Does immigration depress wages of native Americans?

Two prominent economists each with many years’ experience in immigration research come down on opposite sides of this question:
David Card of UC Berkeley thinks the adverse impact is scant. His most recent paper is titled,” Is the new immigration really so bad?”
George Borjas of Harvard thinks the adverse impact is large –the new eave of immigrants depresses wages by 3 to 4%. He stakes his position out in a paper presented through the Center for Immigration Studies.
I’ll use a simple model below to highlight that which researchers have to grapple.


The domestic workforce is divided among many labor markets, and among many education and age cohorts. There will be a cohort, for example, for persons with less than a high school diploma and over 10 years work experience for Chicago; another for those without a high school diploma and up to 10 year’s work experience; and so on. Job growth varies over time and there is a fair amount of geographic mobility.
When worker supply increases relative to worker demand there is a tendency for wages to become relatively depressed. But that economist’s axiom needs to be shown at the local level with all these factors at play.
The economic research is focused on labor. I think it the matter is more clearly addressed if we think about jobs. There appears to be one job category which concerns all researchers: jobs which can be filled by workers with less than a high school diplomas Borjas notes that in the 2000 Census, immigrants made up half of all non-high school diploma workers with 10 to 20 years work experience: i.e. those poorly educated with little or no chance of upward mobility. Borjas estimates that for this education / age cohort, native American wages have declined by upwards of 7%.
Card is not so sure. He says the statistics show only a modest impact on wages. The less than high school diploma job market has been growing in absolute terms but have been shrinking in relative terms. Fewer young native American workers fit into this category – Americans have become better educated. Card believes that as immigrants flood into a local job market they are competing less with native Americans and more with themselves.
Borjas summarizes his findings thus:
• By increasing the supply of labor between 1980 and 2000, immigration reduced the average annual earnings of native-born men by an estimated $1,700 or roughly 4 percent.
• Among natives without a high school education, who roughly correspond to the poorest tenth of the workforce, the estimated impact was even larger, reducing their wages by 7.4 percent.
• The 10 million native-born workers without a high school degree face the most competition from immigrants, as do the eight million younger natives with only a high school education and 12 million younger college graduates.
• The negative effect on native-born black and Hispanic workers is significantly larger than on whites because a much larger share of minorities are in direct competition with immigrants.
• The reduction in earnings occurs regardless of whether the immigrants are legal or illegal, permanent or temporary. It is the presence of additional workers that reduces wages, not their legal status.
Borjas draws his findings from analyzing in several decennial censuses the penetration of immigrant labor in education/work experience cohorts. The conclusion – that wages are depressed – is pretty much assured based on the theory he cites that more supply of a factor (such as labor) trends to depress the cost of that factor. He does not consider local labor market dynamics. Nor (like Card) does he devote much time to looking at changes in job composition.
Card approaches the problem very differently. He looks at prevailing wages by educational attainment in local economies (Dallas, New York, etc. as well as many smaller areas). He says, at that level, you simply can’t find a relationship between size of immigrant labor share and wage levels.
My own interpretation of this debate is that in some industries within some local markets it may well be easier to show that native Americans, especially those with low mobility, are being harmed by immigrant influx, but that these instances are fewer than may be imagined. Tightness in many blue-collar labor markets, American labor mobility, restructuring of jobs, and the underground economy overwhelm the economist’s axiom.

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