when immigration increases the supply of workers in a skill category, the earnings of native-born workers in that same category fall.
One response is “of course.” Straight-forward supply-and-demand analysis predicts that, all other things equal, raising the supply of something lowers the market value of that something.
But a second response is “all other things aren’t equal.” A greater supply of workers encourages a deepening of the division of labor — which, over time, raises the return to work effort. The still-foundational explanation of how this process works is the first chapter of Adam Smith’s Wealth of Nations.
So I’m curious about Borjas’s data. (The paper isn’t yet available on-line.) Does Borjas look only at the short-run consequences of higher supplies of certain kinds of labor? If so, then any finding other than the one reported in the e-mail invitation would be startling.
Or does Borjas study the wage data over time spans long enough to capture the return-enhancing effect of a deeper divsion of labor? If so, Borjas’s finding would indeed strengthen the economic case against immigration — although to stregthen a case is not necessarily to make it decisive or even very compelling.
I’m eager to read Borjas’s paper when it’s available.