Impact of Illegal Immigrants on U.S. Wages

Last time, we talked about the impact of illegal immigrants on the U.S economy. As I discussed before, it is important to know what the composition of skills of immigrants have in order to know its impact on the labor market. Our assumption last time was that most illegal immigrants are mostly less educated people than U.S native citizens. However, Ottaviano and Peri’s findings explicitly tell us that illegal immigrants only lower the wages of native high school dropouts only by 1.1 %. More importantly, however, increases in the number of illegal immigrants increase the US born wages by 1.8%. What do these findings indicate? Does it necessarily mean that illegal immigrants will never have a significant impact on the US born wages?

In Card’s Mariel Boatlift 1990 paper, it has some answers that we want to explore. Between April and October in 1980, a massive number of Cubans migrated into the United States, which is called the Mariel boatlift. More than 100,000 people left to the United States to seek for freedom and wealth. Most Cubans from Mariel Boatlift went to Miami, suggesting that the labor supply in Miami had increased dramatically in a short time period. This unexpected and rapid increase in number of immigrants increased the city’s labor force by 7 percent. Guess what happened to Miami’s wages? This is what I will talk about this time in order to find the general effect on the unskilled immigrants on United States.

Although most people would expect that the Mariel Boatlift harmed the U.S. labor market, Card found out that wages and employment opportunities of unskilled workers did not have an impact by the large inflow of Cuban people. I could not understand the reason why this is true because I learned in economic class that an increase in labor supply would not only decrease the wage but also lower the quantity of labor.

The results lead to the question how the Miami labor market was able to absorb a 7 % increase in the labor force without any negative effects. One possible answer for the rapid absorption of the Mariel immigrants is the growth of industries that utilize relatively unskilled labor. Card states, “the industry distribution in Miami in the late 1970s was well suited to handle an influx of unskilled immigrants”. Miami adopted a new technology much later than other states, which supports the idea that Miami employed unskilled labor.

We cannot definitely conclude that the influx of illegal immigrants does not have a significant impact on the U.S wages. However, Card’s Mariel Boatlift suggests that illegal immigrants or unskilled immigrants tend to have a small effect on the U.S wages.

 

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