Who Emigrates From Denmark?

Ilpo Kauppinen, Panu Poutvaara, and I have just finished a paper that examines the selection characterizing emigrants from Denmark, one of the richest and most redistributive European welfare states.

The paper makes a neat theoretical contribution. It derives the conditions that determine whether the skill distribution of the emigrants stochastically dominates (or is stochastically dominated by) the skill distribution of the stayers. Because the rewards to skills in Denmark are low (relative to practically all possible destinations), the model predicts that the emigrants will be positively selected, and that the skill distribution of the movers will stochastically dominate that of the stayers.

Our analysis of administrative data for the entire Danish population between 1995 and 2010 strongly confirms the implications of the model. Denmark is indeed seeing an outflow of its most skilled workers. And that is one of the consequences that a very generous welfare state must learn to live with.

The paper is forthcoming in the Economic Journal.

I’m Confused!

Haven’t we been told over and over and over again that higher levels of immigration do not lower the wages of American workers? So what’s this I read in Politico:

President Donald Trump’s harsh criticism of immigration programs and Congress’ refusal to lift a cap on work visas meant many seasonal businesses had to hire American this summer — and pay their workers more. That’s good news for Trump, for U.S. workers, and for supporters of Trump’s “American First” agenda, but business groups complain that increased spending on wages will ultimately cost jobs and sap company profits.

Maybe someone should write a paper entitled “The Labor Demand Curve is Downward Sloping.”

 

The NYT Corrects the Wolfers Post

Here is the corrected post.

As I noted in a long post that contains the entire email exchange between Justin Wolfers and me, Justin admitted making a “foolish mistake” when reporting my reaction to the paper on gender bias in economics. Justin’s initial article had me reacting as follows:

In an email sent on Wednesday, after he received a copy of Ms. Wu’s paper, Professor Borjas said his views had not changed.

The problem with this sentence is that the email exchange makes it obvious that I was reacting to an entirely different matter. Justin’s foolish mistake was to tell me he was going to quote from Blog Post A, which I then reacted to, but then superimposed my reaction on a quote from Blog Post B. I’m not entirely sure what they teach in journalism school, but this is probably a no-no.

The New York Times has corrected the text of the article. It now reads:

After receiving a copy of Ms. Wu’s paper, Mr. Borjas said: “While there is some value in that forum, there is also a great deal that is offensive and disturbing. The problem is I’m not sure exactly where to draw [the] line.”

This precisely summarizes my feelings about EJMR, in particular, and social media, in general. There’s an amazing amount of bullying, of offensive language, of demeaning people, of making fun of how people look, and on and on. It often makes a high school cafeteria look like the Magic Kingdom, the friendliest place on earth.

At the same time, amidst all that offensive material, one can find posts that are very useful. In the EJMR context, the posts on professional misconduct in economics are extremely valuable. It is likely that much of that information would have been hidden away in the darkest room by the guilty parties had they not been uncovered by the forum.

There is indeed a tradeoff. Unlike most people who seem so certain of what the world should look like, however, I just don’t know what the solution is.

I am extremely grateful to the two editors at the NYT who took my grievance seriously and who were the initiators and prime movers behind the correction.

I am also still waiting for Justin’s public apology.


And here’s the text of the footnote that the NYT added to indicate the correction:

Correction: August 22, 2017

An earlier version of this article misstated the current views of George Borjas about Economics Job Market Rumors, an online forum, after receiving a copy of a paper by Alice H. Wu about the forum. Mr. Borjas said, “While there is some value in that forum, there is also a great deal that is offensive and disturbing. The problem is I’m not sure exactly where to draw line.” He did not say that all his views about the forum were unchanged.

EJMR, Wolfers, and I

So a new brouhaha has developed over some comments I made in a blog post last year when discussing the potential professional misconduct in L’Affaire Hoynes (see here for my initial comments, and here for the very, very long EJMR thread on this). Justin Wolfers wrote a column for the NYT where he quoted one sentence from that post.

I think I can clarify by describing the brief email exchange that Justin and I had last week, as it might provide an instructive case study of how the sausage gets made in popular economic journalism. Justin has generously granted me permission to publish the entire email exchange (the only redaction being a phone number).

On Wednesday, August 16, 2017, at 5:54 pm, Justin emailed me:

George:

It was fun to see you in London a couple of weeks ago. And even more fun to see how much we ended up agreeing on a bunch of issues.

I’m writing, instead, about something we likely disagree more about – the Economics Job Market Rumors forum. You probably aren’t surprised to hear that I’m less sympathetic to it than I understand you to be. I’m writing about it for this weekend’s New York Times, and planned to quote from your blog post, here: https://gborjas.org/2016/07/19/ejmr-is-refreshing/

But I also want to make sure that I don’t misrepresent your views. If you’ve revised your views, please do let me know.

The main focus of my column is a paper that analyzes the forum in greater detail. I’ve attached the paper, FYI. And in light of this paper, I wanted to see if you had anything to add about these issues.

Finally, apologies for asking you about this at the last moment, but I think that my editor is going to close the column sometime on Friday morning.

Warmly,

Justin

The attachment was Alice H. Wu’s paper on “Gender Bias in Academia: Evidence from Economics Job Market Rumors Forum.”

I clicked on the link to my blog post that Justin provided. That link (here it is again) goes to a post about how EJMR exposes what I consider to be the ridiculous “cutesy” type of research that so dominates applied economics today. It presents the fake abstract for a fake paper entitled “The Very Short-Run Health Effects of Pokemon Go: Evidence From GPS Data,” with the paper claiming that because Pokemon Go leads to more exercise, it increases lifetime income by several thousand dollars. I reread that post, saw nothing in it that I would change, and quickly replied at 6:14 pm:

Justin,

It was indeed nice to catch up with you in London. That was a most interesting event—something that I will remember for sure as opposed to most of the other conferences that become a blur in my mind after a few weeks.

As for EJMR, I reread the blog post that you want to quote from. There’s nothing there that I would change my mind about.

And off the record for your background so you better know where I was coming from in that post. I found that Pokemon abstract hilarious for a simple reason. If someone walked down to your office and said that they were planning to write that paper, the polite thing to do—which I’ve done myself–is to say “hmm, what an interesting experiment” even though deep down inside you would know that it’s absolutely ridiculous and it’s downright pathetic that applied micro has come down to this. EJMR seems to be the only place where people can say out loud that the emperor has no clothes. And that’s indeed a refreshing difference from the self-censorship that we all use in public to discuss the thousands of “Blah blah blah: Evidence from Blah blah blah” papers.

It’s easy to find a ton of posts in EJMR that are offensive—as I’m sure you will point out this weekend—but it’s also easy to find posts like the one about Pokemon or the ones about professional misbehavior that are informative and that information would simply disappear into the ether (or be much harder to uncover) in the absence of that forum.

Unfortunately, due to family circumstances that eat up a lot of my time these days I have not been able to follow EJMR closely in recent months. But I’m hoping that one day I can return to scan for fun posts (skipping over the offensive ones), and perhaps blog about it again.

George

Note that my response to Justin was based on the contents of the blog post which he said he would specifically quote from. He asked if I had revised my views on that post, and I said I had not. Note also that my response says nothing about–in fact, does not even mention–the Wu paper. My reaction was short and unequivocal: “I reread the blog post that you want to quote from. There’s nothing there that I would change my mind about.”

I first read Justin’s published NYT article on Friday, August 18. I immediately noticed that the quote he used in the published article, and that he has me reacting to, does not appear in the blog post he asked me to look at. This is the relevant part of the NYT article.

Some economists say they find the discourse on econjobrumors.com to be a breath of fresh air. George Borjas, an economics professor at Harvard, wrote on his blog last summer that he found the forum “refreshing.”

Professor Borjas said: “There’s still hope for mankind when many of the posts written by a bunch of over-educated young social scientists illustrate a throwing off of the shackles of political correctness and reflect mundane concerns that more normal human beings share: prestige, sex, money, landing a job, sex, professional misconduct, gossip, sex. …” In an email sent on Wednesday, after he received a copy of Ms. Wu’s paper, Professor Borjas said his views had not changed.

I quickly sent Justin an email expressing my disappointment. The email goes out at 12:14 pm:

Hi Justin,

Just got sent your post on EJMR. I had hoped you would have been a bit more honest about what you planned to quote. As you can easily tell, the quote you chose does not appear at all in the “planned to quote from your blog post, https://gborjas.org/2016/07/19/ejmr-is-refreshing/”.

I know that it goes with the territory that you have chosen to travel these days, but it is nonetheless disappointing.

And this email is totally off the record just in case that it somehow raises another opportunity for mischief.

George

I hear back from Justin a short while later, at 12:35 pm. This is his reply:

George:

My sincerest apologies. I didn’t realize this at all. I had meant to send you the link to both of your blogs, because I was going to quote from both. At the time, I was typing from the front seat of my car, with a load of kids in the back, and it appears that I got distracted, and so the email didn’t include both links.

Making trouble with you was the exact opposite of my intentions. I was reaching out to you, precisely to be as fair as possible. The best evidence I can give of this is that obviously I don’t need to reach out to you quote your blog, but I wanted to make sure that I gave you a chance to make your views as clear as possible.

And even though I didn’t include both links, the rest of the email to you gave you enough context that you knew what issues I was writing about. Indeed, I even told you that I was going to be writing about EJMR, and that I was going to be critical of the forum.

Again, my sincerest apologies. This wasn’t mischief. It was an attempt to do the right thing, compounded by a foolish mistake, from typing a bit hastily.

If you want to talk about it, or if I can give you a call to apologize directly, I’m happy to chat. (I just tried your office number, but it went to voicemail.) My cell is XXX-XXX-XXXX.

Best,

Justin

Let me summarize: Justin’s article has me reacting to a quote that he, in fact, did not ask me to look at or respond to. My emailed reaction to Justin was based entirely from my rereading of the post that he told me he would quote from. And the point of my reply was that EJMR is a good forum for exposing the cute-o-nomics type of research that far too many economists are so fond of these days, as well as the potential professional misbehavior that motivated my initial post, and that few other such forums exist.

As Justin wrote, his initial email to me contained a “foolish mistake” and he has offered his “sincerest apologies.” I accept those apologies.

And for those who want to know how I really feel about EJMR, my response to Justin pretty much summarizes what I think:

It’s easy to find a ton of posts in EJMR that are offensive…but it’s also easy to find posts like the one about Pokemon or the ones about professional misbehavior that are informative and that information would simply disappear into the ether (or be much harder to uncover) in the absence of that forum.

There is a tradeoff in social media. I don’t know how that conflict should be resolved.

UPDATE, 8/22/17, 7:00 am. Just before this post went online yesterday afternoon, there was one final email exchange between Justin and I, as well as a brief phone conversation. In that exchange, I told Justin that there were two things he could do to set the record straight. First, he should offer his “sincerest apologies” in a public forum. I hear he has a big megaphone in social media, and that would be an ideal place for such an acknowledgement to take place. Second, he should update the NYT article in a way that accurately reflects my response. As of the time of this update, neither of these actions have been taken.

UPDATE #2, 8/22/17, 6:30 PM. The New York Times has changed the text of Justin’s article to correct Justin’s “foolish mistake.” Click here for a discussion of the correction.

Do We Need a RAISE?

I am away on a family vacation. But a couple of days ago, sitting on a beach at an undisclosed location, my iPhone started beeping and shaking. It turned out that Senators Cotton and Perdue had introduced their “Reforming American Immigration for Strong Economy” (RAISE) proposal. Politico asked me if I had any thoughts on the matter and here they are.

There have been a lot of rushed reactions that overlook the actual details of the proposal. Let’s face the hard truth. No conceivable change in current immigration policy will please everybody. So I tried to look at the legislation from a different angle. Does it fix some of the glaring flaws in the “broken system” we have now?

One of the points I make is that the proposed point system is a far more transparent way of allocating visas to high-skill workers than the employment preferences now used. Here is the point system (courtesy of Senator Cotton’s office) in case you haven’t seen it.

Another point is that the family preference system needs fixing and RAISE proposes one way of doing it. The current policy allows a branching out so that the relatives of my close relatives qualify for entry. As I put it in the Politico piece: “Does it really make sense to have a policy that eventually guarantees an entry visa to the immigrant’s brother‘s wife‘s father‘s sister?”

i suspect that the intense emotions triggered by immigration so corrupt the debate that we will not get a RAISE in the end. But it’s really too bad that we can’t even talk about ways to update an outdated 50-year old policy.

 

 

Liberals and Immigration

Peter Beinart has an excellent essay in The Atlantic entitled How the Democrats Lost Their Way On Immigration. The article perfectly encapsulates the conundrum faced by liberals when they think about immigration:

Progressive commentators now routinely claim that there’s a near-consensus among economists on immigration’s benefits….There isn’t. According to a comprehensive new report by the National Academies of Sciences, Engineering, and Medicine, “Groups comparable to … immigrants in terms of their skill may experience a wage reduction as a result of immigration-induced increases in labor supply.” But academics sometimes de-emphasize this wage reduction because, like liberal journalists and politicians, they face pressures to support immigration…

The problem is that, although economists differ about the extent of the damage, immigration hurts the Americans with whom immigrants compete. And since more than a quarter of America’s recent immigrants lack even a high-school diploma or its equivalent, immigration particularly hurts the least-educated native workers, the very people who are already struggling the most. America’s immigration system, in other words, pits two of the groups liberals care about most—the native-born poor and the immigrant poor—against each other.

Beinart also raises an issue that is only whispered about in private and swept under the rug in public: Who is paying for all the pro-immigration research in economics? Whoever came up with the phrase “Follow the money” surely had an exquisite sense of where the bodies are buried. There need not be any intellectual corruption for this flow of money to influence the debate. As Beinart aptly puts it, “the prevalence of corporate funding can subtly influence which questions economists ask, and which ones they don’t.”

Finally, anyone who knows me knows that I would not be classified as progressive-leaning on economic policy (although I’m a live-and-let-live type of guy when it comes to social issues). Beinart actually cites the very progressive suggestion for “mitigating the problem” that I proposed in We Wanted Workers:

A better answer is to take some of the windfall that immigration brings to wealthier Americans and give it to those poorer Americans whom immigration harms. Borjas has suggested taxing the high-tech, agricultural, and service-sector companies that profit from cheap immigrant labor and using the money to compensate those Americans who are displaced by it.

This is one of those articles that is worth reading in full and thinking about very carefully.

 

 

 

The New Narrative: Less Immigration Is Bad

If one follows the political debate over a divisive issue for a long time, it is not rare to see ideological advocates switch to making arguments they would never have made years earlier. The political environment changed, and the claims that need to be made to further the ideological objective must change as well.

Maybe it’s just me because I instinctively read in between the lines whenever I read anything about immigration, but I’m beginning to detect such a seismic shift in the immigration debate. We all know the party line by now: Immigrants do jobs that natives don’t want to do. As a result, natives do not lose jobs, and natives do not see their wages reduced. And anyone who claims otherwise is obviously a racist xenophobic moron. They obviously don’t like immigrants, and they obviously are not educated/credentialed enough to understand and appreciate expert opinion.

The flurry of immigration restrictions proposed by the Trump administration demands a switch in tactics–with a corresponding switch in the argument linking immigration and wages. The party line must now be that less immigration is bad. But how can one show that in simple-to-grasp economic terms that can be mass-marketed to the masses? By far the simplest way is to come up with examples that less immigration raises labor costs and makes us miserable because everything becomes more expensive.

I first noticed the tactical switch back in March when the Washington Post published a story headlined After decades in America, the newly deported return to a Mexico they barely recognize, The point of the story, of course, was to imply that Trump’s deportation initiatives are bad because they are making Mexicans worse off. And how exactly are Mexicans made worse off?

More returnees means lower wages for everybody in blue-collar industries such as construction and automobile manufacturing, where competition for jobs is likely to increase, economists say.

I love the “economists say” add-on. Too bad that those economic experts remain unnamed. But don’t be shocked if they are the same exact economic experts who have been claiming the same exact opposite for two or three decades in the context of the American labor market.

Then there’s this story in a local New England paper. The goal again is to demonstrate the economic costs created by Trump’s immigration restrictions. The Bangor Daily News article is headlined Amid foreign worker shortage, Bar Harbor businesses turn to local labor. The article starts off by noting that “Businesses in Maine that rely on summer help are hoping that Congress will come to the rescue.” And what do these businesses have to be rescued from? Higher wages, of course.

Because of new limits on the seasonal worker visa program, restaurants, hotels and other tourist-centered operations are scrambling to find seasonal employees. Until Congress opens the door to more H-2B foreign workers…Bar Harbor area employers are enticing workers in other ways. Higher wages are part of the solution.

The Dallas Morning News joins in the fun with a story blaming the immigration slowdown for higher housing prices. The story is headlined One Reason for Dallas’ soaring home prices and labor shortage: Immigrants aren’t coming to work:

Dallas home prices are climbing rapidly, and homebuilders are complaining about labor shortages and soaring wages for construction workers.

Duh! Who could have possibly guessed that fewer construction workers meant higher construction wages?

Finally, the highly credentialed economic experts at the Federal Reserve are out in force documenting just how costly the immigration-related actions of the Trump administration are. In a recent Bloomberg article headlined Fed Officials Sharpen Concerns Over Trump’s Immigration Policy, those credentialed experts expertly make the point:

Patrick Harker, president of the Philadelphia Fed, became the latest policy maker to call attention to the struggles of companies in finding low-skilled labor…The Chicago Fed said one manufacturing firm raised wages 10 percent to attract better applicants and improve retention of unskilled workers. A freight trucking firm in Cleveland reported granting raises of almost 8 percent in an attempt to retain workers.

There is no upper bound to the hypocrisy of experts. It might be a lot of fun to keep track of this over the next few years, watching the dominos fall and all those “immigration-does-not-affect-wages” experts fall all over themselves as they switch to proving the economic awfulness of Trump’s actions because fewer immigrants mean higher labor costs, higher prices, more inflation.

But don’t hold your breath for any admission that they were wrong in the past. They will instantly switch to the former party line the minute the Trump immigration restrictions fade into history.