The Agenda

Matt Yglesias on Less-Skilled Immigrants and Native-Born Labor

Matt Yglesias notes that less-skilled immigration does not appear to depress the wages of less-skilled native-born workers. Rather, it tends to depress the wages of other less-skilled immigrants, as these workers tend to have a similar rather than a complementary skill profile. Less-skilled immigrants and less-skilled native-born workers, in contrast, tend to have complementary skill profiles. And he goes on to make a point I consider very important:

Right now the stock of low-skill immigrants to the U.S. is heavily weighted to Mexico, since low-skill immigration is largely illegal and if you’re going to sneak into the country Mexico is a good place to do it from. Actually allowing people to come would let us diversify and pick up more immigrants from Africa, Southeast Asia, etc., whose work might be complementary to the work of Latin American immigrants as well as to people born in the USA.

I’ve been arguing for some time that the humanitarian case for less-skilled immigration from Latin America is fairly weak relative to the case for less-skilled immigration from the world’s highly-indebted poor countries. The fact that our immigration conversation is so Latin-centric has long struck me as evidence that it is shaped more by political imperatives than by humanitarian considerations. Moreover, a more diverse supply of less-skilled immigrants would have economic benefits as well.

Yet I also think that the argument that less-skilled immigration depresses the wages of less-skilled native-born workers is not and has never been the most compelling argument for biasing our immigration system more strongly towards high-skilled immigrants and against less-skilled immigrants, though it is an argument that has resonated politically. Rather, the real issue is the net fiscal impact of immigration, particularly on a multigenerational basis.

Aristide Zolberg, who I strongly suspect would not share my views on immigration reform, has referred to the United States as “a nation by design,” a reference to an evolving immigration policy that has been mindful of the fact that immigration shapes our shared future.

According to the national mythology, the United States has long opened its doors to people from across the globe, providing a port in a storm and opportunity for any who seek it. Yet the history of immigration to the United States is far different. Even before the xenophobic reaction against European and Asian immigrants in the late nineteenth century, social and economic interest groups worked to manipulate immigration policy to serve their needs.

Today’s immigrants will form families and help determine the shape of the labor market for many generations to come. So it is hardly surprising that many of us persist in believing that it is right and appropriate to manipulate immigration policy to serve national needs over the long-run. Matt believes that the best way to do that is by increasing immigration of all kinds, including less-skilled immigration. I tend to think that increasing high-skilled immigration while decreasing and changing the composition of less-skilled immigration is the better strategy. 

While less-skilled immigration benefits the immigrant due to the place premium, and while it benefits her children, who have access to institutions that are presumably of higher-quality than those available in the main source countries, it is important to think about how the future will unfold in a realistic, unsentimental way. The Borjas-Katz research on the Mexican-born workforce suggests that the native-born children of less-skilled Mexican immigrant workers have a somewhat higher skill level than their immigrant parents, yet they don’t close the gap with other native-born children. Part of this reflects the fact that the skill gap in the founding generation is so large.

If our K-12 system were well-suited to closing skill gaps that flow from differences in upbringing and home environment, etc., the case for less-skilled immigration would be extremely strong, as the increase in the less-skilled share of the workforce would not persist beyond one generation. But that is not the case. If anything, our K-12 system has demonstrated that it is not very good at closing these gaps, due to a number of factors that range from the hard-to-overcome effects of residential concentration of poverty to rigid instructional approaches that fail to meet the needs of low-performing students to summer learning loss. Though our K-12 system could certainly improve along these dimensions, it is hard to imagine that literally closing these gaps will ever be easy, not least because the skill gap is a moving target.  

If we assume that skill-biased technical change will continue into the future, this has important implications for the labor force. One can imagine that the number of workers who find themselves disadvantaged by technological change will increase over time, as will the number of workers who find that their labor market position has deteriorated to such an extent that leaving the labor force is preferable to remaining on its margins. This will presumably increase the need for social transfers. Increased social transfers, in turn, will mean higher taxes on high-skilled workers. To be sure, the deteriorating labor market position of less-skilled workers will mean that high-skilled workers will have access to low-cost in-person services, which might mitigate the impact of higher taxes. But we can also imagine tighter labor markets leading to firms combining technology and labor in new ways that also reduce the cost of services.

To put this another way, would we rather have a skill profile comparable to Canada, Norway, and Australia or Portugal and Greece? Given the power of human capital spillovers, my strong sense is that we want to go in a more Canadian direction. 


The Latest