Wednesday, May 29, 2013

How to use wage data in thinking about immigration policy

Tyler Cowen recently introduced a post with this: "Here is a point which I think the anti-immigration forces are getting wrong, mostly on the side of economics. It can be pointed out that low-skilled (native) labor in the United States has not seen strong income gains for some time. You might then wonder whether it makes sense to bring more unskilled labor into the country."

He goes on to give a lot of reasons why that's not necessarily a good inference.

I think he's essentially right, but I've recently had a paper published about immigration that has been making waves using stagnant wage data to make some points about high skill immigration, so I wanted to clarify my view on what that sort of data tells us.

I don't think the U.S. government should make immigration policy to move labor markets in a particular direction (say, boosting the wages of low wage workers). Tyler gives some good reasons to think limiting low wage immigration wouldn't have that effect anyway, but even if it would my own policy view is that that's not the purpose of immigration policy.

What wages (along with other indicators) can tell us is if there's something wrong in the labor market causing a shortage. A labor shortage might give us reason to target a specific type of migrant with immigration policy. Stagnant wages and other signs that there's no labor shortage going on seem to me to suggest that there's no reason to target immigration policy toward that class of worker (if we were even inclined to do that in the first place).

In other words, my prior is that immigration policy is about welcoming new Americans not shaping the labor market. Before taking labor market issues into account when making immigration policy we need to look at labor market data to see if that is even justified. If it's not then we probably shouldn't use labor market tests (like targeting high skill immigrants) when we let people in.

Protectionism shouldn't be our policy tool of choice. If we're concerned about low wages for low skill workers we ought to have policies that help them out of that situation, not that keep them in that situation and insulate them from competitive pressures. And as a last resort we should have safety nets, not walls. But labor protectionism is a very commonly held view, and it's one I've regularly had to grapple with, deal with, and clarify my position on in pursuing these high skill immigration issues.


  1. Sorry for going a bit OT, but I do wonder about something related. I saw -- or maybe it was a dream! -- an ad by Walmart promising a job to every veteran who has been honorably discharged. (IIRC.) It's not immigration, but veterans would be a sizable influx of workers.

    Unless that represents a change of heart by Walmart, I suspect that this offer may backfire on them. Why? I doubt if many veterans, even privates, will be happy to work at current Walmart wages. (Maybe Walmart is counting on not providing medical insurance, though.) Furthermore, a number of vets may be offended at Walmart wage offers, and pissed of veterans have a way of making a stink. Which could be a public relations nightmare for Walmart.

  2. "is about welcoming new Americans"

    Why not a prior of "is about making current Americans better off." Why are the interests of non-voting, non-tax paying, non-Americans take priority over current Americans? I elect a representative to represent my interests, not the interests of someone outside of a given jurisdiction.


    1. The short answer is that America was built on immigration. Almost all Americans are immigrants or descendants of immigrants. Immigration is no small part of what has made America great. Current immigrants are no more moochers than our immigrant ancestors were.

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