"How Immigration Boosts Your Pay"
August 31, 2010, 08:18 PM
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At Mother Jones, Kevin Drum quotes economist Giovanni Peri`s latest study correlating immigration levels by state and income up through 2007. (Don`t worry about what happened in high immigration states like California after 2007. I`m sure all the trends stayed the same.)

Why does immigration increase average income? How does it increase productivity and efficiency? Here`s the scoop:

The analysis begins with the well-documented phenomenon that U.S.-born workers and immigrants tend to take different occupations....Because those born in the United States have relatively better English language skills, they tend to specialize in communication tasks. Immigrants tend to specialize in other tasks, such as manual labor. Just as in the standard concept of comparative advantage, this results in specialization and improved production efficiency.

If these patterns are driving the differences across states, then in states where immigration has been heavy, U.S.-born workers with less education should have shifted toward more communication-intensive jobs. Figure 3 shows exactly this....In states with a heavy concentration of less-educated immigrants, U.S.-born workers have migrated toward more communication-intensive occupations. Those jobs pay higher wages than manual jobs, so such a mechanism has stimulated the productivity of workers born in the United States and generated new employment opportunities.

What`s really striking about this is that the very mechanism that provides the productivity boost—the fact that immigrants don`t speak English well and therefore push native workers out of manual labor and into higher-paying jobst—is precisely the thing that most provokes the immigrant skeptics. They all want immigrants to assimilate faster and speak English better, but if they did then they`d just start competing for the higher paying jobs that natives now monopolize.

Isn`t it nice that immigrants "push native workers out of manual labor and into higher-paying jobs" in fields where English skills are crucial. Who hasn`t known some American-born construction worker who got pushed out of low paying manual labor when the whole construction site switched to Spanish-speaking so he became a $100,000 per week script doctor for Ridley Scott movies? Or at least as a Human Sign pointing the way to the theatre showing Robin Hood? They`re both communications work!
Peri writes:

To better understand this mechanism, it is useful to consider the following hypothetical illustration. As young immigrants with low schooling levels take manually intensive construction jobs, the construction companies that employ them have opportunities to expand. This increases the demand for construction supervisors, coordinators, designers, and so on. Those are occupations with greater communication intensity and are typically staffed by U.S.-born workers who have moved away from manual construction jobs.

Right. In, say, California`s Inland Empire in 2007, Americans who used to be construction workers but were displaced by immigrants moved into "greater communication intensity" jobs like, say, peddling subprime mortgages for Countrywide or flipping houses using zero downpayment mortgages from Washington Mutual.

What could possibly go wrong?