The article claims that, “immigrants are often imperfect substitutes for native-born workers.” However, that does not stop many Americans from being concerned that immigrants will cause their wages to fall. Suppose that the authors of the article are wrong and that native-born and migrant workers are very similar, at least in the market for low-skilled workers. Use simple supply and demand analysis to illustrate the concerns of native-born workers
To draw the diagram, we have to draw the demand and supply of workers. The supply is the sum of native born workers and immigrant workers. Thus we assume they are similar or equivalent, as we are clubbing them in one curve.
The effect of rising numbers of immigrants is shown with a simple demand –supply approach. Wages are the price of workers, shown on Y axis and number of total workers on X axis. The demand curve slopes down, which means that as wages rise demand is lesser. The supply curve slopes upwards to show that more workers are willing to work at higher wages.
Higher immigration adds to total number of workers- it is reflected as a ‘downward shift of supply curve’ ( econport.org, n.d). As a result we move from E to E1. At the new equilibrium E1, wages are lower and number of workers is higher. Thus immigrants are labeled as a cause of lower wages. Since wages earned are same by both groups the natives blame immigrants for lower earnings.
(b) In 250-300 of your own words, explain why the analysis that you have presented in (a) is, according to the article,not correct. [Your answer should focus on these points: (1) Whether native-born and migrant workers are similar, as claimed in the question. (2) The possibility of an effect on the demand side as well as the supply-side effect. (3) The evidence presented in the article. References are not required.]
- The article points that immigrants are not uniform- some are better educated than others. So if we distinguish between the less educated and more educated immigrants it will change the total impact of immigrants. The lack of linguistic skills makes immigrants uncompetitive with natives, who have no such problems. There is no scope for wage depression in such sectors.
- The effect of immigrants is sector specific. Most well educated immigrants are more likely to be employed in innovative and technical industries, where language is not a requirement. This makes both types of workers uncompetitive in technical industries.
- The less skilled immigrant are also less educated ‘relative to the native-born,….and less likely to have completed high school’, (Brookings.edu, May 4, 2012) which further makes immigrants uncompetitive on the basis of education levels and unemployable. Within immigrants, there are differences between younger and older ones. The younger immigrant is more skilled, better qualified and linguistically better placed than the older immigrant. The younger immigrants are more of a threat to older ones, rather than native born workers.
- We have ignored demand side considerations completely. A rise in demand for workers can also raise prices, and vice versa. Data shows that some states that are high on innovation prefer to employ immigrants , mainly for immigrants proclivity towards such innovative work. Wage depression does not arise in such states and sectors.
To conclude, the effects of immigrants as labour supply are skill-based, sector- specific and often dependent on education levels and linguistic skills. As a result, they cant be clubbed into one single homogeneous group. Their effects must take into account the heterogeneity among the immigrants as a group. There is no statistical data that shows any systemic depression in wages that is attributable to immigrants alone.
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Demand, supply and equilibrium, viewed 19 May 2017, https://cobe.boisestate.edu/lreynol/WEB/PDF/Demand_supply_ans.pdf
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Shifts shown graphically, viewed 19 May 2017, https://www.econport.org/content/handbook/Equilibrium/shifts-graph.html
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