Illegal Immigrants and the Economy

ILLEGAL IMMIGRANTS AND THE ECONOMY….Remember that study suggesting that illegal immigration had modestly reduced the wages of native-born high school dropouts? Well, it turns out there’s even less to that than meets the eye:

George J. Borjas and Lawrence F. Katz….estimated that the wave of illegal Mexican immigrants who arrived from 1980 to 2000 had reduced the wages of high school dropouts in the United States by 8.2 percent.

….When Mr. Borjas and Mr. Katz assumed that businesses reacted to the extra workers with a corresponding increase in investment…their estimate of the decline in wages of high school dropouts attributed to illegal immigrants was shaved to 4.8 percent. And they have since downgraded that number, acknowledging that the original analysis used some statistically flimsy data.

Assuming a jump in capital investment, they found that the surge in illegal immigration reduced the wages of high school dropouts by just 3.6 percent.

….Mr. Katz agreed that the impact was modest, and it might fall further if changes in trade flows were taken into account ? specifically, that without illegal immigrants, some products now made in the United States would likely be imported.

So we went from 8.2% to 4.8% to 3.6% ? and probably even less if trade flows are taken into account.

Bottom line: illegal immigration has had a (small) positive economic impact on the American economy as a whole; its sole negative impact has been tiny and limited to one segment of the workforce (high school dropouts); and if we’re really worried about high school dropouts, everyone agrees they have way bigger problems than competition from illegal immigration anyway.

If this is the best we can come up with after 20 years and 8 million illegal immigrants, there really isn’t a serious economic argument to make against immigration from Mexico. Cultural backlash is pretty much all that’s left.

Via Ezra Klein.