Edward Conard

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Edward Conard

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Does Economics 101 Apply to Immigration?

Aug 15 Chart_Imigration EconomicsRobert VerBruggen, a writer for RealClearPolicy, has written a pithy summary of Harvard labor economist’s, George Borjas’, recently published tough-minded book, Immigration Economics.

VerBruggen writes:

“[Borjas] lays out evidence that [immigration] undermines the employment prospects of the Americans who need decent jobs the most. … High-school dropouts — about 10 percent of the native U.S. population and 30 percent of immigrants — often take a hit to their wages. [Where immigration increases the number of workers in a skill group 10%, Borjas finds it reduces wages 4%.] [Meanwhile,] the overall economic benefits of immigration to natives are quite small: In the various models presented here, a 15 percent expansion of the labor supply can’t provide a ‘surplus’ for natives amounting to even 1 percent of GDP.”

Does the complementarity argument fare better for higher-skilled workers? There are reasons to think it might — even if you find the idea that immigrant high-school dropouts ‘complement’ native high-school dropouts somewhat absurd. …  It’s hard to be too upset when wealthy people encounter stiffer competition and as a result offer their services to the rest of us at a lower price.

Of course, there’s another side to the coin: benefits to immigrants. People disagree as to what role these benefits should play in making immigration policy, but hardly anyone would say they are entirely irrelevant.

Borjas makes some less speculative points about the fate of immigrants in America as well, complicating the rosy narrative that…advocates often present. One significant problem seems to be that ‘economic assimilation,’ the tendency of immigrants to start out behind natives but steadily catch up as they remain in the country, has slowed in recent decades.”

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