Immigration and Wages—Methodological advancements confirm modest gains for native workers

Here is an abstract on a new study on the economic impacts of immigration by Heidi Shierholz:

In the ongoing debate on immigration, there is broad agreement among academic economists that it has a small but positive impact on the wages of native-born workers overall: although new immigrant workers add to the labor supply, they also consume goods and services, which creates more jobs.

The real debate among researchers is whether a large influx of a specific type of worker (say, workers with a particular level of education or training) has the potential to have a negative impact on the wages of existing workers of that same type. Some research argues that immigrant competition is quite costly to certain groups of native-born U.S. workers, while other research finds that native workers—even those who have levels of education and experience similar to new immigrants—may actually reap modest benefits from immigration.

We begin this paper with a review of the scholarly literature on immigration’s effect on wages, focusing on recent methodological advancements. We then use Current Population Survey (CPS) data from 1994 to 2007 to conduct our own empirical analysis of immigration’s effect on wages over this period, incorporating these recent methodological advancements. Our analysis finds little evidence that immigration negatively impacts native-born workers.

A key result from this work is that the estimated effect of immigration from 1994 to 2007 was to raise the wages of U.S.-born workers, relative to foreign-born workers, by 0.4% (or $3.68 per week), and to lower the wages of foreign-born workers, relative to U.S.-born workers, by 4.6% (or $33.11 per week). In other words, any negative effects of new immigration over this period were felt largely by the workers who are the most substitutable for new immigrants—that is, earlier immigrants.

KJ