sample covers, there were 2,740 attacks arising from the domestic population. In relative terms though, the picture is different – there were fewer than 0.18 terrorist attacks for every one million locally born citizens in a typical country and year. Overall, while the probability that foreigners are involved in an attack on the domestic population was much higher than the risk that citizens were involved in attacks on their own country, the risk associated with each additional foreigner was tiny.

In our statistical analysis, we investigate whether, and to what extent, an increase in the foreign population of the average OECD country would increase the risk of terrorist attacks from foreigners in a host country. We identify exogenous variation in the number of foreigners living in an OECD country using changes in migration resulting from natural disasters. These changes affected host countries differently, according to the specifics of each host- and origin-country pair.

Using data for 20 OECD host countries, and 187 countries of origin between 1980 and 2010, we find that the number of terror attacks increased with the number of foreigners living in a host country. This scale effect that relates larger numbers of foreigners to more attacks does not imply, however, that foreigners are more likely to become terrorists than the domestic population. When we calculate the effect of a larger local population on the frequency of terror attacks by locals, the effect is of a comparable size. We conclude that, in this period, migrants were not more likely to become terrorists than the locals of the country in which they were living.

To put these results in perspective, consider the expected effect of a decrease in the domestic population of 0.0002% (which is the average decrease in the domestic population of the 20 OECD countries we studied in 2015, according to the OECD). According to our model, this would have reduced the number of terrorist attacks by 0.00025 per country and year. The increase in the stock of foreigners living in these countries was 3.6% in the same year. According to our estimates, this would have created 0.04 additional attacks. We might argue that this hardly justifies a ban on foreigners as a group.

We find little evidence that terror had been systematically imported from countries with large Muslim populations. The exceptions were Algeria and Iran, where we found a statistically higher risk of being involved in terrorist attacks against the local population, compared to the average effect of foreigners from non-Muslim countries. In this light, the phrases ‘Muslim terror’ or ‘Islamist terror’ does not seem accurate or useful. Only 6% of the terrorist attacks in the US between 1980 and 2005 period were carried out by Muslims, and less than 2% of all attacks in Europe had a religious motivation between 2009 and 2013 (Alnatour 2017).

I’ve written before about how European labor laws may play a role in radicalization. The authors make a similar case for immigration bans:

Contrary to the expectations of many politicians and pundits, introducing strict laws that regulate the integration and rights of migrants does not seem to have been effective in preventing terror attacks from foreign-born residents. We rather find that repressing migrants already living in the country with these laws has alienated a substantial share of this population, which increases the risk of terror. Stricter laws on immigration thus have the potential to increase the risk of terror, at least immediately following the ban.

…Our results illustrate an important trade-off. While stricter immigration laws could reduce the inflow of (violent) foreigners and thus potentially the number of future terrorist attacks, the restrictions would also increase the probability that those foreigners already living in the country become more violent. Immigration bans, like those recently introduced in the US, would arguably increase the short-term risk of attacks, before potentially reducing risk when the number of foreigners in the population has decreased.

Corruption: Another Driver of Migration

Migrants sit in the back of a truck at a local immigration transit centre in the desert town of Agadez, Niger May 25, 2015. African migrants in overcrowded pickup trucks, encouraged by social media messages from friends who survived the perilous journey across the Mediterranean, set off from Agadez, an ancient trading town on the edge of the Sahara, to cross Niger in the uncertain journey towards Europe via Libya, where the collapse of the government has offered an open door for smugglers. Mostly young men, escaping grinding poverty in neighbouring Benin or Burkina Faso, face bandits and often have to pay bribes en route, on top of the hefty payments to people smugglers. International focus on the issue of migration into Europe has sharpened after hundreds of migrants drowned while trying to cross the sea from North Africa in overcrowded and unsafe vessels. REUTERS/Akintunde Akinleye TPX IMAGES OF THE DAY PICTURE 34 OF 36 FOR WIDER IMAGE STORY ‘SMUGGLED THROUGH NIGER’SEARCH ‘SAHARA AKINLEYE’ FOR ALL IMAGES TPX IMAGES OF THE DAY - RTX1EXBV

“One issue frequently raised by migrants whom I have met in transit (most recently in Agadez, Niger) is the absence of a level playing field in their home country,” reports Richard Danziger at the World Economic Forum. “Without knowing the right people, being from the right community or having the money to buy their way into a job, they will never get ahead. This, in turn, is part of the broader problem of poor governance, which has resulted in everything from a sharp drop in the quality of education and other services; to investment in sectors that lead to impressive GDP growth indicators, but result in little by way of job creation. While an increasing number of countries across Africa are holding free and fair elections, democratically elected governments have yet to prove themselves truly responsive to the needs of vast swathes of the population. In countries where there is already a tradition of migration, for many, voting with one’s feet can appear more effective than a trip to the ballot box.”

Danziger continues,

There has been relatively little research on the issue of poor governance as a driver of migration. A recently published study by GIZ specifically examining the link between corruption and migration and forced displacement is a rare example of research into this sensitive subject…The concept of poor governance is very broad and can cover a multitude of areas of mismanagement or criminal activity horizontally across sectors and vertically across levels of management. Indonesians for example talk of KKN: the Bahasa acronym for Corruption, Collusion and Nepotism. It might perhaps be more useful to explain what is meant by good governance and here we can refer to Sustainable Development Goal (SDG) 16: “Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.” More specifically 16.5, 16.6 and 16.7; address corruption, transparency and accountability, and inclusiveness and participation.

As for the link to migration, the New York Declaration for Refugees and Migrants refers to the promotion of the rule of law and the need to address marginalization and exclusion. It also refers to the SDGs and the promotion of peaceful and inclusive societies, carefully sidestepping any mention of KKN or related abuses. Yet if we are to create a truly new and effective global migration framework there is a need for the Global Compact on Migration to include explicit reference to these issues.

I have an article currently under review at BYU Studies Quarterly on the subject of the Church and immigration. The more I read about the subject, the more I’m convinced I’m right.

The Effects of Immigrants: Miami Edition

Economist Michael Clemens has an excellent article in Vox discussing some of his most recent research on immigration and in turn responds to Harvard’s George Borjas, the most prominent anti-immigration economist around:

Do immigrants from poor countries hurt native workers? It’s a perpetual question for policymakers and politicians. That the answer is a resounding “Yes!” was a central assertion of Donald Trump’s presidential campaign. When a study by an economist at Harvard University recently found that a famous influx of Cuban immigrants into Miami dramatically reduced the wages of native workers, immigration critics argued that the debate was settled.

…But there’s a problem. The study is controversial, and its finding — that the Cuban refugees caused a large, statistically unmistakable fall in Miami wages — may be simply spurious. This matters because what happened in Miami is the one historical event that has most shaped how economists view immigration.

In his article, Borjas claimed to debunk an earlier study by another eminent economist, David Card, of UC Berkeley, analyzing the arrival of the Cubans in Miami. The episode offers a textbook case of how different economists can reach sharply conflicting conclusions from exactly the same data.

Yet this is not an “on the one hand, on the other” story: My own analysis suggests that Borjas has not proved his case. Spend a few minutes digging into the data with me, and it will become apparent that the data simply does not allow us to conclude that those Cubans caused a fall in Miami wages, even for low-skill workers.

An influential 1990 study found “no difference in wage or employment trends between Miami — which had just been flooded with new low-skill workers — and other cities” following the arrival of 125,000 Cuban immigrants.

Two new studies reexamined the 1990 study. “Borjas, instead, focuses on workers who did not finish high school — and claimed that the Boatlift caused the wages of those workers, those truly at the bottom of the ladder, to collapse. The other new study (ungated here), by economists Giovanni Peri and Vasil Yasenov, of the UC Davis and UC Berkeley, reconfirms Card’s original result: It cannot detect an effect of the boatlift on Miami wages, even among workers who did not finish high school.” Clemens suggests looking at

certain subgroups that may have competed more directly with the newly-arrived Cubans. For example, the Mariel migrants were mostly men. They were Hispanic. Many of them were prime-age workers (age 25 to 59). So we should look separately at what happened to wages for each of those groups of low-skill workers who might compete with the immigrants more directly: men only, non-Cuban Hispanics only, prime-age workers only…Here again, if anything, wages rose for each of these groups of low-skill workers after 1980, relative to their previous trend. There isn’t any dip in wages to explain. And, again, the same is true if you compare wage trends in Miami to trends in other, similar cities. Peri and Yasenov showed that there is still no dip in wages even when you divide up low-skill workers by whether or not they finished high school. About half of the Mariel migrants had finished high school, and the other half hadn’t. So you might expect negative wage effects on both groups of workers in Miami. Here is what the wage trends look like for those two groups.

The wages of Miami workers with high school degrees (and no more than that) jump up right after the Mariel boatlift, relative to prior trends. The wages of those with less than a high school education appear to dip slightly, for a couple of years, although this is barely distinguishable amid the statistical noise. And these same inflation-adjusted wages were also falling in many other cities that didn’t receive a wave of immigrants, so it’s not possible to say with statistical confidence whether that brief dip on the right is real. It might have been — but economists can’t be sure. The rise on the left, in contrast, is certainly statistically significant, even relative to corresponding wage trends in other cities.

So how did Borjas come to different conclusions? He “starts with the full sample of workers of high school or less — then removes women, and Hispanics, and workers who aren’t prime age (that is, he tosses out those who are 19 to 24, and 60 to 65). And then he removes workers who have a high school degree. In all, that means throwing out the data for 91 percent of low-skill workers in Miami in the years where Borjas finds the largest wage effect. It leaves a tiny sample, just 17 workers per year.” Borjas’ conclusions involve a lot of statistical noise and, as Clemens notes, “if we’re willing to take low-skill workers in Miami and hand-pick small subsets of them, we can always find small groups of workers whose wages rose during a particular period, and other groups whose wages fell. But at some point we’re learning more about statistical artifacts than about real-world events.”

But there is another factor at work:

it turns out that the CPS sample includes vastly more black workers in the data used for the Borjas study after the boatlift than before it.

Because black men earned less than others, this change would necessarily have the effect of exaggerating the wage decline measured by Borjas. The change in the black fraction of the sample is too big and long-lasting to be explained by random error. (This is my own contribution to the debate. I explore this problem in a new research paper that I co-authored with Jennifer Hunt, a professor of economics at Rutgers University.)

Around 1980, the same time as the Boatlift, two things happened that would bring a lot more low-wage black men into the survey samples. First, there was a simultaneous arrival of large numbers of very low-income immigrants from Haiti without high school degrees: that is, non-Hispanic black men who earn much less than US black workers but cannot be distinguished from US black workers in the survey data. Nearly all hadn’t finished high school.

That meant not just that Miami suddenly had far more black men with less than high school after 1980, but also that those black men had much lower earnings. Second, the Census Bureau, which ran the CPS surveys, improved its survey methods around 1980 to cover more low-skill black men due to political pressure after research revealed that many low-income black men simply weren’t being counted.

You can see what happened in the graph below, which has a point for each year’s group of non-Hispanic men with less than high school, in the data used by Borjas (ages 25 to 59). The horizontal axis is the fraction of the men in the sample who are black. The vertical axis is the average wage in the sample. Because black men in Miami at this skill level earned much less than non-blacks, it’s no surprise that the more black men are covered by each year’s sample, the lower the average wage.

But here’s the critical problem: The fraction of black workers in this sample increased dramatically between the years just before the boatlift (in red) and the years just after the boatlift (in blue). That demographic shift would make the average wage in this group appear to fall right after the boatlift, even if no one’s wages actually changed in any subpopulation. What changed was who was included in the sample.

“When the statistical results in the Borjas study are adjusted to allow for changing black composition of the sample in each city,” Clemens continues, “the result becomes fragile. In the dataset Borjas focuses on, the result suddenly depends on which set of cities one chooses to compare Miami to. And in the other, larger CPS dataset that covers the same period, there is no longer a statistically significant dip in wages at all.” And once “you’ve discarded women, and Hispanics, and workers under 25, and workers over 59, and anyone who finished high school— and blacks, you’ve thrown away 98 percent of the data on low-skill workers in Miami. There are only four people left in each year’s survey, on average, during the years that the Borjas study finds the largest effect. With samples that small, the statistical confidence interval (represented by the dotted lines) is huge, meaning we can’t infer anything general from the results. We can’t distinguish large declines in wages from large rises in wages — at least until several years after the boatlift happened, and those can’t be plausibly attributed to the boatlift.”

In conclusion, “[t]here is no clear evidence that wages fell (or that unemployment rose) among the least-skilled workers in Miami, even after a sudden refugee wave sharply raised the size of that workforce. This does not by any means imply that large waves of low-skill immigration could not displace any native workers, especially in the short term, in other times and places. But politicians’ pronouncements that immigrants necessarily do harm native workers must grapple with the evidence from real-world experiences to the contrary.”


World Bank: Immigrants & Productivity

A new World Bank policy brief reviews the effects of immigrants on productivity:

For a sense of net effects –positive or negative, we looked at 22 primary studies. Explicit analysis on skilled versus unskilled immigrants is rare. So, most of the econometric results pertain to the effects of total immigrants. They remain instructive, given the overwhelming direction of migrant flows from less educated to more educated countries.

…In our RPB, broken down to the three components of labor productivity, positive effects from total immigrants are especially apparent through TFP. There is no statistically significant impact on physical capital per worker suggesting that capital accumulation need not be adversely affected. Human capital per worker is somewhat negatively affected, indicating that immigrants’ compositional effect on skills tends to outweigh the effect on natives’ skills upgrading. In the studies that analyze labor productivity alongside all its three components, positive immigrant effects on TFP more than offset the effects on physical capital and human capital per worker.

Outcomes vary across countries. Positive productivity effects from total immigrants are obvious for the U.S. – analysis using state-level data links task specialization of less-educated natives, induced by unskilled immigrant inflows, to TFP growth. Studies suggest that the complementarity and scale channels operate in Malaysia, but also that automation is somewhat hindered. Actual empirical evidence of net productivity effects seems mixed, and not representative enough of the economy as a whole, tending to focus on the manufacturing sector. In contrast, there is also the unique example of a large influx of skilled immigrants into Israel (fleeing the collapse of the Soviet Union) not having positive effects on productivity in the manufacturing sector.

More than anything, the cross-country evidence highlights that underlying the likelihood of positive net productivity effects is how immigrants link to specific gaps in the economy – regardless of skill level. And the response of agents, markets and institutions in host countries.

In fact, the report found that “on balance, total immigrant effects on labor productivity are statistically insignificant to positive” with “statistically significant positive effects” for total factor productivity (pg. 2). In short, “The economic case for an outright ban on unskilled immigrant workers is weak.”

And now I’ll leave you with the Hamilton Mixtape.

The Long-Term Impact of Immigrants

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“Immigration is one of the most controversial policy issues in the US and Europe today,” write the authors of a new economics paper.

The debate mostly focuses on the short-run effects of immigration: Do immigrants take jobs away from natives? Do immigrants increase pressure on public goods? Do immigrants increase crime and reduce social capital? Many researchers have attempted to address these questions by providing empirical evidence on the short-run, immediate effects of immigration (e.g. Kerr and Kerr 2016, Peri 2012, Peri and Sparber 2009, Card 2009, 2012). While understanding the short run is important, policymakers should also consider the long-run consequences if the welfare of our children and grandchildren are to matter. And yet, we know very little about the long-run impact of immigration.

In order to study this long-run impact, the researchers

examine migration into the US during America’s Age of Mass Migration (from 1850–1920) and estimate the causal effect of immigrants on economic and social outcomes approximately 100 years later (Nunn et al. 2017). This period of immigration is notable for many reasons. First, this was the period in US history with the highest levels of immigration. Second, the immigrants that arrived during this time were different from previous waves of immigrants. While earlier immigrants were primarily from western Europe, the new wave also included large numbers of immigrants from southern, northern, and eastern Europe who spoke different languages and had different religious practices (Hatton and Williamson 2005: 51, Daniels 2002: 121–137, Abramitzky and Boustan 2015).

In order to measure the effects, the authors developed “an instrumental variable (IV) strategy that exploits two facts about immigration during this period. The first is that after arriving into the US, immigrants tended to use the newly constructed railway to travel inland to their eventual place of residence (Faulkner 1960, Foerster 1969). Therefore, a county’s connection to the railway network affected the number of immigrants that settled in the county. The second fact is that the aggregate inflow of immigrants coming to the US during this period fluctuated greatly from decade to decade.”

Their findings?

We find that higher historical immigration (from 1860–1920) resulted in significantly higher incomes, less poverty, less unemployment, more urbanisation, and higher educational attainment today. The estimates, in addition to being statistically significant, are also economically meaningful. For example, according to the estimates for per capita income, moving a county with no historical immigration (i.e. during 1860–1920) to the 50th percentile of the sample (which is 0.049) results in a 20% increase in average per capita income today.

We also try to shed light on the mechanisms. We find that immigration resulted in an immediate increase in industrialisation.  Immigrants contributed to the establishment of more manufacturing facilities and to the development of larger facilities. We also found that immigrants contributed to increased agricultural productivity in the medium-run and to increased innovation, as measured by patenting rates of both immigrants and the native-born. These findings are consistent with a long-standing narrative in the historical literature suggesting that immigrants benefitted the economy by providing an ample supply of unskilled labour, which was crucial for early industrialisation. A smaller number of immigrants brought with them knowledge, skills, and know-how that were beneficial for industry and increased productivity in agriculture. Thus, by providing a sizeable workforce and a (smaller) number of skilled workers, immigration led to early industrial development and long-run prosperity, which continues to persist until today.


What is the Impact of Immigration on Labor Markets?

Yes, this is another immigration post.

A 2017 article in the St. Louis Fed’s The Regional Economist looks at the impact immigration has on U.S. labor markets. The researchers drew on “state-level data from the U.S. Census Bureau for the years 2000, 2005 and 2010 for wages and immigration figures…For wages, we used inflation-adjusted pretax wages and salary incomes of the employed population between the ages of 18 and 60. Finally, we used the Bureau of Labor Statistics’ seasonally adjusted unemployment rate.”

The data “reveals that the relationship between unemployment and immigration is weak to nonexistent, even during this crisis period.”

Furthermore, it “reveals a weak to nonexistent correlation” between wages and immigration, even during economic crises.

But what about the impact on low-skilled workers? “A study by economist David Card addresses this question,” the authors write. “It discusses the consequences of the Mariel boatlift episode, when about 125,000 Cubans emigrated from Cuba’s Mariel port to Miami between May and September 1980. These immigrants had relatively low skills (i.e., less than the average Cuban worker). Card found no evidence that low-skilled wages and the unemployment rate among low-skilled workers changed in Miami.” This is most likely due to the fact that “immigrants and native workers may not be perfect substitutes. It was suggested in one study that immigrants do not so much compete directly with natives as they create conditions for increased specialization by which natives perform more communication-intensive work and immigrants do manual tasks.”

Just more evidence to consider in this controversial debate.

A World Without Borders

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Open borders, according to economist Nathan Smith writing in Foreign Affairs, is the

complete freedom of migration worldwide, with rare exceptions for preventing terrorism or the spread of contagious disease. Borders would still exist in such a world, but as jurisdictional boundaries rather than as barriers to human movement. Ending migration controls in this way would increase liberty, reduce global poverty, and accelerate economic growth. But more fundamentally, it would challenge the right of governments to regulate migration on the arbitrary grounds of sovereignty.

Smith points out that

Gallup has estimated that 640 million people worldwide want to emigrate from their current country of residence. Yet the true number could be much greater—economists such as John Kennan predict that in the absence of border controls, global labor markets would tend toward equilibrium, which in practice would mean the migration of several billion people to the West. (In the short to medium run, the true number of immigrants would be closer to Gallup’s estimates, but over the long run that figure might reach into the billions, as stocks of immigrants and their descendants accumulate in destination countries.) The more efficient allocation of labor would result in global increases in productivity, leading the world economy to nearly double in size. This increased economic activity would, moreover, disproportionately benefit the world’s poorest people. 

Smith acknowledges,

At current levels of benefits, a vast influx of immigrants would bankrupt the welfare state, as newcomers would not be able to pay enough in taxes to finance the benefits to which they would be entitled. (A possible solution might involve curtailing welfare programs, or at least their generosity to the foreign-born.) It follows that open borders would probably lead to a large increase in visible extreme poverty in the West. Yet impoverishment by Western standards looks like affluence to much of the world. And far from creating such poverty, open borders would actually be alleviating it. The new huddled masses, although worse off than the average Western natives, would be better off in their new countries than they were at home. The only difference would be that without borders, Westerners would see the poverty that today is kept comfortably out of sight.

He concludes,

Opening borders would expand the scope of freedom, strengthen respect for rights, and widen the realm of actions that governments, including democratic ones, are not allowed to take. This endeavor is an extension of the liberal project that has animated the West since the Enlightenment. And those who sympathize with abolishing migration restrictions, but fear how popular backlash against immigration has recently affected Western democracy, should ask themselves whether freedom can really be secure if its growth is curtailed; whether respect for rights can be compatible with the exclusion of the foreign-born; and whether, in the United States, immigrants are really a greater threat to freedom and the rule of law than are native-born devotees of the president, Donald Trump.

Read the whole thing.