Immigration: good if you're a restaurant customer, maybe not so good if you're a waiter

George Borjas has a piece in today’s WSJ on immigration and wages in the US, arguing that a 10% increase in Mexican immigrants lowers low-skill native wages by 3-4%. He also makes some important points on the methodology of looking for wage effects. So far as I’m aware, the Australian literature (which generally finds small wage effects of immigration) could be subject to many of the criticisms Borjas makes of the earlier US studies.

(Hat tip: Dan Andrews)

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4 Responses to Immigration: good if you're a restaurant customer, maybe not so good if you're a waiter

  1. Patrick says:

    The thorniest question that article raises is actually a very broad and important one: what weight should ‘national’ policies give to ‘international’ factors?

    In particular, to what extent should America or Australia see, and manage accordingly, their immigration programs as elements of their foreign policy as well as their economic policy.

    There is a contested but, I think, pretty good, case for immigration to first world countries as an important part of development, for example.

    And of course we in Australia are seeing an acute example of the other side of the coin now!

  2. Patrick says:

    NB: the one real problem I can think of with relating those conclusions, as opposed to the methodological criticisms, to Australia would be our high minimum wages.

  3. Jason Soon says:

    In Australia because of high minimum wages, our unskilled migrants wouldn’t even be able to enter the job market in the first place, hence Cronulla and associated social pathologies.

  4. f says:

    Although I bombed an interview with him, I like George Borjas and the tone of his work… (I’m sure you took classes with him, Andrew)

    I completely agree that the increased availability of cheap labor necessarily lowers unskilled wages a la the samuelson quote. However, I do wonder if he has the correct counter-factual when looking at the effect of a change to immigration policy (and I assume that actually means border control). Just because you block foreign workers from entering doesn’t mean you stop their utilisation through outsourcing and the like. Sure, you can’t outsource waitstaff and maids, but there are a ton of jobs you can outsource (manufacturing/call centers etc). So the question becomes if you cut back on immigration what is the effect on local unskilled wages and unemployment given that outsourcing will likely increase? Maybe he addresses this in his papers, but wasn’t in the Op-ed, so call me an ass if need be.

    more seriously, what would the developed world be without immigrant cabbies? 😉

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