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Tuesday, November 06, 2007

"Do Immigrants Raise or Lower Wages?"

Some of you seem to be itching to talk about immigration. Here's your chance. Tim Harford looks at new evidence on immigration and wages:

Do immigrants raise or lower wages?, by Tim Harford: The idea that "immigrants take our jobs" has always been ridiculous to economists, or anyone who thinks seriously about how an economy works. (If a million people migrate to the UK, who is going to sell them food and clothes, build them houses, teach their children? When the population is larger there is more demand for workers.)

However, the idea that immigrants lower the wages of native workers is not at all ridiculous. ... The economist George Borjas (now blogging) argues that low-skilled migrants to the US help to depress the wages of low-skilled natives. That is reasonable. But it may be wrong. The mix of new skills may complement the existing demography well; it may also encourage new capital investment. It is fair to say that economists do not really agree.

The latest contribution is from Gianmarco Ottaviano and Giovanni Peri, arguing that immigration raises native wages and (less surprisingly) rents:

In this paper we document a strong positive correlation of immigration flows with changes in average wages and average house rents for native residents across U.S. states... the correlations are compatible with a causal interpretation from immigration to wages and rents of natives.

The paper is here.

    Posted by on Tuesday, November 6, 2007 at 02:34 AM in Economics, Immigration, Unemployment | Permalink  TrackBack (0)  Comments (95)


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