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A reflection on immigration and wages

A new paper rekindles a tiresome debate on immigration and wages
This is a timely read on immigration and wages. It is almost common knowledge to think that an influx of immigrants will depress wages. And this logic is, well, logical. After all, if more workers are available than businesses can very easily lower wages until they find the lowest possible wage someone is willing to take. And immigrants – who have nothing – are willing to take amounts less than minimum wage. The fallacy in this logic is simple: all jobs are not equal. Immigrants tend to be the lowest skilled workers. Not to mention, as immigrants they are not eligible for jobs that require U.S. citizenship. Therefore, as the article mentions, new immigrants will displace other immigrants. In fact, in the Mariel boatlift event, immigrant wages dropped 6.7% while non-immigrant wages were unchanged. The key here is to look at the long-term. While there is likely a (negligible) short-term drag on wages, over the long-term the increased productivity and competitiveness is beneficial for an economy.

 

Categories: Uncategorized

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