it attempts to identify the American households that benefit the most and those that gain the least from these changing prices.1

The Economic Gain to Immigrants

In the previous chapter, we argued that immigrants expect that they themselves will gain from immigration, or they would not come. But how large are these economic benefits to immigrants? Although the question is straightforward, it is amazing how little direct evidence exists on the magnitude of their actual economic benefits. Some thorny conceptual issues beset comparison of standards of living across countries, but the primary reason for the lack of knowledge is that survey data contain little information about immigrants' lives before they came to America. As a not atypical example, the decennial census questionnaire asks no direct questions about how immigrants fared in labor markets at home.

Given this paucity of direct evidence, the best we can do is make some simple contrasts between what immigrants earn here compared with average wages in the major sending countries.2 There are two salient facts in describing wages in the United States relative to those of potential sending countries. First, wages in the United States are high relative to those in the less economically developed sending countries, such as the Philippines, Mexico, and the other Central and South American countries. Second, dispersion in wages in the United States is high relative to that in most of the developed sending countries, including those in Western Europe and Canada.

The implication is that immigration to the United States should be attractive to most workers from less economically developed countries and that skilled workers from many developed countries may want to emigrate into the United States.3 These implications appear to be broadly consistent with migration patterns—for example, unskilled labor from Mexico and skilled labor from Western Europe.

As a rough gauge on relative standards of living, Table 5.1 lists gross domestic product per capita for the principal source countries. This table illustrates the


There are other interesting issues that the panel did not consider because it was necessary to limit the scope of the report. Among them are the effects of immigration on family income (as opposed to individual earnings) and the contribution of immigration to the rise in individual and family income inequality over the past 20 years.


One difficulty with such comparisons is that immigration may be highly selective relative to home country traits.


These implications are strictly true as long as productivity differences among workers do not fully account for these wage differences between the United States and the sending countries. The extent to which productivity differences can fully account for these differences is a source of considerable debate. Unlimited free trade or immigration would imply that wages would tend to equalize across nations (factor price equalization). Current estimates of productivity adjustments suggest that productivity-related factors can explain only some of these intercountry wage differences, leaving large wage differences and large gains from migration.

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