Politico gave me the opportunity to elaborate and extend some of the arguments made in my previous post that considered Donald Trump’s proposal for “extreme” vetting of immigrants. Here is the Politico deluxe edition of the essay.
Donald Trump gave a foreign policy speech yesterday where he outlined some of his key proposals to expand the “ideological” vetting of immigrants. Here is the oh-so-serious mainstream summary of the proposals in the New York Times; and here is a better written and more insightful take by Milo Yiannopoulos.
Needless to say, the proposals immediately attracted over-the-top reactions. I knew it wouldn’t take long before somebody called them un-American, and MSNBC (of course) nicely obliged; a commentator quickly commented that “this is the single most un-American thing I have ever heard in my life.” And one of the opinionators at the Washington Post opined (and I’m only slightly paraphrasing) that Trump’s ideas were “crazier than crazy.”
…natives could have done. The demolition of the narrative that large numbers of immigrants can enter a labor market without having much of an effect on native employment opportunities continues apace.
The new paper by Christian Dustmann, Uta Schönberg, and Jan Stuhler looks at what happened in some German labor markets after the fall of the Berlin Wall. It turns out that German localities bordering Czechoslovakia were affected by a policy that allowed some Czech workers to commute to jobs in Germany, but did not grant those workers any type of residency rights. The amount of commuting was substantial, “averaging to about 10% of local employment in municipalities closest to the border.”
So what happened?
On average, the supply shock leads to a moderate decline in local native wages and a sharp decline in local native employment.These average effects mask considerable heterogeneity across groups…A 1 percentage point increase in the inflow of Czech workers relative to employment in the baseline has led to about a 0.13 percent decrease in native wages, a 0.93 percent decrease in native local employment…A 1 percentage point increase in the employment share of Czech workers decreases the local wages and employment of unskilled natives by 0.20 and 1.37 percent, respectively, but of skilled natives by only 0.11 and 0.50 percent.
Obviously, I’m not surprised by these effects. What I find really interesting, and what makes the paper important, is the conceptual analysis of how immigration jointly affects wages and employment. For reasons that we do not yet fully understand, immigration sometimes has a large impact on native wages and a small impact on native employment. And, yet, the opposite is true in other contexts. The Dustmann-Schönberg-Stuhler paper opens up new avenues for research by introducing a technical framework that should eventually enable us to get a fuller understanding of why different labor markets react differently along different margins.
The paper is forthcoming in the Quarterly Journal of Economics.
Although the official publication date of We Wanted Workers is still some weeks away, the publisher told me on Thursday that the first two copies out of the bindery had just been delivered to their office. So my wife and I jumped at the opportunity to go down to New York City, pick up the books, spend time with our kids, and have a nice family celebration (appropriately enough) at one of the best Cuban restaurants in Manhattan.
The book looks really good. I reread parts of it on the train back to Boston today, and my (non-humble) reaction was “Not bad at all.” I am sure that I’ll be blogging about the reactions from the lovers and the haters in the weeks to come.
The Economist just published a very nice writeup of my Mariel paper.The article captures the essence of the paper very nicely. Over 60 percent of the Marielitos were high school dropouts. It seems more than obvious today that if we want to find out what Mariel did, perhaps we should look at what happened to the wage of similarly educated workers who were living in Miami at the time. Remarkably, that had not been done until I wrote my Mariel reappraisal. As The Economist puts it: “Mr Borjas’s paper shows that empirical results may depend on exactly where researchers look.”
There is a lot of wisdom in those words. Just keep looking in all the wrong places, and one will never discover what the impact of immigration really is. For example, one empirical trick that is often used to “hide” the impact is to define the population of low-skill workers as the aggregate of high school graduates and high school dropouts (click here for a technical discussion, and pages 14-17 here for an English translation). Because there are tens of millions of high school graduates, the impact of immigration on the smaller group of the least skilled workers gets diluted. And it’s usually too late, only after the inevitable political reaction occurs, that we find out that some people were really harmed.
Here’s a quick link to a description of my Mariel analysis, to the paper itself, and to the data.
I’ve begun to pay a bit more attention to what the different presidential candidates have been saying about immigration. And my research led to this section of a political platform that I found quite interesting:
Immigration has been a major topic in the Republican Presidential debates. But the discussion has been remarkably disconnected from the facts…The real issue with immigration is legal immigration. We are adding 1 million legal immigrants to the population each year. The great majority are unskilled. This isn’t hurting investment bankers or the software engineers at Google. This is hurting low-skilled U.S. workers. It’s the last thing we need if we are trying to restore our middle class…
Legal immigration is also fueling a veritable population explosion. Unless we reduce legal immigration, our population will rise by one-third – over 100 million people – in just 45 years. That’s the current population of the Philippines. Most of these additional people will locate in the nation’s major cities. Driving in our major cities at peak hours is already a major challenge. With one-third more people, driving in our major cities may be like driving in Manila – an experience I don’t recommend…
If there were always enough young people coming along and if they were always earning enough to fully pay off the contemporaneous old people, there’d be no impact on the fiscal gap. But our postwar intergenerational chain letter is failing like all chain letters do, eventually. Ours is running into the baby boomers’ baby bust, which refers to the fact that the massive baby boom generation chose to have fewer children per person than its parents did…Yes, the 1 million or so in annual immigration is bolstering the work force. But it’s not helping us with our chain letter. Immigrants, given their skill composition, cost our country roughly as much in benefits as they contribute in taxes.
These few sentences on immigration totally contradict the narrative that the mainstream media has been peddling for years. To rephrase: 1. There is a problem, and the problem is the very large flow of legal immigrants; 2. immigrants are disproportionately low-skill, “hurting low-skilled U.S. workers”; 3. immigrants are not going to solve the fiscal problem created by an aging native population–they cost us “as much in benefits as they contribute in taxes.”
So guess which candidate put up this immigration platform? Not Trump, and not Clinton. The honor belongs to the Kotlikoff-Leamer campaign.
Larry Kotlikoff, a professor at BU, and Ed Leamer, a professor at UCLA, are two renowned economists who are running in the 2016 presidential election as write-in candidates. Larry is a world-class expert in public finance, and Ed is a world-class trade economist and econometrician.
The Kotlikoff-Leamer immigration platform demolishes another one of the establishment’s cherished lies: All economists believe that immigration is so beneficial that only xenophobes and racists would disagree with the settled science. It seems that the elite has it wrong yet again.
One consequence from my rant on peer review from a few weeks ago was that I heard from some esteemed colleagues who simply could not believe that I found Economics Job Market Rumors to be a refreshing read. I think they felt that I had either very poor reading habits or had totally lost it.
I went to my Harvard office this morning for the first time in weeks and after carefully locking the door, turning out all the lights, and opening the Tor browser to hide my web surfing habits, I dared click onto the Economics Job Market Rumors forum. And what do I find? A post that illustrates why I find the site refreshing indeed. The post was the (fake) abstract for a forthcoming paper entitled “The Very Short-Run Health Effects of Pokemon Go: Evidence From GPS Data,” and the abstract reads as follows:
We estimate whether walking burns calories and causes individuals to lose weight. Using Pokemon Go as an instrument for miles walked, we find that exercise reduces one’s body mass index. The effects are largest for individuals who weigh the most in the baseline and for Hispanics. Initial estimates indicate that one hour of Pokemon Go will increase future income by $3,652 per year.
The abstract perfectly encapsulates the sterility and triviality of the cute-onomics that has overwhelmed the empirical side of the economics profession, down to the way its title “Blah Blah Blah: Evidence from Blah Blah Blah” reflects the papers that now get published in top journals. Look at the current issue of the American Economic Journal: Applied Economics, where 6 of the 10 papers religiously follow the template. (Thank you, you know who, for pointing this out to me months ago). I am certain that the Pokemon Go natural experiment will provide very precise estimates of a totally irrelevant economic question.
Some advice to the young bro or broette who came up with this classic. Write four or five such abstracts. Do what your elders do–hire an army of RAs to collect the data that would enable you to turn yourself into a reg monkey. And write the papers. You’ll be a shoo-in for Clark medal in a few years.