Immigration’s Effects on American Wages and Unemployment

Hi. I’m Lone Candle.

We hear a lot of rhetoric about immigrants being good or bad. There’s a lot of ways to cut this issue, but I want to take a moment to cover the impact of immigrants on American jobs and wages.

Do immigrants take our jobs!? Do they suppress our wages? Let’s get into it.

Fortunately, economists have been studying this for decades and the theory and evidence is pointing toward some consistent conclusions.

In a simple world where most things in economic life are constant and immigration has limited effects, then immigration increases the supply of labor. If we have more workers due to immigration, then each will have less leverage in wage negotiations and wages will go down. This would mean immigration decreases wages for Americans.

Fortunately, we don’t live in that simple world. While there is this downward pressure, there are a lot of other effects.

A major factor to consider is the extent that American workers are complementary with immigrants. If American workers do the exact same function as immigrant workers, then they will directly compete for jobs, lowering wages for Americans. If they do different jobs, then by allowing Americans to focus on their comparative advantage and to utilize cheap labor, Americans become more productive. This pushes wages up.

Largely, American work-functions are complementary with immigrants, rather than…