1 Center for Immigration Studies Increasing the Supply of Labor Through Immigration Measuring the Impact on Native - born Workers

Dr. Borjas is the Robert W. Scrivner Professor of Economics and Social Policy at the John F. Kennedy School of Government, Harvard University. This Backgrounder is an expansion of Dr. Borjas’ article, “The Labor Demand Curve Is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market,” published in the November 2003 issue of the Quarterly Journal of Economics (pp. 1335-1374). This Backgrounder updates and expands the earlier results, most notably by incorporating newly released public use data from the 2000 Census and estimating the impact of immigration on various ethnic groups. President Bush and some members of Congress have proposed legalizing illegal aliens and substantially increasing legal immigration. Economic theory predicts that increasing the supply of labor in this way will reduce earnings for natives in competition with immigrants. This study examines the economic impact of increases in the number of immigrant workers by their education level and experience in the work force, using Census data from 1960 through 2000. Statistical analysis shows that when immigration increases the supply of workers in a skill category, the earnings of native-born workers in that same category fall. The negative effect will occur regardless of whether the immigrant workers are legal or illegal, temporary or permanent. Any sizable increase in the number of immigrants will inevitably lower wages for some American workers. Conversely, reducing the supply of labor by strict immigration enforcement and reduced legal immigration would increase the earnings of native workers.