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Do Surges in Less-Skilled Immigration Have Important Wage Effects? A Review of the U.S. Evidence

This paper reviews a small part of a vast professional literature on the labor market effects of new immigrants. It focuses on recent studies that have employed econometric techniques to estimate wage effects of less-skilled immigrants during the two great American immigration surges (roughly 1870-1914 and 1980 to the present).  

The literature is fairly consistent in finding that large long-term immigrant surges have at least small negative wage effects for less-advantaged members of the labor force, and that these are likely to be largest for foreign-born workers and less-educated African-Americans in major immigrant-receiving regions. While this is consistent with the simple textbook prediction in a largely deregulated labor market, we might have expected more robust negative effects. The explanation may be that these effects are inherently difficult to isolate, especially given the quality of the data. Many less-skilled new immigrants are undocumented workers who are employed by individuals or small family businesses under-the-table and are either not counted or counted poorly.  

The paper concludes that, while all consumers and many employers (both as households and as firms) have undoubtedly benefited substantially from the surge in undocumented low-skilled workers since the early 1980s, there are also some losers, and there is consequently a need for policy interventions designed to ensure that socially-acceptable wage levels, employment opportunities, and working conditions are maintained for our least advantaged workers, native- and foreign-born alike.  

David Howell is a professor at Milano The New School for Management & Urban Policy. He is the editor of Fighting Unemployment: The Limits of Free Market Orthodoxy.

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