Immigration economics

Chris Farrell

TEXT OF STORY:

SCOTT JAGOW: This sweeping change in immigration law Congress is debating includes both skilled and unskilled labor, but there are certainly differences in attitude toward the two. Even people who oppose letting in more skilled foreign workers acknowledge their contribution to the economy. Unskilled workers — not so much. Our economics correspondent Chris Farrell has some thoughts on this.

CHRIS FARRELL: Well if you think about it, skilled immigrants, 40 percent of the PhD scientists and engineers, born elsewhere. They clearly add to our GDP growth.

When you get to the unskilled worker, it's a mixed bag. Net overall, the impact is positive, but you have to balance that against the fiscal impact, not the federal fiscal impact. The federal government for example gets some nice revenues form immigrants who work, play, you know, employment taxes. But the state and local governments, they end up paying for health care and educational expenses and that's where a lot of the controversy surrounds.

SCOTT JAGOW: So from an economic perspective, there is a huge difference between illegal and legal.

CHRIS FARRELL: Well now hold on a second there, from an economic perspective I don't think it really matters whether legal or illegal. Now it matters from a national security point of view, it matters in terms of the rights and obligations and responsibilities of being a citizen, but from an economic point of view, the question is the job being fulfilled.

So what economists believe is the big distinction is between skilled immigrants and unskilled immigrants. But I've really noticed that there seems to be in a lot of this discussion an automatic association of illegal and unskilled. There are a lot of legal immigrants whom we consider unskilled workers.

SCOTT JAGOW: A lot of people worry that the skilled immigrants are taking jobs away from Americans, but people usually say low-skilled immigrants are taking jobs that Americans don't want. Is there some kind of impact, perhaps on wages?

CHRIS FARRELL: Well this is what economists are fascinated by and this is what we should be concerned about, or this is one of the things we should be concerned about. There is a study by George Borjas, Lawrence Katz, Harvard University, look between 1980 and 2000, and they argue that immigration reduced the wage of high school dropouts by a little over seven percent. But other economists looking at the same set of data or trying to break it down in somewhat different ways have come up with minimal impact. One of the reasons why there may be no effect on wages is that there are different labor markets at work. So, for example, Tyler Cohen he's an economist at George Mason University, he points out 54 percent of tailors are foreign-born but less than one percent of crane operators. So there may be competition within different labor markets and not so much in overlap.

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