The Immigration Cure for Our Economy?

snakeoilResearchers are regularly coming up with studies designed to cast immigration as a panacea for economic stagnation. A new “discussion paper” by a UK and a US researcher, “Spillovers from Immigrant Diversity in Cities” was described on the Citilab website as proving, “More Immigration Means Higher Wages for All Workers. The study was described as proving that “more immigrant workers made everyone richer…”

One had to read further to find out that conclusion was not so clear cut. The article noted that, “It may not be the case that all types of immigrants have the same effect on productivity.” That’s pretty obvious even without a PhD.

The researchers, however, explained that they had found a way to determine that the higher wages in cities with larger immigrant populations was not just a reflection of cities with higher wages attracting more immigrants or more immigrants with needed qualifications. The test was to focus the study on only those immigrants who had resided in the city for at least two years. But, this qualification does not logically provide the assurance the researchers claimed. It would be more likely to increase the share of workers with special work qualifications by reducing the share of those workers with few qualifications who travel widely looking for work.

Finally, the article on the study further qualified the importance of the research finding. It concluded that, “But the larger point is that immigration isn’t the zero-sum, us-or-them game that it’s often framed as.” That is a finding so innocuous that everyone should be able to agree with it. If immigration were a zero-sum game, there would be a strong argument for ending all immigration, which is not a position advocated by any mainstream politician or organization.

The lessons from this type of sensational reporting are twofold:
- There is a lot of supposed research bolstering the benefits of immigration that does not stand up to careful scrutiny.
- Even in the biased reporting of such research, it is worth reading beyond the headlines to see whether the reporter’s intellectual honesty slips some doubt into the reportage.

avatar About Jack Martin

Jack, who joined FAIR in 1995, is a retired U.S. diplomat with consular experience. He has testified before the U.S. Congress, U.S. Civil Rights Commission, and U.S. Commission on Immigration Reform and has authored studies of immigration issues. His national and international print, TV, and talk radio experience is extensive (including in Spanish).


  1. avatar Ron says:

    The discussion paper is contradicted by other research, conflates immigration with diversity, contains numerous methodological flaws (one of which Jack points out), and starts with a statistically insignificant correlation. Rowthorn’s report, mentioned by Leland in his comment (many thanks!), includes the following summary about large-scale immigration to our country:
    “One highly influential study by Borjas and Katz (1997, p. 62) estimated that immigration explained 27 to 55 percent of the substantial decline in the relative wages of high school dropouts in the United States over the period 1980-95. Other papers by Borjas reach a similar conclusion (e.g. Borjas, 2013). In contrast, Ottoviani and Peri (2012) find that immigration has only a small impact on the wages of this group. Using a different methodology, Card (2001) finds that in some of America’s gateway cities, such as Los Angeles, large-scale immigration during the period 1985-90 ‘significantly reduced employment rates for younger and less educated native workers’ (p 58). Elsewhere, Card (2005) and also Smith and Edmonston (1997) find that immigration has a surprisingly small impact on native workers of any variety.”

    So the effects on wages are either negative or minimal, contrary to the discussion paper. This is consistent with CBO’s analysis of the 2013 Gang of 8 bill, which would have greatly increased immigration: CBO estimated that it would have decreased our wages for over a decade. It should be noted that the discussion paper looks only at the impact on wages, so it has nothing to say about any impact on unemployment. Furthermore, an unemployed worker’s wage, if it were included in the analysis, would be zero, so it is a methodological flaw in the paper that it did not control for unemployment rate. Rowthorn does look at the impact on unemployment and, with respect to our country, cites research on immigration’s impact on unemployment in OECD countries, including ours, that found that over the period 1984-2003, “an increase in the share of immigrants in the labour force is estimated to raise temporarily natives’ unemployment, over a period of approximately five to ten years.” This is also consistent with CBO’s analysis of the Gang of 8 bill: CBO estimated that it would have increased our unemployment rate for seven years.

    The discussion paper and even more so CityLab also conflate diversity with immigration. The paper attempts to measure the effect on wages of diversity, as measured by birthplace fractionalization index. The value of this index is exactly the same whether a population consists of 90% natives and 10% immigrants or the reverse! Furthermore, the value of this index is higher if the immigrant share is split evenly between two countries than if it is split 90%-10% between them, and the index is higher still if that same immigrant share is split evenly among three countries. The paper thus says absolutely nothing valid about the effect of immigration (immigrant share of the population) on wages. These observations also imply that it is a methodological flaw in the paper that it did not control for immigrant share. In addition, the index takes no account of the different productivity of immigrants from different countries. For example, the value of the index is exactly the same whether the immigrant share consists of workers from a low-productivity country like Mexico or a high-productivity country like Canada. Thus, yet another of the paper’s methodological flaws is that it did not control for the productivity of the source countries.

    One must also wonder why the paper’s authors went all the way back to 2007, hardly a representative year for the US economy, for their data. In any case, there is no analysis of whether a change in a city’s diversity over several years is correlated to a change in real wages, which if true would provide much stronger support for their argument that diversity increases wages.

    Finally, any statistician would immediately note that the R-squared for birthplace fractionalization vs. log of wages (Figure 1 in the paper) is so low (only 0.194) that the idea that the data show any significant correlation at all between them, or that the regression line is at all predictive, is ridiculous. It’s interesting that the CityLab article conveniently left out the note for Figure 1, wherein the R-squared is disclosed.

  2. avatar Ken says:

    What these reasearchers think, even on the surface, is preposterous. Disregard entirely.

  3. avatar David Smith says:

    First step in any study is to determine what outcome the people paying for it want. Then build selective data from selective sources to support that position before sending the bill.

  4. avatar Leland says:

    If you want something from the UK, how about an analysis in 2014 by Robert Rowthorn, Emeritus Professor of Economics at England’s University of Cambridge, and a self described leftist. [Leftists usually being in favor of mass immigration.]

    His conclusion was that the long term consequences of mass immigration “are mostly negative for the existing population of the UK and their descendants.”

    • avatar Chad says:

      I wish the left in America would listen to fellow leftist Rowthorn.
      I am shocked at how many blamed guns for the cowardly Chattanooga terrorist attack.
      Many will never call him a terrorist. Many leftist cried why he was pointed out as muslim, or a immigrant, or he must have been treated unfairly or the investigation of his father was the reason.

      I am off subject, I think many employers pander to immigrants, I’ve seen many hired at work, some barely speak English. Even one local company, Hills pet food, has a international committee or similar name, seen them (in hills uniforms with international committee on shirts) bring in an immigrant to the doctors office I was at.
      This man was very young, practically no English. They filled out his papers for him so he could get a job. This is one of the best paying jobs in town. I had worked there previously as a temp but could never get an interview.
      I believe there must be a govt program that rewards companies for hiring immigrants and / or refugees.
      No American with half a brain would believe that immigration brings higher pay to Americans. Just brings govt benefits to the immigrants /refugees.