One interesting fact that the article pointed out was the benefit that immigrants bring to companies especially in top management and research related positions. Immigrants produce twice as many patents compared to native workers. Research suggest that a higher level of skilled and innovative workers leads to a faster growing GDP. “It has been found that more than ¾ of U.S. GPD growth over the last 150 years can be explained by improvements in education and research-driven innovation.” This is because as new technology and objects are developed it requires more labor to produce thus increasing the labor force. These items are also demanded throughout the world leading to increased exports to other countries and higher overall welfare. It can be concluded that these immigrants in total are not hurting our work force or economy rather they are boosting it especially when looking at the long-term effects of immigration.
Sunday, October 13, 2019
Immigrations Impact on Natives
Did you know many studies
have found that immigration grows the economy and has few if any negative
effects in the long run? It is true, one of these studies looked at the Mariel
Boatlift in Miami and concluded similar results. The University of Pennsylvaniahas a very interesting article about this that debunks many of the politician’s
arguments against immigration. Research has indicated that immigration increases
the supply of labor, this leads to firms increasing investments, this ensuring
that wages remain constant in the long run. If you look at the Heckscher-olin model for a long run outlook of wage you will see these results. This is because everything is mobile. As more workers are put to work in each industry, capital will be readjusted among the industries to keep the labor-capital ratio the same. Because these ratios are unchanged, the marginal products of labor and capital are unchanged as well. Therefore rental and wage do not change in the long run. In the short run, due to the influx
of workers it has been shown that this increase leads to a short term drop in
the wage and a higher unemployment rate. This is seen in most economic models discussed
in class due to the simple fact that more labor means higher competition for a
job and wages then can be dropped until equilibrium is hit. If you look at the specific factors model, with the influx of immigrants, the PPF will shift outward. However, the wage will drop because both industries have more workers but they also have fixed amounts of capital and land, therefore the wage will decline because of diminishing marginal product of labor. This wage drop is especially prevalent
in jobs that are already being worked by immigrants as well as low skilled jobs.
This is because these new immigrants tend not to take native workers jobs for a
few reasons including language barrier and skill required. Instead these
immigrants tend to take jobs of the very low skilled as well as jobs worked by
other immigrants. The article states that immigration tends to impact those who
simply have a high school degree or less as well as those with masters and PHD’s
due to those being the groups that tend to immigrate.
One interesting fact that the article pointed out was the benefit that immigrants bring to companies especially in top management and research related positions. Immigrants produce twice as many patents compared to native workers. Research suggest that a higher level of skilled and innovative workers leads to a faster growing GDP. “It has been found that more than ¾ of U.S. GPD growth over the last 150 years can be explained by improvements in education and research-driven innovation.” This is because as new technology and objects are developed it requires more labor to produce thus increasing the labor force. These items are also demanded throughout the world leading to increased exports to other countries and higher overall welfare. It can be concluded that these immigrants in total are not hurting our work force or economy rather they are boosting it especially when looking at the long-term effects of immigration.
One interesting fact that the article pointed out was the benefit that immigrants bring to companies especially in top management and research related positions. Immigrants produce twice as many patents compared to native workers. Research suggest that a higher level of skilled and innovative workers leads to a faster growing GDP. “It has been found that more than ¾ of U.S. GPD growth over the last 150 years can be explained by improvements in education and research-driven innovation.” This is because as new technology and objects are developed it requires more labor to produce thus increasing the labor force. These items are also demanded throughout the world leading to increased exports to other countries and higher overall welfare. It can be concluded that these immigrants in total are not hurting our work force or economy rather they are boosting it especially when looking at the long-term effects of immigration.
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What will happen when the Marginal Revenue Product no longer equals Wage? This will cause firms to no longer hire workers. Also, what will happen to the new immigrants that come in? Wouldn't the constant returns to scale deter firms from hiring new immigrants?
ReplyDeleteVery interesting points made here Trae. I think it would be important for politicians to understand these economic theorems when dealing with immigration. In the long-run it does not hurt our economies like it is perceived. Yes in the short-run wages will lower, but at the same time owners of capital gain from inward immigration. However, in the long-run, wages balance out as more labor is demanded with innovation.
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