Monday, 11 June 2018

Immigrants and wages

Another for the growing list of articles showing that migrants do not hurt the wages of locals, in the latest American Economic Review, from Clemens, Lewis and Postel:
An important class of active labor market policy has received little impact evaluation: immigration barriers intended to raise wages and employment by shrinking labor supply. Theories of endogenous technical advance raise the possibility of limited or even perverse impact. We study a natural policy experiment: the exclusion of almost half a million Mexican bracero farm workers from the United States to improve farm labor market conditions. With novel labor market data we measure state-level exposure to exclusion and model the absent changes in technology or crop mix. We fail to reject zero labor market impact, inconsistent with this model.
In short, farms swapped out Mexican workers for capital investment, but neither wages nor employment of farm workers changed. Farm owners went from hiring Mexican workers to hiring machines instead, and shifted production a bit towards crops that could more easily be handled with machines instead of workers.

If for some reason you preferred that farm produce was picked by machines instead of by workers who had come in from Mexico, whether because you love machines or don't like people from Mexico, then I guess the policy was good at that. But it would be a mistake to view this as some productivity-enhancing capital-deepening. Output per worker would have gone up, but nothing happened to worker wages - employers were just paying machines instead.

1 comment:

  1. And if the employers move to machines AND the country imports Mexicans?

    Then immigration will affect locals.

    Because I doubt when Trump goes that immigration will remain blocked.