catallaxy files

catallaxy in technical exile

Illegal immigration vs 'fair wages'

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Here is an interesting long piece about the debate between two economists, George Borjas and David Card (of Card-Krueger fame, the study which purported to find that there was no relationship between minimum wages and unemployment) and its implications for US border control policy. Here is an extract which nicely summarises these implications:

    To Borjas, a Cuban immigrant and the pre-eminent scholar in his field, the truth is pretty obvious: immigrants hurt the economic prospects of the Americans they compete with. And now that the biggest contingent of immigrants are poorly educated Mexicans, they hurt poorer Americans, especially African-Americans, the most.

    It turns out that Borjas’s seemingly self-evident premise — that more job seekers from abroad mean fewer opportunities, or lower wages, for native workers — is one of the most controversial ideas in labor economics. It lies at the heart of a national debate, which has been encapsulated (if not articulated) by two very different immigration bills: one, passed by the House of Representatives, which would toughen laws against undocumented workers and probably force many of them to leave the country; and one in the Senate, a measure that would let most of them stay.

    You can find economists to substantiate the position of either chamber, but the consensus of most is that, on balance, immigration is good for the country. Immigrants provide scarce labor, which lowers prices in much the same way global trade does. And overall, the newcomers modestly raise Americans’ per capita income. But the impact is unevenly distributed; people with means pay less for taxi rides and household help while the less-affluent command lower wages and probably pay more for rent.

    The debate among economists is whether low-income workers are hurt a lot or just a little — and over what the answer implies for U.S. policy.

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Written by Admin

July 10, 2006 at 9:34 am

Posted in Uncategorized

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