We Wanted Workers: Unraveling the Immigration Narrative by George J. Borjas

Author:George J. Borjas [Borjas, George J.]
Language: eng
Format: epub
Publisher: W. W. Norton & Company
Published: 0101-01-01T00:00:00+00:00

1. THE HELICOPTER PARABLE

LET ME START with a parable that shows how economists think about the labor market impact of immigration. The parable has the added benefit that it suggests how we can measure the impact in real-world labor markets. Furthermore, it clarifies what the conditions on the ground must have been if we are to believe those estimates.

A very big helicopter flies around the United States after we settle in for a night’s sleep. This helicopter is superfast, flying vast distances in nanoseconds. And it is on a haphazard journey: Sometimes it turns right, sometimes left. Sometimes it stops and hovers, more or less randomly. When the helicopter comes to a stop in midair, its side doors open and a random number of persons—sometimes a small number, sometimes a large number—parachute off into the night. Those jumpers are immigrants making their way to their new homes. By sunrise, the helicopter has done its job: its human cargo has been delivered to random places in random quantities across this large country, and the helicopter disappears from sight.

We are the natives. We wake up in the morning and notice that our town has changed. Before we went to bed the night before, our city had about 1 million workers. Now our city has 1.1 million of them—a supply shock of 10 percent. What happens when we and the firms that employ us discover that there are a lot more people looking for work than there were the day before?

Let’s first think of what might happen that morning immediately after we wake up, before anyone has time to react. This snapshot obviously does not capture the whole story. Native workers, for example, might eventually react by moving to (or away from) cities that the helicopter bypassed, or by trying to acquire credentials that will differentiate them from the immigrants. Employers might expand the size of the office or factory to take advantage of the new workers. For now, however, let’s put all those reactions aside and focus on the short run, the period of time that immediately follows the helicopter drop.

In this short run, much will depend on who the immigrants are and how they compare to native workers like us. The town we live in is one of those homogeneous towns where everybody produces widgets. We produce widgets, our neighbors produce widgets, and all the factories are widget-producing factories. And now there are 100,000 new workers. Do they make widgets too? Are the immigrants clones of our productive selves?

Suppose that the two groups are indeed clones of each other—or, as an economist would put it, immigrants and natives are “perfect substitutes.”* What does common sense then tell us?

There are now a lot more widget-making workers in this widget-producing town. When everyone shows up for work, employers notice a lot more people trying to fill the slots on the assembly line. In the short run, employers squeeze new workers into the existing infrastructure so that more widgets can be produced. After all, the immigrants are consumers too and will buy some of those extra widgets.

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