Harvard economist George Borjas contributes a fascinating article – “Immigrants In, Wages Down” – in the new May 8, 2006 issue of National Review. Here’s a snippet:

It turns out that it’s easy to demonstrate a strong link between earnings and immigration across these skill groups. I calculated the wage growth for each skill group in every decade between 1960 and 2000, as well as the corresponding change in the fraction of that skill group’s workforce that was foreign-born. The data showed an obvious negative correlation between wage growth and immigration: Wages grew fastest for workers in the skill groups that were least affected by immigration.
My results suggest that wages fall by 3 to 4 percent for every 10 percent increase in the number of workers in a particular skill group. This wage response (or “wage elasticity,” to use the economics jargon) is just what one would expect if one had looked at the vast economics literature on how labor demand adjusts (a literature that exists pretty much outside the immigration debate). In other words, the national wage-elasticity estimates I found mirror precisely what we already know about labor demand in the United States.
It’s worth emphasizing that this 3 percent “rule of thumb” is calculated using actual labor-market data over a 40-year period. It does not rely on any theoretical restrictions. It’s simply what we find when we let the numbers speak.

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