Editor's Note: This is an updated version of a piece originally published in June 2019. New studies covering a broader set of immigration topics have been added.
The economic costs and benefits of immigration are routinely measured, weighed, and debated in academic journals. No fair reading of the literature could conclude that economists believe immigration has only costs or only benefits.
Nevertheless, some immigration advocates claim that their benefits-only narrative is backed by scholarly consensus. Vox once ran this headline: "There's no evidence that immigrants hurt any American workers". Reason's Shikha Dalmia has claimed that George Borjas is "literally the only economist of any repute who questions the economic benefits of immigration". ABC News thought it could dispense with the whole notion that immigrants drive down wages with a single-paragraph "fact-check".
Sadly, even some professional economists have joined the advocates' bandwagon. Esther Duflo, who won a Nobel Prize for her anti-poverty work in the developing world, recently told a whopper about the National Academies of Sciences, Engineering, and Medicine. According to her, the National Academies "summarized maybe hundreds of studies, and they all come to the conclusion that the effect of low-skilled migration on low-skilled wages is zero."
The National Academies said no such thing. Chapters 4 and 5 of its book-length report review the theoretical and empirical research on how immigration affects wages and employment. Anyone who reads those chapters cannot come away believing that immigration is cost-free. For example, Table 5-2 from the report lists several major studies measuring immigration's impact on wages. Notice the negative values in the "Wage Effect" column:
Since the National Academies' book was published in 2016, economists have continued to produce more papers finding costs associated with immigration. A sample of these new papers are listed and summarized below. Please note that the authors are mainstream academics writing for mainstream outlets. Harvard's George Borjas, who was alleged to be "the only economist" to publish these types of studies, clearly has some company. Like Borjas, these authors usually stress that they have found both costs and benefits. One-sided claims about immigration are rarely true.
The following summaries are my own.
Wage and Employment Effects
- Anthony Edo, "The Impact of Immigration on the Labor Market", Journal of Economic Surveys, Vol. 33, No. 3, July 2019.
This review paper is similar in content to the National Academies' chapters, but it takes a more international perspective. After considering over 50 studies of immigration in developed countries, the author concludes that "immigration can create winners and losers among the native-born workers." Because low-skill immigration tends to make low-skill natives the "losers" and high-skill natives the "winners", rising inequality is a natural consequence. This conclusion stands in stark contrast to the advocates' position that "there is no evidence that immigrants hurt any American workers." While some Americans gain from immigration, others certainly do lose.
- Joseph Price, Christian vom Lehn, and Riley Wilson, "The Winners and Losers of Immigration: Evidence from Linked Historical Data", NBER Working Paper No. 27156, May 2020.
This paper acknowledges the winner-loser framework right in its title. The authors use genealogical data to track millions of men between decennial censuses in the early 20th century. Following these individuals allows the authors to improve upon past research that focused only on community-level impacts of immigration. They find that older and higher-skilled workers were the "winners" — their incomes tended to go up when immigrants entered their local labor market. By contrast, younger and less-skilled workers were the "losers" — they were more likely to move away and suffer income losses as a result of immigration.
In the modern-day context, CIS has emphasized that immigration tends to have strong disemployment effects on the youngest and least-skilled Americans of all: teenagers.
- David A. Jaeger, Joakim Ruist, and Jan Stuhler, "Shift-Share Instruments and the Impact of Immigration", NBER Working Paper No. 24285, February 2018.
Several studies try to isolate the impact of immigration on wages by comparing cities with different levels of immigration. The problem is that immigrants do not choose destination cities randomly. If they choose cities that have rising wages, the negative impact of immigration may be obscured.
This paper shows that a common "instrumental variables" technique to deal with that problem still unintentionally captures more than just the initial impact of immigration. When a local area experiences an influx of immigrants, the wage goes down for a time, but then it rises back toward equilibrium as more businesses come in or other workers leave. Since immigrants tend to go to the same places year after year, the instrumental-variables technique captures both the negative short-term wage effect and the positive "catch-up" wage effect from earlier waves of immigrants. As a result, all of the short-term wage effects estimated using this method appear less negative than they really are.
The authors of this paper provide a long list of prior studies that underestimate negative wage effects because of this faulty method. Giovanni Peri, an economist famous for downplaying the negative impact of immigration, has 12 different papers on the list.
- Michael Amior and Alan Manning, "Monopsony and the Wage Effects of Migration", CEP Discussion Paper No. 1690, May 2020.
In the standard model first developed by George Borjas, immigrants produce small economic gains for natives (an "immigration surplus") but do so by lowering the wages of competing workers. The model is built on the assumption of "perfect competition" in the labor market, meaning that employers compete for labor until the wage is bid up to equal the workers' value added. But what happens if the assumption of perfect competition is relaxed?
The authors of this paper argue that various legal and cultural barriers prevent immigrants from moving between jobs as easily as natives do. With less competition among employers to hire workers, immigration could reduce the ability of workers to demand a wage that reflects the full value of their labor. Empirically, they estimate that a one percentage-point increase in the immigrant share of workers leads to at least a 0.5 percent reduction in native wages. With effect sizes like these, the immigrant surplus could be swamped, and overall wages (not just wages for the most affected workers) could decline over the long term.
- Bin Xie, "The Effects of Immigration Quotas on Wages, the Great Black Migration, and Industrial Development", IZA Discussion Paper No. 11214, December 2017.
Restricting immigration in the 1920s raised manufacturing wages and drew black migrants from the South into northern factories. As with the Dustmann et al. paper below, this result provides support for the theory that immigration deters natives from moving into emerging labor markets.
Interestingly, immigration restriction also appears to have slowed the growth of electric-powered assembly lines, which illustrates how the relationship between skills and technology has changed over time. Low-skill workers were once needed to man the assembly lines that displaced skilled artisans. Today, technology generally advances with skilled workers — e.g., computer programmers in Silicon Valley. (See the Brunello, et al. paper listed below for more on this point.)
- Philipp Ager and Casper Worm Hansen, "Closing Heaven's Door: Evidence from the 1920s U.S. Immigration Quota Acts", Working Paper, October 2017.
This paper also finds that 1920s immigration restrictions benefited black workers. It concludes that wages for white workers dropped, however, which is another indication that immigration has mixed economic effects. It is up to policymakers to decide how to weigh the costs and benefits.
- Christian Dustmann, Uta Schönberg, and Jan Stuhler, "Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment", Quarterly Journal of Economics, Vol. 132, No. 1., 2017.
A change in commuting policy led to a sudden increase in Czech workers in a border area of Germany. The result was lower wages and employment levels for natives, particularly for those who are older and have less attachment to the labor force. Although this paper focuses on a foreign country, it has important implications for U.S. policy. The tight labor market in the United States in 2019 led employers to recruit from marginalized groups such as high school dropouts, ex-cons, and the disabled. Expanding immigration in a tight labor market could short-circuit that employer outreach. As the authors of this paper conclude, "[T]he employment response [to immigration] is almost entirely driven by diminished inflows of natives into work rather than outflows."
- Jason Anastasopoulos, George J. Borjas, Gavin G. Cook, and Michael Lachanski, "Job Vacancies and Immigration: Evidence from Pre- and Post-Mariel Miami", NBER Working Paper No. 24580, August 2019.
It may seem that the Mariel Boatlift has been studied to death, but this is an innovative paper. It uses a database of historical job listings to establish that job vacancies in Miami declined after three mass-immigration events: the initial wave of Cuban refugees after the revolution, the Mariel boatlift, and an additional refugee wave in the mid-1990s. The implication is that the labor market was not able to immediately adjust to the influx of new workers.
- Giovanni Peri, Derek Rury, and Justin C. Wiltshire, "The Economic Impact of Migrants from Hurricane Maria", IZA Discussion Paper No. 13049, March 2020.
A more recent event that is perhaps similar to the Mariel Boatlift is the migration of Puerto Ricans to the Orlando area after Hurricane Maria hit in 2017. Once again, the effects are mixed. Wages declined in the construction industry, where a large portion of the Puerto Rican migrants came to work. However, wages for retail workers appear to have increased. The authors believe these results reflect "concurrent labor supply and consumer demand shocks".
- Amy Wax and Jason Richwine, "Low-Skill Immigration: A Case for Restriction", American Affairs, Winter 2017.
The authors combine the "top-down" Census Bureau data on native job losses with "bottom-up" ethnographic research on employer preferences for immigrant labor. They make a strong qualitative case that businesses use immigrants to replace natives in their low-skill workforces.
In 2019, CIS published a follow-up report that focused on Equal Employment Opportunity Commission cases in which employers are accused of favoring immigrant workers over native-born workers. The details of these cases are consistent with the claim that employers use immigration to depress wages and working conditions.
- Maria Hoen, Simen Markussen, and Knut Roed, "Immigration and Social Mobility", IZA Discussion Paper No. 11904, November 2018.
Using administrative data from Norway, the authors find that low-skill immigration has reduced social mobility, causing inequality to increase. Interestingly, they connect their findings to the politics of immigration. Opposition to immigration from lower classes in Norway arises not necessarily from "bigotry", but as a rational response to their weakened economic position.
- David Neumark and Cortnie Shupe, "Declining Teen Employment: Minimum Wages, Other Explanations, and Implications for Human Capital Investment", Mercatus Working Paper, February 2018.
The primary focus of this paper is the minimum wage, but it finds some role for immigration in reducing teen employment. Moreover, the authors are skeptical of immigration advocates' argument that teens improved their human capital by substituting school for employment.
- Anthony Edo and Hillel Rapoport, "Minimum Wages and the Labor Market Effects of Immigration", Labour Economics, Vol. 61, December 2019.
Speaking of the minimum wage, this paper uses state variation in minimum wage laws to show that immigrants tend to lower the wages and employment levels of the native-born with whom they compete most directly. Specifically, the native-born suffer greater wage and employment losses due to low-skill immigration in states with lower minimum wages. Whether increasing the minimum wage would be wise policy is beyond the scope of the paper, but it does show once again that immigrants and the native-born are — at least to a large extent — substitutes in the labor market.
- John Bound, Guarav Khanna, and Nicolas Morales, "Understanding the Economic Impact of the H-1B Program on the U.S.", in High-Skilled Migration to the United States and Its Economic Consequences, Gordon H. Hanson, William R. Kerr, and Sarah Turner, Eds., University of Chicago Press, 2018.
General equilibrium models can be highly sensitive to assumptions. It sometimes seems that one can build a model to prove virtually any proposition. In this case, however, the model confirms basic economic theory: High-skill immigration in the 1990s lowered the wage for competing native-born workers, but reduced consumer prices and increased corporate profits, again illustrating the trade-offs inherent to immigration policy. Consumers and corporations win, while some workers lose.
- Giorgio Brunello, Elisabetta Lodigiani, and Lorenzo Rocco, "Does Low Skilled Immigration Increase Profits? Evidence from Italian Local Labour Markets", IZA Discussion Paper No. 12226, March 2019.
Though its results are likely underestimated due to use of the instrumental-variables technique discussed in the Jaeger et al. paper listed above, this paper finds the usual result that low-skill immigration reduces wages and increases profits in affected industries. The authors speculate that low-skill immigration has retarded Italy's transition to a more high-tech economy. There is an interesting parallel here to U.S. agriculture, where CIS research has found that immigration delays mechanization of the harvest.
- Simone Bertoli and Steven Stillman, "All That Glitters Is Not Gold: Wages and Education for U.S. Immigrants", IZA Discussion Paper No. 12168, February 2019.
Education generally correlates with earnings, but the relationship is weaker among immigrants. This paper finds that when a highly educated immigrant is selected at random, 27 percent of the time he or she will have lower earnings than a less-educated immigrant who is also selected at random. The corresponding figure for highly vs. less educated natives is about 14 percent. "Conferring a pivotal role to education in the selection of migrants might fail to induce a substantial increase in their average quality, and it might even potentially backfire," the authors warn. For one thing, these allegedly "skilled" workers could end up competing with less educated natives.
The findings are consistent with several reports published by CIS. First, despite their faster educational gains, recent immigrants have not improved relative to the native-born on measures of income, poverty, and welfare consumption. Second, college-educated immigrants are more likely than college-educated natives to hold low-skill jobs, especially when the immigrants are from Latin America. Third, immigrants with foreign college or advanced degrees score lower on tests of English literacy, numeracy, and computer operations compared to natives with the same level of education. Finally, the skill level of the average college graduate varies enormously across countries.
Other Negative Impacts
The following papers are not about labor markets per se, but they touch on equally important fiscal, cultural, and political issues affected by immigration. Once again, it is not difficult to find negative impacts in the literature.
- Kathleen Kürschner Rauck and Michael Kvasnicka, "The 2015 European Refugee Crisis and Residential Housing Rents in Germany", IZA Discussion Paper No. 12047, December 2018.
This paper falls at the intersection of economics and culture. It finds that the influx of Syrian refugees to Germany lowered rents in areas where the refugees were most concentrated, despite the sheer increase in people needing housing. The reason is that native Germans did not wish to live near large numbers of refugees. Immigration changes host countries in a variety of ways, and this paper offers a rare quantitative look at how natives sometimes avoid the areas most affected.
- Courtney Brell, Christian Dustmann, and Ian Preston, "The Labor Market Integration of Refugee Migrants in High-Income Countries", Journal of Economic Perspectives, Vol. 34, No. 1, Winter 2020.
Resettling refugees may be a humanitarian good, but the argument that refugees are somehow an economic boon to their host nations is a stretch, to say the least. This paper reviews the evidence that refugees struggle to integrate into the economies of high-income host nations. In the United States specifically, refugees perform unusually well in finding jobs. However, in line with their counterparts in other rich nations, U.S. refugees earn low wages even after 10 years of residency.
CIS recently estimated that the average new refugee in the United States imposes a fiscal cost of about $60,000 in lifetime net present value. The corresponding cost for refugees who enter as adults is $133,000.
- Zachary Ward, "The Not-So-Hot Melting Pot: The Persistence of Outcomes for Descendants of the Age of Mass Migration", American Economic Journal: Applied Economics, forthcoming.
The idea that Great Wave immigrants of varied nationalities disappeared into a "melting pot" is an exaggeration. In 1880, large differences in earnings (as measured by occupational status) existed among immigrants of different nationalities. By 1940, the grandchildren of those immigrants still exhibited about half of the initial differences. Although this paper focuses primarily on Great Wave immigrants, the author warns that "there are many reasons to expect the persistence of ethnic gaps to be stronger for more recent times."
Indeed, a report from the Center for Immigration Studies finds that the grandchildren of Mexican immigrants still lag behind white Americans in education and earnings. Immigration advocates who brush aside concerns about assimilation need to address this worrisome evidence.
- Paola Giuliano and Marco Tabellini, "The Seeds of Ideology: Historical Immigration and Political Preferences in the United States", NBER Working Paper No. 27238, May 2020.
While the previous paper analyzed the economic assimilation of Great Wave immigrants, this one focuses on political assimilation. The authors find that preferences for redistribution among Americans today are correlated with the historical presence of immigrants. Specifically, immigrants seem to have imported the political ideology of their home countries and then spread those views to natives. Whether this political effect of immigration is truly "negative" will depend on one's own political views, but remember that any significant political shift, to the left or to the right, usually involves social disruption.
- Alexander Billy and Michael Packard, "Crime and the Mariel Boatlift", Working Paper, February 25, 2020.
Research on the Mariel Boatlift usually focuses on the labor market impact. (See Anastasopoulos, et al. above.) This paper investigates the impact on crime. Compared to similar cities, Miami experienced a 41 percent increase in the murder rate, a 70 percent increase in the rate of robberies, and at least a 25 percent increase in the rate of property crimes after the boatlift. The authors caution, however, that extrapolating to ordinary immigrants would be unjustified, since Fidel Castro added inmates of prisons and mental hospitals to the ranks of the Marielitos.
In 2015, CIS summarized the evidence on immigrant crime rates, with particular emphasis on choosing an appropriate baseline for comparison.
- Brandyn Churchill, Andrew Dickinson, Taylor Mackay, and Joseph J. Sabia, "The Effect of E-Verify Laws on Crime", IZA Discussion Paper No. 12798, November 2019.
States that mandated E-Verify saw a 5 percent to 10 percent decline in property crime committed by working-age Hispanics. The authors believe that the decrease in labor market competition with illegal aliens steered Hispanic citizens toward work and away from crime.