College of Liberal Arts

Immigration May Contribute to Rising Wage Inequality in the U.S.

Thu, Aug 31, 2017
May 1, 2007 march in support of immigrant rights in Kennett Square, PA.
May 1, 2007 march in support of immigrant rights in Kennett Square, PA.

Low-skilled immigrant labor may increase wage inequality in the United States by driving up the wages of high-skilled natives; according to sociology research at The University of Texas at Austin.

Some argue that an increase in immigrant labor heightens competition, forcing natives out of jobs and widening the wage gap between middle- and low-skilled jobs; while others argue the impact to be modest at best, researchers said.

But in a working paper evaluating the consequences of immigration in the U.S. between 1980 and 2010, UT Austin researchers found that while low-skilled immigrants created some competition among similarly-skilled native workers, their presence also opened doors for employed natives. 

“The predominant focus on same-skill competition in existing literature fails to recognize that the immigration bonus is skill-biased, as well as overlooks its contribution to inequality,” said UT Austin sociologist Ken-Hou Lin. “Beyond the bottom of the labor market, a large presence of low-skilled immigrants is associated with wage gains among native workers.”

Lin and his co-author Inbar Weiss, a UT Austin sociology Ph.D. candidate, used U.S. Census data and the American Community survey to examine the employment, job quality and wage consequences of immigration between 1980 and 2010 when the proportion of immigrants in the U.S. labor force grew from 7.15 percent to 17.5 percent, with the most dramatic growth of nearly 20 percent occurring in California. 

Lin and Weiss found that a 10 percentage point increase in immigration led to a 3 percent decline in native employment overall. When considering skill level, a 10 percentage point increase in low-skilled immigrant labor was associated with a 9 percent decrease in native employment. In fact, low-skilled immigrants were 1.25 times more likely to be employed than equivalently-skilled natives.

But researchers also found that low-skilled immigrants pushed employed natives up the job ladder, with natives being 9.6 percent more likely to obtain a better job for every 10 percent increase in low-skilled immigrant workers.

Immigrants themselves were less likely to obtain better jobs, unless more high-skilled immigrants — college educated or higher — were present in the labor market. In which case, job opportunities also increased for low-skilled natives.

“Not only are less-educated workers bumped up to better jobs, but those with more education also benefit from having more low-skilled immigrants in the states,” Weiss said.

Immigration also had a positive impact on natives’ wages, with a 10 percent increase in immigrant labor resulting in a 2.8 increase in average wages. While low-skilled immigration lowers wages for similarly-skilled natives, a 10 percent increase in low-skilled immigrants led to a 3 percent wage increase for college-educated natives.

Similarly, a 10 percent increase in high-skilled immigrants was tied to a 4 and 7.7 percent increase in low- and high-skilled natives’ wages, respectively. Overall, immigrants received between 1.3 and 6.2 percent lower wages than natives. And a 10 percent increase in low-skilled immigrants decreased these immigrants’ wages by 8 percent. High-skilled immigrants did not experience this wage loss, widening the wage gap between low- and high-skilled workforce, the authors said.

“The influx of migrant labor has stretched both tails of the wage distribution,” Lin said. “Having more immigrants in the population pushed down the bottom of the wage distribution and drives up the top, suggesting that the concern over the labor-market consequence of immigration is perhaps valid but misplaced.” 

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