The Effects of Immigration on Wages and Employment - Essay Example

Effects of Immigration on wages and employment The issue of immigration and its effects on wages and employment has been the subject of numerous debates. Suffice to say, mobility of workers both domestically and internationally has become commonplace thus altering the composition of the workforce in various places. Legal migrants form a substantial portion of the workforce in the United States. It is important to evaluate the impact of both the international migrations to the US and the domestic migrations on the native workers. Specifically, it is imperative to investigate the effect of immigration on the wages and employment rates of a particular area. According to Card (2005), immigration does not have a notable impact on the wages of both the natives and the immigrant workers. Card indicates that large differences in the proportions of immigrants do not cause differences in the relative wages. In order to investigate the effect of immigration on wages and employment, Card compared cities with large versus small numbers of immigrants. He also factored in the effects for each city outmigration and reduced in migration. Card found out that immigration had a negligible effect on skilled and unskilled wages. Borjas (2005) points out that workers move away from cities with large numbers of immigrants or avoid such places altogether. Therefore, the proportion of immigrants in cities is endogenous and therefore economists have to evaluate data over time to analyze immigrants’ impacts on wages and employment. To evaluate the impact of immigrants on wages and employment, Borjas divided people into strategic groupings based on factors such as education, race, place of birth, age among other social factors. After the groupings, the groups’ relative wages and employment were observed over time and matched with the production function. Borjas found out that immigrants cause a reduction of 5.72% in weekly wages. Borjas considered this reduction to be statistically significant taking into account the compounded effect various places. Peri (2010) took a task analytic approach to investigate the study in focus. According to Peri, workers are in different occupations. For instance, natives have a better command of English language and therefore more suited for communication oriented tasks compared to immigrants who specialize in jobs that are manual oriented. Peri also indicates that native born workers take on managerial tasks while educated immigrants are likely to work in specialized roles as engineers, doctors or scientists. Ultimately, a large a number of immigrant workers could lead to increased productivity of the natives and thus increase their wages and employment rate rather than decreasing them. Card, Borjas and Peri used fundamentally different methods to study the effects of immigration on wages and employment. Borjas’ findings were based on an intrinsic grouping of people based on social factors and comparing their wages and employment rate vis a vis proportion of immigration in their cities. It is imperative to not that Card used the same groupings and made findings to the effect that immigration had negligible effects on wages and employment. The difference in findings between Borjas and Card can be attributed to the fact the Borjas failed to consider the effect of capital investments changes to the production function. Peri a task oriented approach to evaluate the differences in terms of jobs that natives and immigrants undertook. It is notable that the findings of Card, Peri and Borjas are based on the methods that they used to conduct their studies. It is not possible to arrive at a generalized conclusion on the effects of immigrants on the wages and employment rates. However, both Peri and Card tentatively agree that the immigrants do not necessarily cause a negative impact on employment rates and wages. 2. Worker mobility is an important factor in market economies since it allows for free movement of workers to obtain employment of their choice. The mobility of workers is also beneficial to employees as it enables to select their staff from a large labor pool. In essence, worker mobility is an offshoot of immigration both nationally and internationally. However, immigrants and native workers may not be perfect substitutes for each other. For instance, the nature of roles and tasks that U.S.-born workers can perform are fundamentally different from the roles that foreign-born workers are suited for. One example of imperfect substitution of workers is in the area of teaching. Native U.S. workers are arguably better suited to perform teaching tasks since they have a better command of English language skills in comparison to immigrant workers. Therefore, a large proportion of immigrant workers to a city in the U.S. may not necessarily jeopardize the labor dynamics in some tasks and jobs. Human capital theory postulates that workers migrate from areas of relatively poor earnings to areas where earning opportunities are better. Pull opportunities offer stronger motivation for migration to a particular destination. In fact, studies indicate that economic opportunities play a great role in influencing migration of workers (Ehrenberg and Smith 325). The immigrants inherently look for better economic compensation in their destination compared to where they migrate from. One of the naive views in regards to immigration is that every illegal immigrant deprives the natives of jobs. It is also argued that immigrants perform jobs that no U.S.-born workers would want to do (Ehrenberg and Smith 337). These are simplistic arguments that do not take into account the demand and supply curves of labor. Even though immigrants may be willing to work at lower wages for menial tasks compared to the native U.S. workers, it is imperative that deportation of all immigrants would not necessarily lead to an increase in employment opportunities for the locals. In fact, lack of immigrants to perform menial tasks could lead to higher wages for the natives to perform the tasks. Theoretically, the wages for natives may increase if immigration was eliminated in its entirety but the job market would shrink as employers cut on costs (Ehrenberg and Smith 338) According to Ehrenberg and Smith, the impact of immigration on wages can be effectively evaluated by analyzing the changes in wage for specific human capital groups at a national level over a period of time (341). This method of approach indicates that immigration reduces the wages of natives by less than half percent in the short run and increased their wages in long run. Other empirical results indicate that immigrants reduce the wages of the natives albeit by a very small margin. Researchers concur that the group that is most affected by increased immigration are prior immigrants. This is because this group is the closest substitute for the services that the new immigrants can offer (Ehrenberg and Smith 341). Work Cited Ehrenberg, Robert, and Smith Robert. Modern Labor Economics: Theory and Practice. 11th ed. New York: Pearson. Print. Read More