Via AILA
10/03/2006

A crucial question in the current debate over immigration is what impact immigrants have on the wages of native-born workers. At first glance, it might seem that the simple economics of supply and demand provides the answer: immigrants increase the supply of labor; hence they should decrease the wages of native workers. However, the reality is more complicated than this.

The latest study published by the Immigration Policy Center addresses this issue. The study, authored by Giovanni Peri, Associate Professor of Economics at the University of California, Davis, and a Faculty Research Fellow at the National Bureau of Economic Research in Cambridge, Massachusetts, is entitled "Rethinking the Effects of Immigration on Wages: New Data and Analysis from 1990 2004." In the study, Professor Peri argues that the widespread notion that immigrants decrease native wages is a misconception, complicated by two reasons that too often are overlooked. First, immigrants and natives, with different skills and education levels, do not compete with each other for the same jobs, but actually complement each other performing interdependent jobs, thereby increasing the wages and productivity of natives. Second, evidence shows that new workers added to the labor force stimulate investment by entrepreneurs. When these two factors are included in the analysis of immigration and wages, it becomes clear that immigration has a positive effect on the wages of most native-born workers.

For a detailed analysis of Professor Peri's findings, read the full report here.