Here is a long and valuable paper on the topic. From the abstract:
Consistent with positive selection of emigrants in terms of observable skill, emigration rates appear to be highest among individuals with earnings in the top half of the wage distribution.
There is much more along those lines. To be frank, I know this paper will not convince most of the skeptics. They will say, or perhaps think, "Yikes, what must the others be like?" But at the very least evidence should improve a debate. The next time you hear it argued that we receive "the dregs" of Mexico, send along this link.
The paper also finds that wages tend to rise in parts of Mexico where many people leave. You could argue this one of two ways. First, it might cause you to doubt David Card’s view that wage effects in the U.S. are small (although the U.S. is a much bigger economy and thus the labor shift should have a smaller impact here). Second, it raises our estimate of how much Mexico benefits from emigration.
Thanks to Eric Husman for the pointer. Here is another relevant paper on Mexican emigration, forthcoming in the Journal of Economic Literature. Full of facts, as they say.
Your arguments lack political persuasion. I would suggest that you create a model and show the winners and losers. If I’m going to hire these hard working people then I like it. If I think I’m going to have to compete with them for jobs I don’t like it. If I think I’m going to have to pay for their health care after they have worked themselves into a wreak I don’t like it.
What jobs are going to be created for the current US citizens. If they are all police officer positions and nurse practitioner positions funded through federal grants then you are going to have a hard time convincing the US public that this is in their best interest.
Robert, ever heard of comparative advantage?
partisan: someone who quotes only research that supports his position.
scientist: someone who adresses all the research.
I should point out that the only one who used the term “dregs” in your comments was someone on your side of the argument who was setting up a straw man. One might think otherwise from the quotes.
That aside, I’m not surprised by this. Coming here does require some initiative, and doing so illegally is neither cheap nor easy. I never found the arguments that these immigrants represented the worst of Mexico convincing (I do imagine that elites are underrepresented, but that’s a small fraction of the population).
However, we don’t really need to know whether the immigrants represent a better, worse, or typical slice of their native population – we already have a lot of information about those that do come here, which you have so far chosen to ignore.
Speirs – if you try to think in terms of *countries* benefiting from immigration or emigration, you will end up confused simply because countries, unlike people, don’t really have preferences. Is it better if a country has a lower GDP but higher average GDP? Who’s to say? Individuals do have preferences, though – and sometimes we can generalize about the preferences of similar groups of individuals (such as low-wage American workers or illegal immigrants). With a whole country full of individuals I think it becomes hard to make generalizations beyond the obvious, however.
Consistent with positive selection of emigrants in terms of observable skill, emigration rates appear to be highest among individuals with earnings in the top half of the wage distribution.
Do they disaggregate illegal and legal immigration? For legal immigration, this is exactly what one would expect, because the bottom half (broadly speaking) would be less likely to have the resources and abilities to navigate the US immigration process. On the other hand, if it is the case that people in the upper-half (or higher?) of Mexico’s wage distribution are wandering through the desert, running the risk of dehydration and death, just to cross the border illegally and gain entry into the US, that suggests to me that Mexico is even more of a hellhole than I thought.
My general opinion is that legal immigration should be expanded substantially and illegal immigration punished heavily, the way it is in most other countries (the punishment, not the expanded immigration, that is), but if Mexico is that horrific even for the top half of the wage earning distribution, then I think possibly we ought to treat them as refugees or something. And start ramping up intervention in the Mexican political process, to fix whatever has gone so disastrously wrong. We can apply plenty of pressure to them, after all — we did with the negotiations for NAFTA, if I recall correctly — we just don’t usually do so.
Mexico benefits from Mexicans working in the United States because many of those working in the US send remittances back to family members living in Mexico. So some large number of families in Mexico are wealthier than they would be had their primary earner remained in Mexico.
Also, quite obviously, the labor pool is going to be tighter in areas where a large number of the people have left.
Slocum has it. When part of the workforce leaves, Mexican employers are competing for the remainder.
Dear Tyler:
Thanks for the link to Hanson’s interesting article. I’m glad you are starting to realize that Card’s study of immigration and wages is self-evidently dubious.
Gordon Hanson writes:
“The tendency for immigrants to settle in regions with high wage growth makes estimates of the immigration wage impact based on cross-area regressions susceptible to upward bias.”
This is what I’ve been saying all along. Illegal immigrants don’t move to Pittsburgh, they move to Las Vegas and places like that where the economy is strong. The problem is that for Americans in Pittsburgh considering moving to Las Vegas to get higher paying work, the normal premium required to get Americans to leave their family friends in their home town and move to an expensive boom town has been hammered down by immigrants. Add in the big cost-of-living differences between cities with lots of illegal immigrants and those without, and Card’s study collapses like a house of, er, cards.
You would do the economics profession a world of good in the long run if you pointed out in your New York Times column that, although you still want to Mexicanize America because you enjoy Mexican cuisine and art, you have to admit that the pro-illegal immigration bias displayed by so many economists has been based less on facts and logic than on emotion, self-interest, and reflexive ideology.
If you really want to see how skewed immigration to US from Mexico is just consider this data:
According to Unisco data Mexico has more than twice as much college education rate as India. Iran and Mexico have similar levels of education, Mexico somewhat higher.
According to US-census The US has 1 million Indian born, 9 million Mexican born.
Of the Indian born 69% have a bachelor degree or more.
Of Swedish immigrants 43% have a bachelor degree or more.
Of Iranian born 51% have a bachelor degree or more.
Of the Mexican born 4% have a bachelor degree or more.
Let’s repeat the comparison of 10000 $ per capita GDP Mexico and 2000 $ per capita India: 4 of 100 Mexican who come to America have college education vs. 69 of 100 of Indians.
Incidentally Indian immigrants on average earn 300% of what Mexican immigrants make. They compete with high skill American labour, and drive up the wage of unskilled Americans.
Pretty simple: either America can have restrictive and selective immigration, skimming the top from the best in the world, people who are self-selected to succeed in your country. Or you can have open mass immigration from across the border of the middle part of the labour force.
Which immigrants do you think contribute more to the US economy? Who integrates better?
Now given the 170+ comment I want ONE person to try to explain to me with actually arguments why the US is better off with immigration from Mexico than the India/Asia/Europe elite.
Yay! Teller and Sailer. You guys are absolutely right. The immigration enthusiasts have let their emotionally-based theoretical affinities blind them to reality. They have lost all objectively and are left to hunt down any evidence, no matter how weak, that supports their fanciful nonsense. Economics, under their watch, is quickly becoming as silly a science as cultural anthropology or sociology.
Gringo:
In a functioning market the demand for work is almost infinite, it is just a question of PRICE. If you lower the wages to 2 dollar per hours you can create hundreds of millions of jobs that today are simply not worth doing. “Shine your shoes, gov’nr?†.
The fact that the Mexicans are doing jobs Americans are not doing is an indicator that they are doing marginal jobs, things that you don’t have very strong demand for and thus only buy if the price is very low (otherwise you would pay to do it without the Mexicans).
That does not mean there are no gains from trade, only that the gains are probably small.
The problem is the other effects of immigration:
Massive welfare dependency and costs though the public sector, higher Crime, more long run demands for distortionary taxation and redistribution.
The small gains from exchange are swamped by the massive other costs of immigration.
One problem is that economics are pretending the logic from the free-trade and outsourcing debate applies to the immigration debate (“only dumb nativists are against it’). But in this case the pro-immigration groups are weak of facts and strong on emotions, unlike protectionism where the opposite applies.
Teller,
Do you think there is also a significant cost from retardation of technological change by having an artifical supply of cheap unskilled labor? There has been some work done on mechanization in agriculture but it would seem that there must be costs in other industries where cheap labor prevents investment in labor saving capital. We know that less technology reduces the supply of good paying jobs too.
Taeyoung points out:
“the American middle class gets to reap “rents,” I suppose the term is … by functioning in an economy where they can restrict the supply of competitors from foreign countries, and thus receive higher salaries than they might receive in a perfect, free, global market…”
Indeed. And don’t forget the low land prices allowed by the low population density of America.
All this was first noted about America by Benjamin Franklin in the 1750s. Using modern terminology, Ben pointed out that America’s patrimony of high wages and low land prices meant that America could be a middle class nation of home-owners, with salutary moral and political effects.
Tyler wants to make the U.S. more like Latin America, with its spicy cuisine and amate paintings, but the problem is that along with Latin Americans, we are also importing some of their tendencies toward hierarchical class structures and self-destructive politics as well. Tyler may consider the old American Ben Franklin virtues boring, but I suspect that even he will miss them when they are gone.
The American middle class isn’t collecting any “rents†, they are PRODUCING trillions of dollars of goods every year
I am not an economist, so I don’t know (although I think it must surely be services, more than goods, no? I thought we had shifted largely to a service economy).
My issue is that I know what wages I am receiving, and have some idea of what kind of value I am providing. But I also know that the work I do could be done for much less, with no loss of quality, if we just outsourced it. That there’s plenty of people in other countries who could do that work for much less, and do just as good a job (or better), only they’re over there, and I’m here. When you say:
The reason American middle class buys Chinese textiles is not that the Chinese are productive compared to Americans
I’m not entirely certain what you mean. On a per worker basis, this is probably true (the average American worker is supposed to have the highest productivity in the world), but I’m looking solely at how much money you put in vs. how much you get out. You get more done for less money by siting your manufacturing in China, which is why people do it, despite the costs of hauling stuff across the oceans. It’s possible that American labourers could do it for cheaper (i.e. lower aggregate wages paid per unit produced) than the Chinese, but I’m dubious.
Anyhow –
Say we outsource my job. Where does that leave me, afterwards (assuming I choose to remain in the country)?
I know there’s productivity gains, and increased wealth creation, etc. I follow that far. What I don’t see is how I reap enough of those productivity gains to offset the loss of my job. Is my new job going to pay me more? I suppose it could (society in the aggregate will be wealthier, after all), but why and how? Walk me through this. Give me an easy-to-follow narrative (remember, I am not an economist):
(1) My job goes abroad (or to an immigrant willing to do it for less — it doesn’t much matter either way), so my ex-employer has lower costs, which propagate through the economy fattening the margins for all their business partners and all their customers . . . and then? How does that get back to me?
I should make clear — I am open to persuasion on this issue. And even if I weren’t, as you might have gathered, I’m not actually all that exercised about the prospect of the American middle class getting a far smaller slice of a larger economic pie, so I’m fine either way. If it turns out my naive interpretation (built on high school econ, as I hedged before) is completely wrongheaded, all the better!
One more point:
The pro-immigration economists are trying to use two but inconsistent parallel arguments at once.
One is that there are great gains from trade in allowing poor unskilled Mexicans coming here, through the comparative advantage argument. In classic trade theory the more differences (in factor proportions or productivity) the bigger the gain from trade.
Another is that Mexicans quickly assimilate into American mainstream and become regulars joes, like the Italians and the Irish did. Three generations, than we are fine.
This is fundamentally inconsistent. If you want assimilated immigrants why take low-skill Mexicans? If you want gains from cheap services why claim that differences disappear?
I suspect Cowen understands pretty well that the cheap labor argument is dangerous. A permanent ethnically and racially distinct underclass is simply not worth cheaper services.
I don’t think people are naturally averse to inequality, but that they have self-serving bias combined with fairness considerations and are bounded rational. That means that it is easy to peddle socialism to poor people, and make them THINK that they are unfairly treated against, even if they are objectively not, especially if their ethnic/racial/cultural group is less successful than others.
This has already started. Second generation Hispanics are almost 50% more likely than first generation to fell personally discriminated against by American society (Pew survey). Only 57% of third generation Latinos describe themselves as America. The lack of appreciation towards the American system is staggering. Since I believe in reciprocal altruism the anti-American attitudes of the majority Hispanic population makes me less likely to weight their utility in this whole discussion.
If Mexicans indeed assimilated to the American culture and ethos I would also accept immigration. I think it is a good thing to make America as big as possible, so that more people can enjoy it’s superior economic system, and so that the Democratic Classical Liberal world continues to be dominant in the world.
But making the US larger by making it less American is not worth the price. This whole discussion, and the frightening evidence of lack of assimilation have made me even more pessimistic about the future.
Sorry I write so many posts , just one thing for Taeyoung:
The key to understanding why not all American jobs will disappear to China:
The wages of aggregate Americans is roughly what they can produce. So is the wages of the Chinese! If they really could do everything as well as Americans their wages would skyrocket, and the profitability of outsourcing go down.
This is exactly what has happened in eastern Europe, and is happening in China.
Thanks for the explanation, Teller. A few more questions then:
They get dollars. They would only accept this deal if the dollars would buy them American goods they value. These goods are made by the broad middle class.
I think, in the case of China (and earlier, Korea, and still earlier, possibly Japan), they’re accumulating American dollars and dollar-denominated debt at least partly as a side effect of their efforts at export-led economic development, under which the government nurtures (or tries to) the development of particular industries likely to introduce valuable infrastructure and managerial expertise into the domestic economy, and likely also to spur quasi-market-driven development of associated industries, all of which can be leveraged to drive economic development. Part of this is ensuring that there’s a market for these goods, and part of that is subsidising American consumption by purchasing American dollars and debt and all that. Part of it is also selling things below cost (e.g. Korea’s massive shipbuilding industry, developed largely because it seemed like a good way to lead industrialisation). But a lot of it is back down to subsidising American spending. Leastways so I am told.
I know on the legal side, at least, this is clearly something they are trying to do — this is why China today (and Korea in the past) implemented all those onerous regulations about having domestic Chinese or Korean partners, whenever a foreign firm tries to enter their markets. They’re interested in transferring knowledge about operating businesses from foreign to domestic firms, so that those domestic firms can use that human capital to compete internationally in the future. And they’re also interested in stealing IP, I suppose.
They outsource your job to China, because your wage demands are so height, because you have alternative employment.
Not quite, in my case, I think. Of my current salary, I would estimate that about a third of it (or at least a substantial amount — between 20% and 40%) emerges not from “alternative employment” opportunities, but just from the cost of living where I happen to be (an urban American region). My wage demands (or the wage demands of my peers, from which I benefit) are thus in significant measure an outcome of related cost of living demands. These kinds of cost-of-living issues are folded into immediately comparable alternative employment compensation levels, at least in the same geographic region, but they seem to me to trace back to underlying cost-of-living expenses.
Anyhow, leaving that aside, the risk I’m seeing here is that my principal alternative employment opportunities, at least those with comparable compensation, exist in the same or closely related fields as my current job. Thus, once outsourcing becomes viable for my current job, it’s not like everything else in the economy is going to be held in a steady state so I can rebound to a lucrative alternative — all my current comparable alternatives are likely to see their compensation levels plummet, because all of them will be facing a suddenly expanded set of possible suppliers (people with training and experience comparable to mine, just living in India or something), that same set that underbid me for my previous job.
Now, I am not (or I like to think I am not) entirely without skills in areas outside of my professional focus — I imagine there are certain alternative career paths open to me which would be largely unaffected even if my current industry becomes ripe for outsourcing. But these unrelated alternative careers do not offer me anything like comparable compensation. That’s why I’m in my current job, instead, after all.
And I don’t think I’m alone here. Indeed, in general, my guess would be that all people whose jobs get outsourced take a pay cut, at least in nominal dollars (otherwise, why didn’t they choose their job alternative in the first place?) That pay cut may be compensated by productivity gains, price reductions, etc., all tending to increase the purchasing power of their new compensation level so that it exceeds the purchasing power of their old compensation under the outsourced job. But it might not, no? Thus, when you say:
You go to this alternative employment and buy cheaper toys and textiles, both are better off. Certain types are groups might be hurt that have very sector specific human capital.
the thing that I’m left wondering is how much cheaper are the toys and textiles? Are they cheaper enough to offset the reductions in nominal pay I would anticipate? Maybe they’re guaranteed to be, but why are they guaranteed to be? That’s the bit I’m not getting.
Thanks Christopher, but your 1994 study (reporting 1 million Mexican illegals!) doesn’t tell us all that much.
†¢ The report does not include any of the most important labor market work, relying instead on papers such as Card 1990 (being Card he looked at one industry in one city†¦) and other jewels of methodological strigency such as
“Native African Americans in areas of high immigration fared better than native African Americans in low immigration areas in terms of wage and employment growth†
You don’t say?
* Sure, the average income of many immigrant groups is above natives, as I wrote. When 69% of Indian immigrants have college degrees, what do you expect?
But we are not talking about “immigrants†, we are talking about (on average unskilled) Mexican immigrants. Looking at the paper provided by Cowen their income is still far below native white not only after 10 years, but after 3 generations†¦
* 10.2% of Mexican immigrants use food stamps, 8.3% unemployment benefits, and 27.2% Medicaid. Do you think these are Mexican refugees, placed here by the UN?
http://www.cis.org/articles/2001/mexico/means.html
They also estimate 10.6$ billion per year Federal deficit from illegal aliens (the local deficit is of course much larger)
http://www.cis.org/articles/2004/fiscalexec.html.
There is another strain of research (that you did not link to) that shows that immigrants do as well as natives after 7 years, ehm, given background characteristic.
The problem is of course that background characteristics (such as education and work experience) is everything in the labor market. I a sense you are importing collection of background characteristics.
Now it makes sense that the average Hispanic with no high school education does somewhat better than a white native with no high school education, the native had much more opportunity and did not take it, so there is probably something else wrong with him. But the fact that you can explain low third generation Mexican earnings with low education does not help us with anything, since they systematically have worse background characteristics.
If you have other data please provide it, but hopefully about Mexicans, not “immigrants†, and hopefully more, eh, current.
Not that I didn’t appreciate insights from the survey such as:
“The Congressional Budget Office (1993) has recently released draft estimates of how much the Republican welfare reform plan might save.†
Teller is correct that any economicst who just talks about the benefits of immigration without a full discussion of cost is perverting economics. The marginal analysis that economics is famous for is that: To maximize the net benefit of activity X, increase the activity as long as its marginal benefit is greater than our equal to its marginal cost.
No economist worth his/her salt would suggest that the maximization of the net benefits of X are achieved by increasing activity X as long as its marginal benefits are greater than zero. Yet discussions about the benefits of immigration that do not included costs are tantamount to exactly this.
Boy Christopher Rasch, that is a lot to look into. However, I would really like to see these NAS and NRC studies in more detail. I want to hear about which costs they calculate and the methodology they use to come up with their figures. Also, do they separate legal (often highly educated) immigrants from the body of illegal, mostly Hispanic immigrants or do they simply lump them all together?
I really would like to see some details. Does anybody know anything about these particular studies and the methodology they use?
Chris:
Again thanks. Sadly the pro-immigration cites you quote are in the business of misleading their readers:
I have read the chapters in 1997 NRC report. They look at all immigrants and their children. The finding is that highly educated immigrants and their children add +105.000 dollar fiscally, state, local and federa. (+198.000 with decedents), while immigrants with less than a high school diploma cost –89.000 dollars fiscally! (-13.000 with decedents).
For the third time, we are not talking about immigration, we are talking about MEXICAN immigration, where 4% have college degrees and 70% have less than high school degrees.
I have never denied selective elite immigration from Asia/Europe is good for the US, that’s precisely why you should close the southern border and take in more high skill immigrants. The silliness of aggregating Mexicans with others is more apparent if you look at detailed data.
In California the fiscal balance of immigrants from Europe/Canada was +1300 dollars, wheras the fiscal balance of those from Latin America was –5.000 dollars. Which figure is more interesting when discussing Mexican immigration, that has it’s alternative cost in less high skill immigration? The average or the specific figure for Mexicans?
Note by the way that both less than high school and Latin underestimate the cost for Mexicans, that do worse than other Latinos and worse than other immigrants with no high school education, especially with regards to intergenerational mobility. The report assumed the children will assimilate quickly, so that by third generation reach american levels. This is certainly true for many immigran groups, but We empirically it is far far from truth for Mexicans.
Basically everything these guys write is based on pretending the Mexicans that earn 60% of American per capita income are as beneficiary fiscally than Other immigrants that earn 115% of the average income. Not to mention Mexicans use welfare services twice as much as other immigrants groups.
Real bright guys, what else do you got?
A couple of further points, that make the assumptions that led to the negative figures above overoptimistic:
* This study was made in 1997, before Medicaid exploded.
* The Social Security argument is to some degree bogus. Yes immigrants pay into SS, but at some point they will start collecting benefits! Immigration can only solve SS if you have ever increasing immigration.
Now to a few other flawed arguments:
1. Saying “they come here to work† and looking only at the men will not solve the basic problem. The labor force participation of all Mexicans was 54% in the boom year of 2000, fully 6 percentage points below natives, and have three times as much unemployment. According to time survey data whites work 7% more than Hispanics (presumably even more than Mexicans, who work less than other Hispanics).
2. If the problem was “documentation† second, third and fourth generation Mexican immigrants would get educated. Today they are less likely to get an education than African Americans.
3. Ditto learning English. Remember the children of illegal go to American schools.
4. Actually the parasitic behavior is likely to get worse, for two reasons. One is that to the extent that people fear deportation they are less likely to seek welfare and commit crime.
Further the norms of native Hispanic seem to get worse from living in the US, not better. They are for example 50% more likely to claim to be personally discriminated against. This makes sense, the parents compare themselves to Mexico, the children to white Americans.
5. Are you seriously claiming giving citizenship to millions of illegal Mexicans will make them go back? Of course not, now they will bring their families and relatives and (new) wife and husbands, so that the “Mexicanisation† will double or triple.
6. You are completely right that immigration has massive benefits FOR IMMIGRANTS. But in this discussion we are focusing on benefits on “club owning† Americas.
Your argument regarding external costs on US consumers is kind of silly, obviously Americans just import the cheapest good around, if the Mexican is ineffective than you buy from Korea (actually nothing in economics says that low effectively in another country hurts your trade, in the simple modes the bigger the difference the better for the US. It depends on the specific ineffectively)
Finally, people have started talking about costs as well as benefits.
Does anyone have information about emergency room usage and/or the hospital usage costs arising from illegal immigration?
Why do they need to move their families? Can’t they buy phonecards?
You mean economic freedom (in this case, the freedom of movement of labor) is a “win-win” result? Amazing! Spectacular! Who knew that free markets could be so beneficial?!??!
Seeing as how Communism won the Cold War, who would have thought it!
Translation: Walls + an auditable identification scheme when applying for employment will.
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