Saturday, April 22, 2006

Great New Economics Blog

I stumbled upon an outstanding new economics blog, Beat the Press, by Dean Baker. The blog is only a month or so old, but seems to me very promising on a number of fronts.

His several posts on immigration are very sensible and explain several common fallacies associated with media coverage and the public debate generally (here and here).

Dean Baker explains why it's wrong to claim America "needs" low-skilled labor:

One of the great absurdities in the debate over immigration policy is the frequently repeated claim that the U.S. economy is generating more “low wage” jobs than can be filled by the domestic workforce. This line has been endlessly repeated in news stories on the issue.

Quick trip back to econ 101: recall the concepts “supply” and “demand.” What makes a job a “low wage” job? In econ 101 world, a job will be a “low wage” job if the supply is high relative to the demand. When there is insufficient supply, then the wage rises. My students didn’t pass the course if they couldn’t get this one right. Econ 101 tells us that there is not a shortage of workers for low wage jobs; it tells us that there are employers who want to keep the wages for these jobs from rising.

Immigration has been one of the tools that have been used to depress wages for less-skilled workers over the last quarter century. Many of the “low-wage” jobs that cannot be filled today, such as jobs in construction and meat-packing, were not “low-wage” jobs thirty years ago. Thirty years ago, these were often high-paying union jobs that plenty of native born workers would have been happy to fill. These jobs have become hard to fill because the wages in these jobs have drifted down towards a minimum wage that is 30 percent lower than its 1970s level.

He also has another related post on why illegal immigration is low-skilled (hint: it's not because we "need" these jobs):

My point is that we don’t have open borders; instead we have very serious limitations on immigration. Immigration is restricted both by the danger of the border crossing and the prospect of deportation due to a random encounter with law enforcement (e.g. a traffic ticket). These threats ensure that most immigrants will not be well-educated, since well-educated people in the developing world will not take these risks to work in the United States.

This means that less-skilled workers in the United States have to worry about competition from undocumented workers, while the people who design and debate immigration policy (economists, lawyers, reporters) don’t have to worry about professionals from developing countries slipping over the borders and undercutting their wages. The implication of the current immigration policy is that the people who design and debate it are largely its beneficiaries, since they can get low cost home repairs, bargain restaurant prices, and cheap nannies.

We can debate whether this is good immigration policy, but we first have to acknowledge the policy in place. The reason that most immigrants are less educated is not because of any shortage of more educated workers willing to immigrate to the United States, it’s because our policy acts to exclude them.

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