On Mon, 17 Apr 2006, Alex wrote:
> I wonder if anyone would be interested in commenting on the following post
> from Dean Baker's new blog Beat the Press. In particular, I'm curious
> what people think of the argument that if we believe increasing the
> minimum wage has little effect on employment, we must also conclude that
> large increases in labor supply (say due to immigration) will
> substantially decreases wages.
That last argument makes no sense, either theoretically or in policy terms.
In policy terms, if we believe increasing the minimum wage has little effect on employment, then the way to raise the wage of low-skilled workers is to raise the minimum wage -- not to manipulate the low-skilled labor supply. Raise the wage and enforce it, and the supply will regulate itself. Problem solved.
On the theoretical side, the best response is Doug Henwood on immigration. He had a three minute bit on it in passing on his most recent show:
http://www.leftbusinessobserver.com/Radio.html#060406
around minute 5:30. Below are the key bits:
On the job and wage effects of immigration:
<quote>
Most studies of the effects of immigration on wages and employment find little or no effect. Several economist have done what are called "natural experiments," which in this case happens when a sudden influx of immigrants lands in a specific region. David Card of Princeton, for example, studied the effects of the arrival of 125,000 Cubans in Miami during the Mariel boatlift in 1980. He found no effect on jobs or earnings. Jennifer Hunt, whom I've interviewed on this show a couple of times, studied the effects of 900,000 people repatriated from Algeria to France in the early 1960s. Again, no effect, and ditto Rachel Friedberg's work on the effects of Russian immigration to Israel when the Soviets lifted their restrictions. Once again, little effect on jobs or wages for native Israelis. Some studies have found small downward effects of immigration on the wages of native-born high school drop-outs in this country, but this contribution is far outweighed by other influences, like the eroding value of the minimum wage, the lack of a serious training and employment policy in this country, and the weakened power of unions.
<unquote>
On the underlying public attitudes:
<quote>
Although American public opinion has turned more anti-immigrant in recent years, it's not a passionately held position except among a minority of the population. In a Pew survey, 80% of respondents said that Latino immigrants work very hard and have strong family values and only a third thought that Latinos turned to crime or welfare. . . .Interestingly, Pew finds that opposition to immigration is strongest in areas with few immigrants and lowest in areas with many immigrants. So it seems that there is some degree of a phantasic component to the opposition to immigration.
<unquote>
Michael