Illegal Immigration: What's in it for us?

Originally posted by telerion
There is a direct relationship between wage costs and prices: reduced wage costs have a negative effect on prices because they permit a firm to undercut a less efficient firms price. Now there are obviously other factors involved in setting a market price. In many cases, the reduced cost of labor savings may not be fully passed on. This may be due ...[text shortened]... nd sick, the benefits to the masses are too great in this case to support strict protectionism.

You just described a non-direct relationship. Few markets in the US are truly competitive; most have oligopolist structures and/or tendencies. Due to this, the supposed economic advantage you cite is greatly reduced. Also, I later edited in a comment about the increase in labor supply caused by illegal immigration causing downward pressure on overall wages which has a negative impact on many US family's wages; I'd like your comment on that. In my view, the market structures in the US coupled with the depressing effect on wages tend to eliminate any economic advantages due to increased labor immigration (illegal or legal).

No one is advocating "strict protectionism" (whatever that means) here, so you can put that arrow back in your bow.

Originally posted by no1marauder

No one is advocating "strict protectionism" (whatever that means) here, so you can put that arrow back in your bow.

Quiver.

Originally posted by telerion
Employers don't use the a "lack of available labor" as an excuse. They instead say that there is a "lack of profitably cheap labor." I'm sure you understand the difference. My beef is primarily with populist pro-American worker types, who seem to think it is the responsibility of fellow Americans to subsidize their labor inefficiency. Theirs is the gimme-gimme attitude to which I refer.

I agree with most of your post. My only complaint is that I cant seem to see the gimme-gimme attitude in the post you said you were responding to:
"Employers simply need to offer good enough wages and conditions that legal US citizens and working residents are willing to do those jobs. If they don't, they've got no-one to blame but themselves if they can't find workers."

Originally posted by no1marauder
Few markets in the US are truly competitive;

That is certainly true here in SA. There have been some major companies fined for price fixing and it is believed that almost all the major industries are involved in the practice to some extent.

Originally posted by no1marauder
You just described a non-direct relationship. Few markets in the US are truly competitive; most have oligopolist structures and/or tendencies. Due to this, the supposed economic advantage you cite is greatly reduced. Also, I later edited in a comment about the increase in labor supply caused by illegal immigration causing downward pressure on overall wag ...[text shortened]... trict protectionism" (whatever that means) here, so you can put that arrow back in your bow.

I believe that I have described a direct relationship, at least as direct as one can get in an economic system. A reduction in the price of inputs into production has a direct negative relationship on market price. An effect does not have to be unique or strictly dominant to be direct. Other direct effects such as demand and supply shifts, technological advancement, and taxes/tariffs may mitigate or reverse the final effect on market.

You are correct that, just I said before, the more monopolistic the market the weaker this effect will be, however, a market need not be perfectly competitive for the decrease in market price to be substantial, and so just because there are some monopolistic characteristics to a market does not mean that the response of market price will be greatly reduced. While there are no truly perfectly competitive markets, the degree of monopoly power is not so great in most US markets to drastically dampen the fall in prices.

As to the general effect on wages, it really depends upon the sort of labor migration. While for some questions the heterogeneity of skills is of only secondary importance, I believe for the case of labor migration (especially illegal immigration) it is crucial. We seem to be talking primarily about labor flows which are disproportionately composed of unskilled labor. A large inflow of unskilled labor generally has no downward effect on the wage of skilled workers. After all how is a farm laborer going to compete for a job as an attorney? If there is any effect at all, evidence points to a rise in the wage of skilled workers. The idea is that in markets where both skilled and unskilled labor is an input to production (not legal services, but perhaps manufacturing or mass agriculture), an abundance of unskilled labor implies a scarcity of skilled labor. The short supply of skilled labor relative to unskilled labor drives up the wages of skilled workers in those sectors.

For the fraction of unskilled American workers that directly compete with unskilled immigrant labor (and I have argued that this is not large), the reduction is their wages (or perhaps increase in unemployment) would be a negative effect. Some workers in these areas would have to find new jobs. Nevertheless, this may not be as harsh as it sounds. First, laborers of this sort tend to have very high rates of job turnover anyway so it is not as if they are losing major career investments. Second, they have a significant advantage over immigrant labor for jobs that require English skills. I'm not just talking about clerical and customer service jobs. Any position in which communication in English, even if only among fellow employees, is valued will be easier for American workers to fill. Therefore, losses in welfare to this segment of the American workforce, should be neither uncharacteristic nor prolonged.

By 'strict protectionism,' I mean policies which aim at barring or severely limiting our openness to foreign markets. In this case, we are talking about the foreign labor market. Border fences and large corporate fines implemented solely with the intention of stemming the flow of foreign labor is an example of such protectionism. It calls for taxing ourselves to preserve a system which forces higher prices upon us. This is a view that has much support in the US, though few of its advocates would phrase it in that manner. Let me say again that I support both border security and corporate penalties, but only if they are used to facilitate a greatly expanded program for immigration.

Originally posted by twhitehead
I agree with most of your post. My only complaint is that I cant seem to see the gimme-gimme attitude in the post you said you were responding to:
"Employers simply need to offer good enough wages and conditions that legal US citizens and working residents are willing to do those jobs. If they don't, they've got no-one to blame but themselves if they can't find workers."

I suppose the best way to put my argument is that it's really not so "simple" as the poster implies. Increases in price generally lead to reductions in quantity demanded. Assuming that producers are already setting their prices in such a way as to maximize expected profits, increasing input costs will only drive down earnings. In some cases, the decreases may be large enough to sink the firm.

My biggest gripe is that while the right-wingers blame the immigrants and the left-wingers blame the corporations, few are willing to admit that the buck really stops with the American consumer.

Originally posted by der schwarze Ritter
Politicians, immigration attornies, the Department of Labor, business owners and all illegal aliens all benefit from illegal immigration. So what do We the People get out of it besides cheap lettuce?

http://projectusa.org/2008/05/18/biggest-immig-raid-ever-much-worse-than-you-think/

I'm almost tempted to join into this discussion since illegal immigration is probably one of my favorites and one of the top two problems of the country ...... Illegal immigrants have ZERO rights in this country, I made that plain before or numerous occasions

However, I'm taking a break from the 'fun and games' of the Debate forum .... everyone needs a break now and then.

I'll leave the battle in the hands of the capable conservatives who battle for common sense in a MSNBC/NBC world.

waves my 'right wing' at Telerion How y'all doing...

Originally posted by telerion
I believe that I have described a direct relationship, at least as direct as one can get in an economic system. A reduction in the price of inputs into production has a direct negative relationship on market price. An effect does not have to be unique or strictly dominant to be direct. Other direct effects such as demand and supply shifts, technol enalties, but only if they are used to facilitate a greatly expanded program for immigration.

So much nonsense, so little time .................

Could you site to SOME evidence in the CPI figures over the last 30 years or so, that would indicate that increased illegal immigration has led to a fall in prices in the US of A? Thank you.

Could you indicate SOME reason that ONLY unskilled labor are capable of illegal immigration? Thank you.

Could you show SOME evidence that real wages in the US of A for skilled or even semi-skilled workers in sectors with a mixture of such labor categories and unskilled labor have increased in the last 30 years as a result of the increased illegal immigration? Thank you.

Could you show SOME evidence that the vast majority of illegal immigrants have no English language skills? Could you produce SOME evidence that proficiency in English is considered by employers of unskilled or semi-skilled labor as more desirable than a willingness to work at substantially under the normal wage rates in their industries? Thank you.

Unlike you, I don't think that some degree of higher prices in the economy (assuming for the sake of argument that your thesis is correct) is an unacceptable option as compared to higher unemployment rates and depressed wage rates for citizen workers. Those results of an "open door" policy for foreign immigration also increase the tax burden on the rest of the citizenry. There is no "free ride" as you are suggesting; the negative economic impacts of such a policy are substantial and spill over into other areas as well.

The beginning of no1's rant
Could you site to SOME evidence in the CPI figures over the last 30 years or so, that would indicate that increased illegal immigration has led to a fall in prices in the US of A? Thank you.

I won't . . . directly 🙂 , but I'll show you some one who has.

http://www.econ.ucl.ac.uk/cream/pages/Accepted_Papers/Patricia%20Cortes/Patricia_Cortes_Paper.pdf

Interested parties should look closely at her paper, but here are some highlights. All emphases that follow are mine.

"The paper exploits the large variation across cities and through time in the relative size of the low-skilled immigrant population to identify the impact of immigration on prices."

"The price data, obtained through a confidentiality agreement with the Bureau of Labor Statistics (BLS), is made of price indexes at the city level for all components of the Consumer Price Index (CPI)."

"At current immigration levels, a 10 percent increase in the proportion of low-skilled immigrants in the labor force reduces prices of
immigrant-intensive services by 1.3 percent. The reduced-form estimates show that there is a causal effect of low-skilled immigration on the prices of low-skilled-intensive services . . ."

"I find that, at current US immigration levels, a 10 percent increase
in the share of low-skilled immigrants in the labor force reduces the wages of other low-skilled immigrants by 8.0 percent and of low-skilled natives by 0.6 percent, and that these decreases in
wages account for 50-80 percent of the decrease in prices of non-traded goods."

"Overall, I find that the low-skilled immigration of the 1990s increased the purchasing power of high-skilled workers living in
the 25 largest cities by an average of 0.65 percent and decreased the purchasing power of native high school dropouts by an average of 2.66 percent. I conclude that, through lower prices, low-skilled immigration brings positive net benefits to the US economy as a whole, but generates a
redistribution of wealth."

"On the other hand, a vast literature has looked at the wage effects of immigration. My estimates of the impact of low-skilled immigration on natives’ wages are in line with what most other cross-city studies have found: the effect of immigration on the labor market outcomes of natives is small."

"My structural estimates suggest an alternative explanation: low-skilled natives and lowskilled immigrants are far from being perfect substitutes . . . therefore, a low-skilled immigration shock should affect mostly the wages of other lowskilled immigrants and have little effect on the wages of low-skilled natives . . . I provide several consistency checks on my estimates. In particular, I show that low-skilled immigration has a much larger negative effect on the wages of native Hispanics with low English proficiency than on the wages of other
low-skilled native groups."

And "Your welcome."

no1's rant cont.
Could you indicate SOME reason that ONLY unskilled labor are capable of illegal immigration? Thank you.

Of course I won't because it is obviously not the case. My arguments however do not rest upon such an assumption and so your request is merely a red herring.

We have been talking about an immigration flow that is, in my own words, "disproportionately composed" of unskilled labor. Whether you will put it in writing or not, you have assumed as much so far in this discussion by emphasizing the negative effects on poor families. If you wish to turn this into a broader discussion of immigration, then I'll oblige but for now let's stick the subject at hand.

Oh, and "Your welcome."

Originally posted by telerion
I won't . . . directly 🙂 , but I'll show you some one who has.

http://www.econ.ucl.ac.uk/cream/pages/Accepted_Papers/Patricia%20Cortes/Patricia_Cortes_Paper.pdf

Interested parties should look closely at her paper, but here are some highlights. All emphases that follow are mine.

"The paper exploits the large variation across cities and through on the wages of other
low-skilled native groups."

And "Your welcome."[/b]

Nice cherry picking. Let's quote from the abstract:

a 10 percent increase in the share of low-skilled immigrants in
the labor force decreases the price of immigrant-intensive services, such as housekeeping and
gardening, by 1.3 percent and of other non-traded goods by 0.2 percent. Structural estimates
suggest that 50-80 percent of the effect on prices can be explained by lower wages. However,
wage effects are significantly larger for low-skilled immigrants than for low-skilled natives
because the two are imperfect substitutes. Overall, the results imply that the low-skilled
immigration wave of the 1990s increased the purchasing power of high-skilled natives living
in the 25 largest cities by 0.65 percent but decreased the purchasing power of native high
school dropouts by 2.66 percent.


So the wealthy and relatively well to do got to pay their gardeners and housekeepers a bit less but native high school dropouts suffered a drop in purchasing power 4 times the benefit of their high skilled brethren. Tell me is it better for society for its well to do to be infinitesimally better off than for its poorest working (well they used to be working) citizens to be substantially worse off (any drop in wages for the members with the least income is potentially catastrophic)?

no1's rant, 3rd installment
Could you show SOME evidence that real wages in the US of A for skilled or even semi-skilled workers in sectors with a mixture of such labor categories and unskilled labor have increased in the last 30 years as a result of the increased illegal immigration? Thank you.

That the wages of skilled workers have risen relative to those of unskilled workers over the past 20 years is well documented in the literature. Just do some a bit of searching on the wage-skill premium to see the data.

As for the effect on wages the paper cited previously answers this question: small negative effects on native unskilled wages, high negative effects on immigrant unskilled wages, significant increases in purchasing power (i.e. real wage) of skilled workers.

And, yet again, "Your welcome."

Originally posted by no1marauder
Nice cherry picking. Let's quote from the abstract:

[b]a 10 percent increase in the share of low-skilled immigrants in
the labor force decreases the price of immigrant-intensive services, such as housekeeping and
gardening, by 1.3 percent and of other non-traded goods by 0.2 percent. Structural estimates
suggest that 50-80 percen ...[text shortened]... orse off (any drop in wages for the members with the least income is potentially catastrophic)?[/b]

Just wait. I'm not finished. I have no intentions of cherry-picking, though you seem to. Please read more than the abstract if you are capable.

The relative size of the hurt population is very small compared to those that gain. I quoted as much above. That's why you need to keep reading.

Here since you are obviously more concerned with bickering than with learning anything, I'll quote it for you again.

"Overall, I find that the lowskilled
immigration of the 1990s increased the purchasing power of high-skilled workers living in
the 25 largest cities by an average of 0.65 percent and decreased the purchasing power of native
high school dropouts by an average of 2.66 percent. I conclude that, through lower prices, low-skilled immigration brings positive net benefits to the US economy as a whole, but generates a
redistribution of wealth."

Do you have any idea what fraction of the US workforce is composed of high school dropouts? How about the fraction of workers with some college education (i.e. skilled workers)?

Originally posted by telerion
Of course I won't because it is obviously not the case. My arguments however do not rest upon such an assumption and so your request is merely a red herring.

We have been talking about an immigration flow that is, in my own words, "disproportionately composed" of unskilled labor. Whether you will put it in writing or not, you have assumed as much so ...[text shortened]... then I'll oblige but for now let's stick the subject at hand.

Oh, and "Your welcome."

The discussion is about the economic effects of illegal immigration. Your present attempt to limit its scope is contrary to the title of the thread.

Originally posted by telerion
Just wait. I'm not finished. I have no intentions of cherry-picking, though you seem to. Please read more than the abstract if you are capable.

The relative size of the hurt population is very small compared to those that gain. I quoted as much above. That's why you need to keep reading.

Here since you are obviously more concerned with bickering ...[text shortened]... uts? How about the fraction of workers with some college education (i.e. skilled workers)?

1 out of 3 students drop out of high school before graduating so I imagine it's a fairly large number. Of course, the rate is higher in urban areas like the ones used in the report you cited. http://blogs.payscale.com/salary_report_kris_cowan/2008/04/high-school-dro.html

Everybody who has "some" college is now a "skilled worker"??? Don't make me laugh.