Thursday, May 18, 2017

Immigration and wages

Robert Pollin, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, explains that immigration has negligible effect on the wages of native workers.' he says:

"The best evidence of which I am aware comes from the UC Berkeley economist David Card, who finds that the impact of immigrants in the US labor force has little, if any, impact on wages of US native-born workers at the lower end of the job market. Card reached this conclusion by comparing conditions in the low-wage labor market in US cities that have a very high proportion of immigrants, such as Miami, New York and Los Angeles, with cities, such as Philadelphia or Atlanta, in which the immigrant population is much smaller proportionally. I myself, along with [Assistant Research Professor at the Political Economy Research Institute] Jeannette Wicks-Lim replicated Card's findings over the years of the Great Recession. Our conclusion was the same as Card's -- the mere presence of a high proportion of immigrants in a given local labor market did not negatively impact wages of native-born workers. This is because immigrants in cities, such as Miami and New York, are also people who buy things and set up their own businesses in these cities. They are, therefore, expanding the markets and jobs in these cities, as well as supplying more people to these local labor markets...

The same general result applies to both legal and undocumented immigrants. Immigrants do take jobs in the low-wage labor market. But they also expand demand by their own purchases, and they also create their own businesses in some cases. 

That said, there are specific areas of the economy in which the share of immigrant workers is very high -- agricultural farm work is perhaps the best example. In this case, you do get more of a reserve army of labor effect, in which the overall wage bargaining dynamic hurts workers against their employers. But we need to be careful not to generalize from the specific case of farmworkers to the general case of all immigrant workers operating in all areas of the US economy."

The professor is, however, wary of such pacts as NAFTA

"The basic impact of NAFTA has been, again, to expand the reserve army of labor -- i.e. pitting US workers against Mexican workers. This is by no means an abstract matter. What I am talking about are situations in which, say, autoworkers in the US try to bargain for a raise. But the plant owners' response to a demand for increased wages is, effectively: "You don't like what you are getting paid? Fine, we will move across the border to Mexico, where wages are one-quarter of what you make, or less. Good-bye and good luck." That has been a credible threat to workers for a long time. NAFTA only made it still more credible."

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