New Study Finds Low-Skilled Immigration Has Negligible Impact on Wages of Native-Born

Earlier today, Public Policy Professor at Georgetown University Harry J. Holzer presented his new report, Does Low-Skilled Immigration Hurt the US Economy? Assessing the Evidence. Contrary to the myth that “immigrants steal American jobs,” Prof. Holzer concludes that low-skilled immigration likely has little to no effect on most U.S. workers, though changes in immigration policy would obviously alter the effect. While admitting that wage depression is an issue for low-skilled native-born workers, Holzer insisted that immigration contributed very little, if at all, to this effect, and that “we’ve been scapegoating [low-skilled] immigrants for little reason.”

Prof. Holzer found that low-skilled immigration had a negligible impact on the wages of native-born workers. He outlined three main reasons for this:

First, immigrants generate additional product demand and therefore labor demand as well as supply, since they are consumers in the United States as well as producers…Second, immigrants are imperfect substitutes for native-born workers of the same educational level…[and] Third, production techniques shift in response to less-educated immigrant labor, with employers less likely to substitute capital and/or technology for less-educated labor when more immigrants are available…it also means that many low-skilled jobs that are now available to immigrants would likely not exist in their absence, as they would be replaced by capital and technology.

Prof. Holzer also noted that the fiscal impact of immigration improves over generations as immigrant children grow in wage and skill-level, and that immigration also improves the economy by lowering the prices of goods and services. The positive impacts of low-skilled immigration could also be amplified through strong immigrant integration programs, which could raise education levels, reduce usage of public benefits, and raise tax revenues. Holzer noted that:

To the extent that skill level can be raised for the least-educated immigrants who are here, we might reduce the competition they present to native-born workers with low levels of education. More educated immigrants might generate even better-educated offspring of immigrants in future generations, which would benefit the economy overall.

So how would Holzer improve low-skilled immigration? He warned that reducing it might result in reductions in U.S. output and movement of jobs offshore. Instead, he suggests legalizing the current illegal workers to mitigate unfair wage competition, adjusting the future flow of workers to follow shifts in employer demand, tightening controls on the hiring of illegal workers, and making sure that the workers we do admit get on a pathway to citizenship and become integrated through career and technical education. In the end, what Holzer calls for is comprehensive immigration reform, legislation that would be good for both native-born workers and immigrants.

Photo by Cult Gigolo