New research conducted by economists at the University of California, Davis, Giovanni Peri and Alessandro Caiumi, has concluded that immigrants have a positive impact on the wages and employment rates of U.S.-born workers. The study, published by the National Bureau of Economic Research, found that immigration had a significant effect on the wages of less educated native workers, with no significant wage effect on college-educated natives. Additionally, the research showed a positive employment rate effect for most native workers. The findings suggest that admitting newcomers does not create economic problems for current workers, contrary to long-held fears.
The study covers the period from 2000 to 2019, including recent increases in immigration, and even simulations for the most recent 2019-2022 period suggest small positive effects on wages of non-college natives and no significant crowding out effects on employment. Policymakers are encouraged to welcome the study’s conclusions, as the research indicates that immigrants have a positive impact on the economy and do not depress wages or job opportunities for U.S.-born workers. The findings are in line with earlier analyses that showed immigrants are beneficial to the U.S. economy.
Immigration has been found to play a crucial role in controlling inflation and boosting economic growth. The increase in the labor force due to immigration has helped the U.S. economy to escape recession, exceed hiring growth expectations, and cool inflation faster than predicted. Economists suggest that immigration expands the labor supply, which is an effective way to control inflation. Additionally, immigrants help labor markets be more responsive to local changes in demand and supply, contributing to economic growth and raising living standards in the country.
Research indicates that without a significant increase in productivity growth, slowing immigration could lead to slower gross domestic product (GDP) growth in the U.S. Immigrants have been shown to contribute to economic growth by increasing the labor force and its productivity. Slower growth in the working-age foreign-born population has been found to reduce U.S. real GDP growth, highlighting the economic benefits of immigration. Understanding the economic effects of immigration is essential for policymakers to make informed decisions about immigration policies that can support economic growth.
Giovanni Peri has explained that immigrants do not depress wages for U.S.-born workers because they bring different skills that complement those of native workers. Immigrants may spur innovation and increase productivity, ultimately leading to higher wages for native workers. By increasing the demand for goods and services, immigrants can also lead to more investment and greater demand for labor, resulting in increased wages and employment in the economy. The study found that immigrants have a degree of productive complementarity with natives, offsetting any competition effect and raising wages for American workers, particularly those with less education.
The research suggests that expanding legal immigration of less educated workers could help fill job shortages in sectors such as construction, hospitality, personal care, and healthcare without hurting U.S. workers’ wages. With the current tight labor market in the U.S., now may be an opportune time to expand legal immigration in an employment-driven process to benefit from the positive effects of immigration on the economy. The study’s findings highlight the importance of understanding the economic benefits of immigration and supporting policies that can leverage these benefits for the U.S. economy.
