The Economist’s Wil Wilkinson reports on new research from California (the state with the most immigrants).
If it were impossible to tell immigrants and native workers apart — had they no differences that matter to the job market — an increase in the supply of immigrant workers would likely ding natives’ wages and make work harder to find. That’s just supply and demand. But native and immigrant workers in California are different in important ways. They are not what economists call “perfect substitutes.”
Rather, they can be “complementary,” which is to say, better together.
Peri notes that most less-skilled immigrant workers don’t speak English as well as natives do, and that matters. It means that primarily Spanish-speaking workers flock to manual work, which pushes native Californians toward jobs for which speaking English gives them a clear competitive advantage. These jobs tend to pay more than manual labor, which has helped keep native wages from falling. But most importantly, the division of labor between immigrants and natives promotes specialization, which in turn boosts overall productivity: Each group comes to perform its respective tasks more efficiently than it otherwise would. Increased productivity makes specialized immigrant-native teams of workers worth more to employers than less-specialized native-only teams, and that helps keep wages and demand for workers up.
This explains what Peri calls “the counterintuitive fact that there is a zero correlation between immigration and wage and employment outcomes of natives,” and exposes the error in Kaus’ anti-inequality proposal. Sealing the border won’t boost native wages — not even in America’s most immigrant-thronged state. In fact it would increase inequality and needlessly perpetuate want.
It can feel a little counter-intuitive to learn that more workers can mean more jobs and higher wages — but it’s hardly an impossible idea to grasp. The idea that specialization increases productivity, and leads to a larger economic pie that can potentially leave everyone better off, is basic free market economics, and a principle that conservatives generally embrace — except when it comes to immigration.