Immigration: The Effects on Native-Born Workers

The large influx of immigrants in recent decades has led to an equally long, still unresolved debate over its effect on the economic well-being of native-born workers. Specifically, does immigration impose costs on U.S. workers by diminishing their labor market prospects? Economic theory posits that an increase in the supply of labor, such as through immigration, will reduce the wages and employment of native-born workers. Studies have utilized two approaches to test the theory. They have produced conflicting results, which have different implications for public policy. The concentration of immigrants in certain cities and skill groups led some economists to believe that immigration's greatest impact would be felt by native-born workers who live in high-immigrant areas and are similar to those foreign-born workers. Studies thus have compared differences in labor market outcomes between native-born workers who live in high-versus low-immigrant areas and are likely to experience the most competition for jobs with foreign-born workers; given the composition of the recent immigrant flow, these would be U.S. workers with comparatively low skill levels (e.g., less than 12 years of schooling). Most inter-area analyses have found scant evidence that foreign-born workers adversely affect the economic well-being of native-born workers. A few inter-area studies have estimated a slight negative impact on those who comprise a small share of total U.S. employment, namely, low-skilled natives. Other economists have argued that the inter-area approach underestimates immigration's consequences for U.S. workers because it assumes that labor, capital, and goods are at least temporarily immobile (i.e., they do not rapidly adjust to the immigration-induced increase in the supply of labor). If, for example, native-born workers who compete for jobs with foreign-born workers quickly decide to leave high-immigrant areas, their movements would spread any labor market effects associated with immigration across the nation and thereby make it difficult for spatially based research to detect any impact. Some analysts therefore have concluded that immigration's impact on the labor market can best be identified by examining data at the national level. The economy-wide approach is not without its own limitations, however. The relationship between internal labor migration and immigration remains an unsettled matter as well. Studies that take a national approach have estimated that immigration, given its composition in recent decades, reduces the labor market opportunities of low-skilled U.S. workers to a greater extent than those of other skill groups with whom foreign-born workers compete. If a goal of public …