Are Immigrant Workers Imperfectly Substitutable? Essay

1794 words - 7 pages

Many wage studies suggest that immigrant workers are imperfectly substitutable for native-born workers who have similar educational attainment and experience. Relying on U.S. Census and ACS data, I ask, to what degree do language skills drive this? I suggest that immigrants who arrive to the United States at young ages, both have stronger English skills and exhibit greater substitutability for native-born workers than immigrants who arrived later. Similarly, immigrants with poor English skills will be more responsive to the supply of immigrants and their relative wages will suffer more than English-speaking immigrants. In large cities, where Spanish speakers are concentrated, I observe the emergence of a “Spanish-speaking” labor market. In these markets, the benefit of English language proficiency is low. Finally, in Puerto Rico, where almost all workers speak Spanish, immigrants and natives are perfect substitutes.
Studies by researchers ranging from the more conservative George Borjas to the liberal David Card have all found that the massive flow of immigrants into the U.S. has had little negative impact on the average wages of native-born workers. However, many of these same studies find that new immigrants have substantially depressed the wages of previous immigrant arrivals (Card, 2001). In Card’s research, for example, the largest impact of immigration that could be found since 1990 was a 0.1% drop in the average wages of native-born high school dropouts, compared to an 8.1% drop in the wages of other immigrants. By this evidence, the lack of immigrant competition in the native labor markets may contribute to the high poverty among immigrants, and more importantly, it may help to inform and enlighten policies aimed at reducing immigrant poverty. A possible explanation for why immigrants may not compete could be associated with their language skills. Many studies find that better native language proficiency is associated with better wages. Furthermore, according to Giovanni Peri and Chad Sparber’s study “Task Specialization and the Comparative Advantages of Immigration on Wages,” poor English language proficiency is closely linked to the overall willingness of immigrants to work in manual jobs and their specialization in jobs that require little communication.
Though U.S. Census and American Community Survey data, I will try to determine the extent to which immigrants’ language skills affect the ways in which immigrants compete with native-born workers. The changes among these two groups can be determined by comparing how close or far their wages are in response to changes in the population size of one group compared to the other. Thus, if an increase in the size of the immigrant group lowers the wages of that group but not the native group, the two groups would be imperfect substitutes. In contrast, if both groups’ wages change similarly in response to changes in their relative sizes, they would be considered perfect substitutes....

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