Day By Day

Sunday, May 21, 2006

Unskilled Immigration is A Win-Win Phenomenon

And while we're on the subject of Tyler Cowen, here's an op-ed he and Daniel Rothschild did for the LA Times.

Recent public discourse would have us believe that they poach American jobs, lower wages and sponge off welfare. Yet economic research suggests a different picture: Unskilled immigrants are good for the U.S., and the U.S. is good for them.

Until the late 1990s, when a boom in native-born self-employment occurred, immigrants were more likely than natives to work for themselves. Immigrant small businesses, from the Korean corner market to the Mexican landscaping service, are, well, as American as apple pie. The labor market is not a zero-sum game with a finite number of jobs; immigrants create their own work.

A key question for economists has been whether the influx raises or lowers "native" American wages. UC Berkeley's David Card, who studied patterns in different U.S. cities, concludes that immigration has not lowered wages for American workers. George Borjas of Harvard counters that immigration reduced the wages of high school dropouts by 7.4% between 1980 and 2000.

Most economists have sided with Card. For one thing, his studies better capture the notion that immigrant labor makes work easier for all of us and brings new skills to the table. Additionally, as Card points out, the percentage of native-born high school dropouts has fallen sharply over the previous decades, creating a shortage of unskilled laborers that immigrants fill. In 1980, one in three American adults had less than a high school education; by 2000, this figure had fallen to less than one in five.

Gianmarco Ottaviano of the University of Bologna and Giovanni Peri of the National Bureau of Economic Research have shown that immigrants and low-skilled American workers fulfill very different roles in the economy. For instance, 54% of tailors in the U.S. are foreign-born, compared with less than 1% of crane operators. A similar discrepancy exists between plaster-stucco masons (44% immigrant) and sewer-pipe cleaners (less than 1% foreign-born). Immigrants come to the United States with different skills, inclinations and ideas; they are not looking to simply copy the behavior of American workers.

New arrivals, by producing more goods and services, also keep prices down across the economy. Even Borjas — the favorite economist of immigration restrictionists — admits that the net gain to the U.S. from immigration is about $7 billion annually.

And over the coming decades, the need for immigrant labor will increase, according to demographers. The baby boom generation will need more healthcare and more nursing homes. The forthcoming Medicare fiscal crunch will require more and younger laborers to finance the program.

Read the whole thing here.

It is a scary thing to see the political system stampeded into adopting disastrous policies like immigration restriction. At least President Bush is smart and informed enough to understand the costs and consequences of what Congress is doing and we can hope that he has the courage to take action to prevent the Congressional lemmings from stampeding over the cliff.

On this issue, as on so many others, Bush is far more perceptive and intelligent than his critics.

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