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Yes, immigration does help domestic workers

The contentious debate over immigration in both the U.S. and Europe is largely based on the worry that immigration hurts domestic workers, particularly low-skilled workers. But is this actually true? Could this concern over immigration be misplaced? Could it be that immigrants actually help native workers?

New research on this topic suggests that they do help. In particular, a recent paper by noted immigration researcher Giovanni Peri and his co-authors Michele Battisti, Gabriel Felbermayr and Panu Poutvaara finds that "both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels."

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Most economists will not be surprised by this result because quite a bit of previous research has come to similar conclusions. For example, a recent survey of U.K. economists by the Center for Macroeconomics found "overwhelming support for the view that migration will increase the average income of current UK inhabitants."

But if it's so well known that immigration helps rather than hurts domestic economies, why is there so much opposition in the public and political arenas? One answer Peri and his co-authors propose is that previous academic research uses highly abstract and simplified models that leave out two important potential costs of immigration: redistribution from natives to immigrants and higher levels of unemployment for native workers. (Most models assume full employment for analytical convenience.)

These issues are important to politicians and the public, and by leaving them out of the models, it became easy for immigration opponents to dismiss the research.

To overcome this concern, Peri and his team explicitly add these effects to an immigration model and examine how both high-skilled and low-skilled domestic workers are affected by a 1 percent increase in the immigrant labor force share in a sample of 20 countries. In an overwhelming majority of the countries -- between 14 and 19, depending on how the costs and benefits are calculated -- immigration helps both skilled and unskilled workers. For the U.S., the effects are positive no matter how the calculations are performed.

Qualifications to the result that immigration helps native workers help explain the variation across countries. For example, the positive effect can be overturned if immigrants have high levels of unemployment or if the share of unskilled immigrants is too high.

But for most of the countries in the sample, the authors conclude that "in contrast to widespread belief, immigrants do not seem to hurt low-skilled natives... This is because immigration is often balanced between more and less educated, because its job-creation effect can help, and because redistribution towards immigrants is not as large as often suggested in the debate."

The gap between economic research on immigration and the popular view of its effects has been growing, and one paper arguing that immigration helps domestic workers in most countries is unlikely to narrow that divide. But research finding positive effects from increases in immigration beyond present levels continues to accumulate, and it suggests that opposition to increased immigration hurts native households.

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