1997. How Much Do Immigration and Trade Affect Labor Market Outcomes?

IMMIGRATION AND TRADE-particularly with less developed countries (LDCs)-have become more significant to the U.S. economy since the 1960s than they were earlier in the postwar period. The number of immigrants relative to native-born workers has risen; an increasing proportion of immigrants come from less developed countries; and a disproportionate number of immigrants have relatively little schooling. The ratio of exports and imports to GDP has risen as well, and an increasing proportion of imports have come from less developed countries. Immigration and trade have thus increased the effective labor supply of less skilled workers in the United States, with potential consequences for relative wages and employment. To what extent might the economic woes of less skilled and lowpaid American workers be attributed to changes in trade or immigration? To what extent have immigration and trade benefited other Americans? These questions have spurred considerable debate in recent years. Some analysts stress the potentially adverse distributional effects of immigration and trade on low-income Americans. Others stress their potentially positive effects on the economy. Standard models suggest