Thread by @Noahpinion

1/OK let's talk about immigration and wages.

Lots of people think immigration reduces wages, at least for some groups of native-born workers.

It is very difficult if not impossible to dissuade them from this belief.

noahpinion.substack.com/p/why-immigrat…

2/Most people think immigration is just a positive labor supply shock. Add more workers, get more labor supply.

This is the model they have in their minds. In this model, immigration makes wages go down.

3/But there's a second effect of immigration that they're not considering.

IMMIGRANTS BUY STUFF.

They rent apartments. They buy food. They get haircuts. They go to the doctor.

All of that stuff takes LABOR to produce. Native-born labor!!

4/So while immigration does increase labor supply, it also increases LABOR DEMAND.

The true effect is something more like this. When both supply AND demand increase, wages could go either way. The effects tend to at least partially cancel out.

5/If you think about it for a second, in the long run immigration won't push down wages, because population growth doesn't push down wages.

6/But that's just theory (and in fact, labor markets are a lot more complex than a simple supply-and-demand model).

So what about evidence?

In the post, I list a bunch of empirical papers -- some of which are literature survey papers -- about the effect of immigration on wages.

7/Although a few studies show some slight negative effects for a few workers (and a few show POSITIVE effects), the vast majority just don't find a significant effect of immigration on wages.

noahpinion.substack.com/p/why-immigrat…

8/Many of the papers study refugee waves -- like Syrian refugees flooding Turkey due to the war. These papers, which I think are the best in the field, find no negative labor market effects on natives. (Though sometimes they find a negative effect on *previous immigrants*!)

9/There were some studies I didn't include -- older studies, studies that rely a lot on theory, studies that look only at the national level, and so on. But the literature survey papers have some links to some of those. They tend to find the same results...

10/Anyway, don't expect this evidence -- or ANY evidence -- to persuade the anti-immigration people. Their belief that immigration is bad is not an empirical belief, but an article of faith.

But someday this post may matter.

11/So I hope this post was helpful.

Anyway, if you like this kind of thing, you can sign up for my Substack's free email list! Get my newsletter directly in your inbox.

Comes with a free picture of a cute rabbit.😊

noahpinion.substack.com

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