The Economist on Mariel

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.

An Immigration Platform

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.

EJMR Is “Refreshing” ?!?@/!?

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.

Odds and Ends on Mariel

Warning: Very geeky post.

Since I posted the final version of my Mariel paper earlier this week, I have heard from a number of people asking for all kinds of details about the paper. One of the nice things about having this blog is that I can quickly address these reactions/questions/doubts without having to resort to writing yet another paper. So here are some responses for those who are really into the minutiae of this stuff.

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Final Version of Mariel Study

My Mariel paper has now gone through the peer review process and it’s officially forthcoming at the Industrial and Labor Relations Review (the same journal that published Card’s original Mariel paper a quarter-century ago).

Mariel_Figure_2

Here is a nice-looking graph that tells the whole story. The graph shows the 3-year moving average of the wage of male, non-Hispanic high school dropouts in and outside Miami between 1972 and 2002; the shaded area is a 95% confidence interval (i.e., the margin of error). It is obvious that something happened in Miami after 1980, the year of Mariel. It is also obvious that something happened in Miami after 1995, when coincidentally there was another large influx of Cuban refugees. All the data-fudging and wishful thinking in the world cannot change those simple facts. As I say in the paper, “The wage of high school dropouts in the Miami labor market fell significantly after the Mariel supply shock. Any attempt at rationalizing this fact as due to something other than the Marielitos will need to specify precisely what those other factors were.”

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Responsible Nationalism: A Quiz

Responsible nationalism: “The idea that the basic responsibility of government is to maximize the welfare of citizens, not to pursue some abstract concept of the global good. Closely related to this is the idea that people want to feel that they are shaping the societies in which they live” (Larry Summers).

Now that as central a figure in the establishment as Larry Summers has made it respectable to be a “responsible nationalist,” I think it’s time to start delineating the boundaries that would allow a person to be classified as such. So here are a couple of examples that can help us decide if we are a responsible nationalist or a “protectionist-xenophobe.”

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Promises, Promises

Many economists are so religiously wedded to their models that it takes an awful long time, and an awful lot of contrary evidence, to shake them from what they learned in graduate school. We are now in the midst of such a reappraisal when it comes to globalization in general, and immigration in particular. Larry Summers’ new oped in the Washington Post illustrates just how much momentum this rethinking has gathered.

It is clear after the Brexit vote and Donald Trump’s victory in the Republican presidential primaries that electorates are revolting against the relatively open economic policies that have been the norm in the United States and Britain since World War II. If further evidence is needed, one need only look to the inability of Congress to pass legislation on immigration reform and the observation that the last four candidates left standing in the U.S. presidential contest all oppose the Trans-Pacific Partnership…Studies are produced about the jobs created by trade agreements, the benefits of immigration and the costs of restrictions on trade. In most cases, certainly including the cases for TPP and against Brexit, the overall economic merits are clear. But in this advocacy there is a kind of Gresham’s Law (the economic principle that bad money drives out good) whereby bolder claims drive out more prudent ones, causing estimates to often be exaggerated and delivered with far more confidence than is warranted. Over time, this has caught up with the advocates of integration.

And it’s about time, I would add!

Continue reading “Promises, Promises”