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to have a very large effect on relative earnings or on gross domestic product per capita. Among the legions of factors that affect the economy, many are far more critical than immigration, including savings and investment and the human capital of U.S. workers. Immigration over the 1980s increased the labor supply of all workers by about 4 percent. On the basis of evidence from the literature on labor demand, this increase could have reduced the wages of all competing native-born workers by about 1 or 2 percent. Meanwhile, noncompeting native-born workers would have seen their wages increase, and both competing and noncompeting workers may have benefited as consumers.
Overall, barring sizable immigration-induced economies or diseconomies of scale, the most plausible magnitudes of the impacts of immigration on the economy are modest for those who benefit from immigration, for those who lose from immigration, and for total gross domestic product. The domestic gain may run on the order of $1 billion to $10 billion a year. Although this gain may be modest relative to the size of the U.S. economy, it remains a significant positive gain in absolute terms.
Potentially, immigration may have much larger effects on certain parts of the labor market—workers in geographic areas that receive large numbers of immigrants or those with low levels of education. However, comparisons of geographic areas with different levels of immigration show only a weak relationship between native wages and the number of immigrants in a city or state. Furthermore, in these studies the numerically weak relationship between native wages and immigration is observed across all types of native workers, skilled and unskilled, male and female, minority and nonminority. The one group that appears to suffer substantially from new waves of immigrants are immigrants from earlier waves, for whom the recent immigrants are close substitutes in the labor market.
While some have suspected that blacks suffer disproportionately from the inflow of low-skilled immigrants, none of the available evidence suggests that they have been particularly hard-hit on a national level. Some have lost their jobs, especially in places where immigrants are concentrated. But the majority of blacks live elsewhere, and their economic fortunes are tied largely to other factors.
There are a number of problems with studies based on local labor market analyses. If native workers and firms adapt to the entry of immigrants by moving to areas offering them better opportunities, then there is no reason to expect local level correlation between the wages of natives and the presence of immigrants. The wages of all competing native workers would fall, not just the wages of natives working in the cities where immigrants cluster.
Some studies have investigated the impact of immigration on aggregate labor markets, rather than on local labor markets. Such studies estimate the effects of changing the relative proportions of skilled to unskilled workers to simulate the effects of the supply increases brought about by immigration. This approach also has its limitations, as it relies on an assumed underlying model of the