The Corner

Famous Study Showing Immigration Doesn’t Depress Wages Refuted

There is perhaps no economic study more often cited by immigration advocates than economist David Card’s 1990 analysis of the “Mariel boatlift.” After Fidel Castro announced in 1980 that anyone wishing to leave Cuba could do so via the port of Mariel, 125,000 Cuban immigrants came to Miami in a matter of months that summer. The sudden influx of young, able-bodied workers generated an unusually good test of how immigration affects wages. Economic theory predicts wages should have declined in Miami after the boatlift, but Card was surprisingly unable to detect any wage impact at all.

In that 1990 paper, Card speculated that perhaps the Miami labor market was already preparing for an expected increase in population, and the sudden boatlift simply headed off other would-be immigrants. Over time, however, the Card study has become immigration enthusiasts’ crown jewel of economic research. It is frequently cited as evidence that the U.S. labor market is so dynamic — magically dynamic, to skeptics — that even large influxes of immigrant workers do not depress wages.

Now, 25 years after the original study, economist George Borjas has a new working paper that directly contradicts Card’s findings. (Disclosure: Borjas was my advisor in graduate school, and we have remained in touch since then.) Drawing on past research showing that low-skill immigrants compete primarily with the least educated natives, Borjas found that the wage for high-school dropouts in Miami had declined by almost 40 percent relative to a control group of cities five years after the boatlift. The wage change in Miami was more negative than 99 percent of wage changes in every other major city over similar time intervals.

Although Borjas mentions it only in passing, his new findings also cast doubt on two other common claims made by immigration advocates. The first is that immigrants compete only with other immigrants in the labor force, leaving native wages unaffected. There has never been much empirical or even theoretical support for this claim, but it spread like wildfire through the media anyway. In fact, Borjas intentionally focused on non-Hispanic residents of Miami, who were mostly native-born. They are the group that experienced the wage declines noted above.

The second claim is that high-school dropouts and high-school graduates might be “substitutes” in the labor market, meaning they have similar skills and compete for similar jobs. If that is the case, then any wage competition from immigrants would be spread over not just the relatively small number of native high school dropouts, but also over the much larger group of native high school graduates. With the wage effect spread so thin, individual natives would feel a much smaller impact. Borjas showed that the wages of high school dropouts and graduates in Miami diverged sharply after the boatlift, implying they are not substitutes at all. It’s the dropouts who feel the pain.

The new study is still a “working paper,” meaning it has not been peer reviewed or published yet. That process will be interesting, as Card is sure to be a reviewer, and sparks may fly. Stay tuned.

Jason Richwine — Jason Richwine is a public-policy analyst and a contributor to National Review Online.

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