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Old 06-08-2009, 01:15 AM
LCButterField LCButterField is offline
Join Date: Jun 2009
Posts: 5
Default Critique of Mickey's Immigration Stance

As a long time viewer of BhTV I have lost count of the number of times I have heard Mickey argue that his opposition to illegal immigration stems largely from a concern over the distribution of income among native born workers. Essentially, so the argument goes, in a labor market made up of skilled and unskilled labor, an influx of illegal immigrants constitutes a shift in the supply of unskilled labor *relative* to skilled labor. Basic economics predicts that the distribution of labor income should become more unequal. This inequality, argues Mickey, is why we should all be so concerned with the immigration issue.

There are many reasons why this argument is less than persuasive. Putting aside issues of morality or legality I will focus on one particular economic issue (the economics of the issue do seem to be the source of Mickey's concern). I will also put aside whether Mickey's position on this issue is consistent with his positions on other issues (generally thinking, I do not think it is).

The key assumption/assertion in the standard story about how immigration lowers the wages of low skilled workers is that immigrants are substitutes for low skilled workers. Only when illegal immigrants are substitutes for domestic workers do they displace them. Important economic research on the topic (see especially Giovanni Peri at UC Davis) stresses the need to treat the distribution of human capital as a continuum rather than a bimodal distribution. Contrary to the simple story, there are not just high and low skilled workers in the US labor market, instead one should think of workers being distributed on a line segment running from no schooling/formal training to PhD level training. When one disaggregates the skill data in this way the US work force looks like the St. Louis Arch. There are very few low skilled workers, many middle skilled workers, and few high skilled workers.

Immigrants are essentially distributed in exactly the opposite way, there are many low skilled workers and (relatively) many high skilled workers (think google engineers). Illegal immigrants would of course be mainly made up of labor in the low skilled category, but not entirely. The distribution of immigrant labor, in other words, looks like an inverted St. Louis Arch.

The fact that the skill distribution of immigrant labor (illegal + legal) is the inverse of that for native born means that for the most part immigrants are complements for domestic labor, not substitutes. Given this complementarity, and given specialization, the evidence is that immigration (of both types) may reduce inequality (see Peri's Task Specialization Immigration And Wages).

Whether or not immigration (again, of both types) increases or decreases inequality by reducing the wages of low skilled labor comes down to determining the empirical value of a number of important parameters in a quite complex model. For California it seems that the effect of immigration is small and reduces inequality (see The Effects Of Immigration On California's Labor Market and Rethinking The Effects Of Immigration On Wages).

Personally I lean more towards Bob's position on illegal immigration. I don't see it as a terribly important issue, and the effects are probably positive, especially when one considers the effects in both countries. But putting this aside, I wonder what would happen to Mickey's position if it turned out that illegal immigration actually served to reduce wage inequality.

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