Migration and the Labor Force Essay ⋆ Sociology Essay Examples ⋆ EssayEmpire

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How do migrants fare in the host labor market and how do they affect native labor? Chiswick theorized that migrants often begin with low earnings because, lacking specific skills such as fluency in the host-country’s language, their home-country education and experience is undervalued. As they acquire these skills, their earnings grow. Supporting Chiswick’s theory, cross-sectional analyses of the USA and other countries revealed that immigrant earnings grow and approach the earnings of natives with similar years of schooling and experience.

This optimistic picture was shattered when Borjas showed that recent immigrants start at much lower earnings than their predecessors. Pairing the actual earnings growth of earlier immigrants with the low initial earnings of recent immigrants produced a bleak picture of immigrant economic assimilation in the USA and elsewhere.

Duleep and Regets questioned using the earnings growth of earlier cohorts to predict the earnings growth of recent cohorts. A low opportunity cost of immigrants’ human capital combined with its value for learning new skills should promote high investment in human capital, particularly for immigrants with low initial earnings. Immigrants should experience higher earnings growth than natives and among immigrants there should be an inverse relationship between entry earnings and earnings growth. These expectations emerge in empirical analyses that follow cohorts and individuals. As entry earnings fell, earnings growth increased; the earnings growth of recent immigrants exceeds that of natives and earlier immigrants. The Duleep/Regets model and associated empirical findings caution against assuming inter-cohort stability in earnings growth when measuring immigrant earnings growth. A key prediction of the model is that immigrants have a high propensity to invest in all forms of human capital, thus injecting dynamism into the host economy.

How migration affects native-born labor also yields conflicting answers for several reasons. Immigrants move in time periods and to areas with better than average wages and employment opportunities, obfuscating potential effects on native labor in cross-sectional and time-series analyses. Natural experiments help in this regard. Immigrants also cluster: estimates of immigration’s effect on natives’ employment and wages may fluctuate with the economic circumstances of one principal immigration state. Combining time-series and cross-sectional data alleviates this problem.

Cross-sectional and historical comparisons may show no immigration effect if natives respond to immigration by moving. Note the south—north migration of blacks and the imposition and relaxation of immigration controls. The recent movement of low-educated natives out of and high-educated natives into areas with large immigrant flows provides circumstantial evidence that recently arrived immigrants are labor-market substitutes for low-educated natives and complements for high-educated natives. There are, however, alternative explanations for this migration pattern and causality is difficult to determine.

Consumption patterns will also affect how immigration affects native labor. Immigrants buy native-produced products. Production/consumption interactions also exist. If immigration makes one product cheaper, the demand for complementary (substitute) products rises (falls). The availability of immigrants to tend kids and clean homes allows middle-class women to work and spend money on goods and services that may be produced by low-educated natives.

Case-study evidence often shows an influx of unskilled immigrant labor displacing unskilled native labor, in contrast to statistical estimates of small immigration effects. Yet an estimated wage or employment effect, if causal, only suggests that, on balance, immigration positively or negatively affects natives’ employment and wages, consistent with the existence of specific cases of displacement and immigration-induced wage declines. Case-study evidence can nevertheless elucidate how jobs traditionally filled by natives become dominated by immigrants and what happens to the natives who were formerly employed in these jobs. Turnovers from native to immigrant labor do not necessarily constitute evidence that displacement has occurred.

The theoretical expectation that increases in unskilled immigrant labor must harm native unskilled labor comes from models with only skilled and unskilled labor. Yet, within unskilled occupations immigrants and natives are differentiated by the nature of their work and the process by which they become employed, trained, and promoted. Moreover, businesses develop or persist, and industries change their use of labor, in response to immigration.

Bibliography:

Chiswick, B. R. (1991) Review of international differences in the labor market performance of immigrants. Industrial Labor Relations Review 44 (3): 570—1.
Duleep, H. O. and Regets, M. (1999) Immigrants and human capital investment. American Economic Review 89: 186—91.
Gang, I. N. and Rivera-Batiz, F. L. (1994) Labor market effects of immigration in the United States and Europe: substitution vs. complementarity. Journal of Population Economics 7 (2): 157—75.