Updated: 2025-07-22 08:55:02
The relationship between immigration and wages is complex and varies significantly depending on the specific context, time period, skill level of workers, and methodology used in analysis. Economic research has produced mixed findings, with some studies showing negative effects, others showing positive effects, and many finding minimal impact overall.
Most economists distinguish between short-term and long-term wage effects of immigration. In the short run, an increase in labor supply through immigration can create downward pressure on wages, particularly for workers who are close substitutes for immigrant workers [1]. However, long-term effects tend to be more positive as the economy adjusts through various mechanisms including capital investment, job creation, and complementary labor relationships [2].
The wage impact of immigration varies considerably by skill level. Research suggests that high-skilled immigration generally has positive effects on wages for native workers, as these immigrants often create jobs, start businesses, and complement rather than substitute for native workers [1]. For low-skilled workers, the evidence is more mixed, with some studies finding small negative effects on wages, particularly for workers without high school diplomas [2].
Even studies that find negative wage effects typically report relatively small impacts. The most cited research suggests that immigration may reduce wages for competing workers by 0-5% in the short term, with effects often dissipating over time [1]. The overall effect on the average worker is generally found to be small or positive, as many workers benefit from the economic growth and complementarities that immigration brings [2].
Wage effects can vary significantly by geographic location and time period. Areas with sudden, large influxes of immigrants may experience different effects than those with gradual, steady immigration flows. Additionally, labor market institutions, such as minimum wage laws and union presence, can mediate the relationship between immigration and wages [1].
Several economic mechanisms help explain why immigration doesn’t necessarily drive down wages:
Some analysts have raised concerns about wage stagnation coinciding with periods of high immigration, particularly pointing to data showing declining wages for certain worker categories during periods of increased immigration [3]. However, establishing causation requires careful analysis that controls for other economic factors such as technological change, globalization, and changing industrial composition.
The consensus among economists is that immigration’s effect on wages is generally small and often positive in the long run, though there may be short-term adjustments and differential effects across skill levels. The key finding is that labor markets are dynamic and adjust to immigration through multiple channels beyond simple supply and demand for identical workers.
[1] UC Davis Migration Research - Presents research showing mixed but generally small effects of immigration on wages, with distinction between short-term and long-term impacts.
[2] We Wanted Workers - Chapter 9 - Discusses the economic theory and empirical evidence on immigration’s labor market effects, emphasizing the complexity of the relationship and the importance of skill complementarity.
[3] Institute for Fiscal and Social Policy - Presents data suggesting concerns about wage impacts of immigration, particularly for certain worker categories, though focuses more on correlation than established causation.
Immigration’s impact on wages is a much-studied and debated topic among economists. Basic economic theory suggests that an increase in the supply of workers (through immigration) could put downward pressure on wages for similar workers. In a simple supply-and-demand framework, if more workers compete for the same jobs, employers may not need to offer as high a wage to attract labor. Some research indeed finds that immigration can reduce wages for certain groups in the short run. For example, economist George Borjas estimates that the large influx of immigrants in recent decades has modestly lowered the average wage of native-born workers in the U.S. (one analysis pegged the impact at roughly a 5% reduction in overall wages) (migration.ucdavis.edu). Borjas argues that when immigrants with similar skills enter the labor force, wages for comparable native workers are likely to drop, while business owners benefit from lower labor costs. In his words, a bigger labor supply “will likely reduce the wage that employers need to offer” to hire workers, even as it raises profits for employers, meaning immigration creates winners and losers (www.scribd.com). This view aligns with the concern that less-educated or prior immigrant workers may face lower wages due to competition from new immigrants.
However, empirical evidence finds that the overall effect of immigration on wages is small, and often close to neutral, especially in the long term. Many studies fail to detect significant widespread wage declines from immigration. Immigrants do not simply substitute for native workers one-to-one; they also complement many native-born workers and contribute to economic growth and new demand. For instance, immigrants often take jobs that natives are less willing to do or that help businesses expand, which can create additional jobs or higher productivity for the economy. High-skilled immigrants, in particular, tend to boost innovation and productivity, which can raise wages for many native workers (by increasing overall economic output and creating new opportunities) (migration.ucdavis.edu). Even among lower-skilled jobs, immigrants often fill crucial roles (in agriculture, care work, etc.) that help other sectors function, potentially keeping some industries viable and consumer prices lower. The spending of immigrant workers also generates new demand for goods and services, which supports other jobs. These dynamics help explain why native-born workers’ wages generally have not been dramatically harmed by immigration – the economy adjusts. Over time, capital investment, business expansion, and new specializations tend to absorb the larger workforce.
Comprehensive reviews by expert panels have concluded that immigration has little to no negative impact on average wages in the long run (migration.ucdavis.edu). A major report from the National Academies of Sciences (2016) found that immigration’s overall effect on the wages of native-born Americans was very small. Initially, an influx of immigrants may slightly depress wages for some workers who compete directly, especially earlier immigrants or native workers without a high school diploma (migration.ucdavis.edu). For example, teens or workers with very low education might see some wage declines when immigrant labor increases in certain low-skill sectors, and previous immigrants can experience wage competition from newer immigrants. But for the majority of native-born workers, the wage effects tend to be minimal to negligible over time. The economy typically adjusts via new job creation and investment. In the long run, most studies find no large wage depression from immigration for native workers as a whole (migration.ucdavis.edu). It’s worth noting that the same NAS report quantified a modest “immigration surplus” – a net economic benefit to the native-born population (approximately 0.3% of GDP) resulting from immigration – largely because employers and consumers gain from lower labor costs even as some workers lose wages (migration.ucdavis.edu). In other words, immigration redistributes income: some native workers may earn less, but owners of capital and businesses earn more, and consumers may pay lower prices. The net effect on total native income is slightly positive, and the negative impact is concentrated on certain groups rather than spread across all workers.
Indeed, the wage impact of immigration is not uniform – it depends on the skill levels of immigrants and native workers, as well as economic conditions. Research indicates that new immigrants often hurt “substitute” workers but help “complementary” workers. For example, an influx of low-skilled immigrants may slightly reduce wages for low-skilled native-born workers in the same field (substitutes) while raising wages for higher-skilled natives (complements) by making businesses more productive overall. Similarly, high-skilled immigrants (like engineers or doctors) might compete with some native professionals, but they can also spur innovation, create companies, or expand services, increasing demand for other jobs. Many economists, such as David Card and others, have studied real-world events (like the Mariel boatlift in 1980, when a sudden wave of Cuban immigrants entered Miami) and found little to no significant drop in wages or employment for locals in those cases – suggesting labor markets absorbed immigrants without harming native workers’ earnings [^]. While some conflicting studies (including a re-analysis by Borjas) argue there were localized wage declines for certain groups, the broader consensus is that large immigration episodes did not widely depress wages for long.
Other factors are often more important than immigration in determining wage trends. Changes in technology, automation, globalization of trade, the decline of unions, and minimum wage policies have had substantial effects on middle and low-wage workers’ earnings. For instance, manufacturing jobs moving overseas or technological changes eliminating certain jobs can hurt wages and are not caused by immigration. It can be misleading to attribute decades of wage stagnation for U.S. blue-collar workers entirely to immigration. In fact, some analyses argue that U.S. economic policy “sold out” its workers through a combination of outsourcing, weaker labor protections, and also a reliance on cheaper immigrant labor – a mix of factors reducing bargaining power and wage growth for lower-skilled Americans (migration.ucdavis.edu) (www.scribd.com). In this view, immigration played a role in holding down wages in certain industries (by expanding the labor pool willing to work for lower pay), but it is part of a larger picture alongside corporate offshoring and automation [3]. It’s notable that during periods when immigration slowed (for example, during the COVID-19 pandemic or restrictive policy periods), wage growth for lower-wage jobs did tick up – suggesting that a tighter labor supply can benefit workers. However, those wage gains may also reflect other factors like economic stimulus and labor market recovery, not just immigration changes. Overall, isolating the effect of immigration on wages is complex, but most rigorous studies find only a modest impact.
In summary: immigration does not appear to be the primary driver of wage levels for most workers, though it can exert some downward pressure on wages for specific groups (especially workers similar to immigrants in skills). The consensus view in economics is that immigration’s overall impact on native wages is small [1]. Immigrants increase the size of the economy and often fill niches that make the economy more efficient. While there are some winners and losers – with businesses and consumers generally benefiting and certain workers facing more competition – the effect on wages is nowhere near the dramatic “harm” that some fear. Policies like education, training, and labor protections can help ensure that native workers aren’t undercut, but broadly speaking, historical data show immigration has not substantially driven down U.S. wages on average [2][1]. It acts more as a redistributive force: some workers (especially prior immigrants or those without a diploma) might lose a bit in wages due to immigrant competition, while other Americans gain via lower prices or higher business profits (www.scribd.com) (migration.ucdavis.edu). Thus, the evidence suggests that immigration only slightly affects wages, and mostly at the margins, rather than dramatically lowering pay across the board. Long-term, a dynamic economy tends to absorb immigrant labor with minimal impact on most natives’ paychecks, though continued attention is warranted for the vulnerable workers who do face wage competition.
Sources:
Migration News (U.C. Davis) – Summary of National Academies Report (2016): Concludes that immigration raises overall economic output with a small net benefit to natives (the “immigration surplus” ~0.3% of GDP), largely by lowering wages slightly and raising business profits. Notes little to no long-run negative effect on average wages, though some downward wage pressure on earlier immigrants and natives without a high-school diploma was observed. Source: Migration News, Oct 2016 (migration.ucdavis.edu) (migration.ucdavis.edu).
George J. Borjas – We Wanted Workers (2016), Chapter 9: Argues immigration is essentially a redistributive policy: adding immigrant labor tends to reduce wages for competing native workers while increasing returns to capital (employers). Borjas’s research finds modest wage declines for low-skill natives in high-immigration scenarios (he estimated a few percentage points aggregate wage reduction from decades of immigration). He emphasizes that immigration creates winners (business owners, consumers, high-skill natives) and losers (some low-skill natives and previous immigrants). Source: Borjas, We Wanted Workers, Ch.9 (www.scribd.com) (migration.ucdavis.edu).
Institute for Sound Public Policy (Kevin Lynn) – “Data on How America Sold Out Its …” (2023): Critical view highlighting data that U.S. policies allowed companies to hold down wages by tapping into cheaper labor pools – through high immigration and outsourcing – thereby stagnating wage growth for many American workers. Suggests that an over-reliance on immigrant labor in certain sectors has undercut bargaining power of native workers, framing this as “selling out” the working class for corporate gains. Source: Kevin Lynn via IFSPP Substack (2023) (migration.ucdavis.edu) (www.scribd.com).
The effect of immigration on the wages of native-born workers is a central and complex question in economics, with research providing nuanced and sometimes conflicting answers. The consensus among economists is that immigration’s impact is not uniform; it varies significantly based on the skill levels of both the immigrant and native populations, the local economic conditions, and the time frame being examined. While some workers, particularly those with low education levels who directly compete with low-skilled immigrants, may experience modest wage declines, the overall effect on the wages of most native-born workers is generally found to be small and can even be positive in the long run.
The most straightforward economic argument suggests that a large increase in the supply of labor, all else being equal, will lead to a decrease in its price—that is, lower wages. This effect is expected to be most pronounced for native-born workers who are easily substitutable for new immigrant workers.
Conversely, a large body of economic research finds that the negative wage effects of immigration are minimal for most native workers and can be positive for many. This view emphasizes that immigrants are not just workers; they are also consumers, entrepreneurs, and sources of complementary skills.
In conclusion, the claim that immigration uniformly drives down wages is not supported by the majority of economic research. The evidence points to a more complex reality: there can be a modest, negative wage impact on the small fraction of the native-born workforce that is in direct competition with new immigrants, particularly high school dropouts [1, 4]. However, for the vast majority of native-born workers, the long-term wage effects of immigration are found to be close to zero or even slightly positive, as immigrants’ contributions as consumers, entrepreneurs, and holders of complementary skills help grow the overall economy [1, 4].
The impact of immigration on wages is a highly debated topic in economics, with research yielding mixed results depending on factors such as the skill level of immigrants, the time frame analyzed, the specific labor markets affected, and the methodologies used. Overall, while some studies suggest that immigration can exert downward pressure on wages for certain groups—particularly low-skilled native workers in the short term—other research finds minimal or even positive effects on average wages, often due to complementary skills, economic growth, and labor market adjustments. The evidence is not uniform, and effects can vary by country, region, and economic context. Below, I outline the key arguments and evidence from both sides, drawing on the suggested sources and additional reputable studies for a balanced perspective.
Several economists argue that an influx of immigrants, especially those with low skills, increases labor supply in certain sectors, leading to competition that reduces wages for similar native workers. This view is rooted in basic supply-and-demand principles: more workers competing for jobs can lower the price of labor.
Short-term impacts on low-skilled workers: Research by economist George Borjas, a prominent voice in this debate, estimates that immigration to the United States between 1980 and 2000 reduced the wages of native high school dropouts by about 9% in the short run and 5% in the long run. Borjas argues that immigrants often cluster in low-wage occupations, displacing or undercutting native workers without high school diplomas [1][2]. He emphasizes that while the overall economy may benefit from cheaper labor, the costs are borne disproportionately by less-educated natives, exacerbating income inequality.
Historical and aggregate data: Analysis of U.S. labor market trends shows that periods of high immigration correlate with stagnating or declining real wages for blue-collar workers. For instance, from 1979 to 2019, the share of foreign-born workers in the U.S. labor force rose from 6.5% to 17%, coinciding with a 20% drop in real weekly earnings for men without a college degree. This pattern is attributed partly to immigration increasing competition in industries like construction, manufacturing, and services, where offshoring and immigration have “sold out” American workers by suppressing wage growth [3]. Borjas further notes that even in high-immigration cities, wage gaps widen for vulnerable groups, with little evidence of natives fully “upskilling” to avoid competition [2].
Broader economic models: A comprehensive review by the National Academies of Sciences, Engineering, and Medicine (2017) found that immigration has a small negative effect on the wages of prior immigrants and low-skilled natives, estimating a 1-2% wage reduction per decade of immigration inflows, though effects fade over time as markets adjust [4].
Counterarguments highlight that immigrants often fill labor shortages, create jobs through entrepreneurship and consumption, and complement rather than substitute for native workers. This can lead to overall wage growth, with any negative effects being short-lived or localized.
Minimal aggregate impact: Studies examining natural experiments, such as the 1980 Mariel Boatlift (when 125,000 Cuban immigrants arrived in Miami), found no significant wage decline for low-skilled natives. Economist David Card’s analysis showed that wages for Miami’s high school dropouts actually rose slightly relative to comparison cities, suggesting rapid labor market absorption [5]. Similarly, more recent research on the same event, updated with better data, confirmed no adverse wage effects, challenging claims of downward pressure [6].
Complementary skills and long-term benefits: Immigrants often bring diverse skills that boost productivity. For example, high-skilled immigrants in tech and STEM fields can increase innovation and wages for complementary native workers. Economist Giovanni Peri’s work indicates that a 1% increase in the immigrant share of the workforce raises average native wages by 0.5-0.6% in the long run, as immigrants push natives into higher-skilled roles and stimulate demand [7]. The UC Davis analysis echoes this, noting that while low-skilled immigration may slightly depress wages in specific sectors (e.g., agriculture), overall effects are neutral or positive due to economic expansion [1].
Regional and sectoral nuances: In areas with high immigration, such as California, wage stagnation in low-skill jobs is often attributed more to globalization, automation, and policy factors than immigration alone. The National Academies report concludes that immigration’s net effect on average U.S. wages is close to zero, with potential small positives for skilled natives [4].
The evidence suggests that immigration does not universally drive down wages but can do so for specific subgroups, like low-skilled natives, in the short term and in concentrated markets. Long-term effects tend to be neutral or positive as economies adapt, with immigrants contributing to growth (e.g., adding $2 trillion to U.S. GDP annually, per some estimates [7]). Factors like education levels, legal status of immigrants, and enforcement of labor laws play crucial roles in mitigating negative impacts. Policymakers could address concerns through targeted training programs for natives, minimum wage adjustments, or skill-based immigration reforms. The debate remains contentious, with methodological differences (e.g., Borjas focuses on national models, while Card uses local comparisons) explaining divergent findings. For a definitive answer in a specific context, more granular data is needed.
The relationship between immigration and wages is complex and has been extensively studied by economists, with research yielding nuanced findings that depend on various factors including time frame, skill level, local labor market conditions, and methodology used.
Most economic research suggests that immigration’s impact on wages varies significantly between short-term and long-term scenarios. In the short run, large influxes of workers can create downward pressure on wages in specific sectors or geographic areas, particularly when immigrants and native workers are close substitutes [1]. However, long-term effects tend to be more positive as the economy adjusts through job creation, increased consumer demand, and capital investment [2].
The wage impact differs substantially based on skill levels:
Low-skilled workers: Some studies find small negative effects on wages for native workers without high school degrees, with estimates typically ranging from 0% to -5% [3]. However, these effects are often temporary and concentrated in specific industries.
High-skilled workers: Immigration of high-skilled workers generally has neutral or positive effects on native wages, as these workers often complement rather than substitute for native workers [4].
Medium-skilled workers: This group typically experiences the least negative impact, and often sees wage gains from immigration [2].
Wage effects are not uniform across all areas or industries. Local labor market conditions, the concentration of immigrants, and the specific industries they enter all influence outcomes [5]. Areas with more flexible labor markets and diverse economies tend to absorb immigrant workers with fewer adverse wage effects.
Immigration creates several offsetting positive effects:
Different research approaches yield varying results. Studies using the “spatial correlation” approach (comparing areas with high and low immigration) often find smaller effects than those using the “national skill-cell” approach (comparing workers with similar education and experience levels) [8]. Natural experiments, such as sudden large-scale migrations, provide some of the most reliable evidence and generally show modest short-term effects that dissipate over time [9].
Recent comprehensive reviews of the literature suggest that immigration has little to no effect on wages and employment of native-born workers overall [10]. The National Academy of Sciences concluded that immigration has had an overall positive impact on the wages and employment of native-born workers, though effects vary by education level and time frame [11].
[1] Borjas, George J. (2003) - Argues that immigration can depress wages in the short term, particularly for competing native workers, but acknowledges long-term economic benefits through increased productivity. Harvard Kennedy School Faculty Research
[2] Card, David (2009) - Finds minimal negative effects of immigration on native wages, emphasizing economic adaptation and complementary effects. UC Berkeley Economics
[3] Ottaviano, Gianmarco and Giovanni Peri (2012) - Shows small negative effects on high school dropouts but positive effects for other education groups. Journal of the European Economic Association
[4] Hunt, Jennifer and Marjolaine Gauthier-Loiselle (2010) - Demonstrates positive effects of high-skilled immigration on innovation and wages. American Economic Journal
[5] Lewis, Ethan (2011) - Examines geographic variation in immigration effects, finding adaptation mechanisms reduce wage impacts. Quarterly Journal of Economics
[6] Peri, Giovanni (2012) - Emphasizes positive demand-side effects of immigration on local economies and wages. Journal of Economic Literature
[7] Fairlie, Robert W. (2012) - Documents higher rates of entrepreneurship among immigrants and positive employment effects. Small Business Administration Research
[8] Dustmann, Christian, Uta Schönberg, and Jan Stuhler (2016) - Compares different methodological approaches and their varying results on immigration effects. Review of Economic Studies
[9] Card, David (1990) - Analyzes the Mariel boatlift as a natural experiment, finding minimal effects on Miami wages. Industrial and Labor Relations Review
[10] Clemens, Michael A. (2011) - Provides comprehensive literature review concluding minimal overall effects of immigration on native wages. Journal of Economic Perspectives
[11] National Academy of Sciences (2017) - Concludes immigration has positive overall effects on native wages and economic growth. The Economic Impact of Immigration Report
Most economic research finds that immigration does not broadly drive down wages. In fact, the overall impact of immigration on average wages of native-born workers is very small – and often statistically insignificant – in the long run [1][2]. Some studies even find a slight positive effect on overall native wages, because while immigrants increase labor supply, they also boost demand for goods and services, which can create new jobs and raise productivity [2]. Comprehensive reviews of the literature (for example, a 2017 National Academies panel study in the US) conclude that any wage changes due to immigration are generally minimal over periods of a decade or more [1]. In other words, adding immigrant workers tends to expand the economy in ways that offset downward pressure on pay for most native workers [2].
Distribution of effects: The impact of immigration on wages tends to vary across different groups. Economists find that if wage competition occurs, it is usually focused among workers who are most substitutable for the new immigrants. For example, recent immigrants often compete with earlier immigrants who have similar skills, and those earlier immigrant workers may experience modest wage declines as a result [1][2]. Likewise, native-born workers with very low education (such as high school dropouts) can face some downward wage pressure in the short run if a large influx of similarly low-skilled immigrants enters the market [1][3]. However, these effects are generally small in magnitude. One analysis by economist George Borjas, who argues immigration can depress low-skill wages, estimated that a 10% increase in the supply of workers in a given skill group might reduce wages in that group by roughly 2–5% – a modest effect spread over time [3]. Other research using different methods finds even smaller or near-zero wage impacts on low-educated natives, with any negative effects largely confined to prior immigrants rather than native-born workers [2]. In fact, a study of U.S. data from 1994–2007 found immigration slightly raised average wages for U.S.-born workers (by about 0.4%) while lowering wages for earlier immigrant workers by a few percent – implying new immigrants primarily competed with other immigrants, not with native workers [2].
Evidence from natural experiments: Real-world cases reinforce the finding of little overall wage effect. A famous example is the 1980 Mariel boatlift, when about 125,000 Cuban refugees suddenly arrived in Miami, expanding the city’s labor force by 7% virtually overnight. According to economist David Card’s classic study, this large influx did not measurably reduce wages or employment for Miami’s native workers, even those in low-skill sectors [4]. Several follow-up studies similarly found no significant long-term depression of wages due to the boatlift [4]. Years later, another economist (George Borjas) re-analyzed the Mariel data and claimed that wages for Miami’s very least-educated group (native-born high school dropouts) fell sharply in the years after the influx. However, Borjas’s interpretation has been widely challenged by other researchers, who argue that his finding was an artifact of a small sample and failing to account for other economic changes in Miami (such as shifts in the demographic makeup of the workforce) [4]. When those factors are properly accounted for, the evidence still points to minimal wage impact from that immigration shock [4]. Overall, studies of sudden regional inflows – whether in Miami or elsewhere – often do not find the large wage drops that simple supply-and-demand theories might predict, because economies adjust in response to migration.
Skill complementarities: One key reason immigration usually doesn’t drag down wages is that immigrant workers and native workers are often complements rather than perfect substitutes. Immigrants often fill different niches in the labor market – for instance, taking difficult-to-fill jobs or bringing specialized skills – which can increase productivity for everyone. Higher-skilled immigrants, in particular, are frequently found to boost innovation, create businesses, and raise productivity, which can increase wages for many native workers over time [1]. Even lower-skilled immigrants can complement native-born workers by doing jobs that allow natives to move into higher-paying roles. This complementarity means natives and immigrants aren’t simply competing for one fixed set of jobs; instead, immigration can reallocate labor in ways that make the economy more efficient. As a result, the net effect on native wages tends to be close to zero or slightly positive in aggregate, rather than a broad wage depression [1][2].
Findings in other countries: Research in other advanced economies echoes the U.S. experience. In the United Kingdom, for example, studies have found that immigration in the late 1990s and 2000s had a small positive effect on average wages of native-born workers [5]. One U.K. study showed that immigration contributed modestly to overall wage growth, especially benefiting middle- and high-wage workers [5]. At the same time, it found only a slight “downdraft” at the bottom of the wage distribution – i.e. wages for the lowest-paid native workers grew a bit more slowly than they would have without the new immigration, but did not fall in absolute terms [5]. In other words, even in sectors with many immigrant workers, wages continued to rise, just at a marginally slower pace than otherwise. This aligns with a general pattern observed by economists: immigration may temporarily hold down wage growth for some specific groups or regions, but those effects are usually small and tend to dissipate as markets adjust.
Conclusion: Overall, the best empirical evidence indicates that immigration does not significantly drive down wages for the existing workforce in the aggregate. The impact on wages is typically very modest, and often positive for many workers [1][2]. There can be some redistribution: certain workers (especially previous immigrants or those without a high school diploma) might experience slightly lower wage growth due to new competition, while other workers may see their wages lifted by the complementary skills and economic growth that immigrants bring [1][3][5]. However, these distributional effects are generally small – on the order of a few percentage points at most for affected groups, not massive wage cuts. In the longer run, economies tend to absorb immigrant labor by increasing output, investing in new businesses, and creating new jobs. This expansionary adjustment means immigration’s overall impact on wages is close to neutral and may even be mildly positive. In sum, immigration has only a limited effect on wages, and it does not deserve the broad blame for low wages or wage stagnation; factors like automation, education, and economic policy play much larger roles in determining wage levels than immigration does [1][2][5].
Sources:
[1] National Academies of Sciences, Engineering, and Medicine (2017) – The Economic and Fiscal Consequences of Immigration. A comprehensive review of research concluded that immigration has little to no effect on overall wages of native-born workers. Any negative wage impacts are small and mostly concentrated among previous immigrants or very low-educated natives (e.g. high school dropouts), while many native workers experience no loss or slight gains from immigration. (National Academies Press – Summary, pp. 4-6) – URL: Link
[2] Heidi Shierholz (2010), Economic Policy Institute – “Immigration and Wages: Methodological Advancements Confirm Modest Gains for Native Workers.” This analysis finds immigration raised average wages for U.S.-born workers by about +0.4% from 1994–2007, while slightly reducing wages of earlier immigrants by about 4.6%. It notes a broad consensus among economists that immigration has a small but positive impact on native-born workers’ wages overall, since immigrants boost labor supply and demand. (EPI Briefing Paper #255) – URL: Link
[3] George J. Borjas (2013) – “Immigration and the American Worker: A Review of the Academic Literature.” Labor economist Borjas argues that immigration redistributes income from competing workers to employers. He estimates that an immigrant influx can lower wages for low-skill native workers, citing studies that find a 2–5% wage reduction for U.S. native high school dropouts due to immigration (depending on short vs. long run effects). Borjas contends that even under optimistic assumptions about immigrants being complementary to natives, there are still modest wage losses for the least-skilled natives. (Center for Immigration Studies report) – URL: Link
[4] Erta Kurti (2020) – “The Case for ‘Low-Skilled’ Immigration,” Harvard Political Review. Describes the Mariel boatlift natural experiment: when Miami’s labor force suddenly grew ~7% in 1980 due to Cuban immigration, economist David Card found no negative impact on wages or unemployment for native workers. Kurti notes that Card’s finding has been confirmed by many studies. The article also discusses a contrary analysis by George Borjas, who claimed a dramatic wage drop for Miami’s least-educated workers, but explains that subsequent research discredited Borjas’s result due to methodological flaws (small sample and not accounting for workforce changes). – URL: Link
[5] Christian Dustmann et al. (2007) – Study on “The Impact of Immigration on UK Wages” (UCL / CReAM report for the Low Pay Commission). This research found immigration made a modest positive contribution to average wages of UK-born workers in 1997–2005. The wage benefit was small but positive for most natives (immigration accounted for roughly 0.15 percentage points of annual wage growth). At the same time, lower-paid workers saw slightly slower wage growth due to immigration – wages in the bottom 25% of the distribution grew a bit less than they would have otherwise (a small downward pressure, not an absolute drop). Overall, wages increased at all levels of the distribution, and the authors conclude immigration’s effect on UK wages was generally benign, with no large negative impacts. – URL: Link
The question of whether immigration drives down wages is a central and often contentious topic in economics. The answer is not a simple yes or no; it is highly nuanced and depends on a range of factors, including the skill levels of immigrants, the skills of native-born workers, the time frame considered, and the overall health of the economy.
While basic economic theory suggests an increase in labor supply could lower wages, the empirical evidence from numerous studies indicates that the overall effect on the wages of native-born workers is very small, and for many, it is non-existent or even positive. The negative impacts, when found, are typically concentrated on a small segment of the population.
The simplest model for analyzing the effect of immigration on wages is based on supply and demand. In this framework, an influx of immigrants increases the supply of labor. If the demand for labor remains unchanged, this increase in supply should, in theory, lead to a lower equilibrium wage for workers in that market [1]. This is the foundational argument for the belief that immigration reduces wages.
However, this model is overly simplistic because it fails to account for several critical real-world dynamics.
The economy is not a static system. The arrival of immigrants triggers a series of adjustments that complicate the simple supply-and-demand narrative.
Decades of economic research have attempted to measure the real-world impact of immigration on wages. The overwhelming consensus from this body of work is that the impact on the wages of native-born workers is, on average, very small.
The claim that immigration drives down wages is an oversimplification of a complex economic reality. The vast majority of economic research indicates that for the average native-born worker, the wage effect of immigration is negligible and may even be positive in the long run.
The economic costs, in the form of potential wage depression, are not borne by the native-born population as a whole. Instead, they are narrowly concentrated on a small group of workers with the lowest education levels and on immigrants who arrived in previous waves. Conversely, the economic benefits—including increased innovation, entrepreneurship, and economic growth fueled by both consumer demand and a more complementary workforce—are broadly distributed across the population. Therefore, a comprehensive assessment must weigh the small, concentrated costs against these widely dispersed benefits.
https://nap.nationalacademies.org/catalog/23550/the-economic-and-fiscal-consequences-of-immigrationhttps://www.cbo.gov/publication/56348https://www.nber.org/papers/w21588https://wol.iza.org/articles/do-immigrant-workers-depress-the-wages-of-native-workers/longhttps://www.nber.org/papers/w17343https://www.oecd.org/migration/mig/OECD%20Migration%20Policy%20Debates%20Numero%202.pdfhttps://davidcard.berkeley.edu/papers/mariel-impact.pdfThe question of whether immigration drives down wages is a contentious topic in economics, with research yielding mixed and context-dependent findings. Economists generally agree that immigration can influence labor markets, but the effects vary based on factors such as the skill levels of immigrants and native workers, the scale and speed of immigration, local economic conditions, and policy responses. Below, I’ll outline the key arguments, evidence from both sides, and a balanced synthesis, drawing on empirical studies and expert analyses.
Some research suggests that immigration can exert downward pressure on wages, particularly for low-skilled native workers. This perspective is rooted in basic supply-and-demand economics: an influx of workers increases labor supply, which can reduce wages if demand doesn’t keep pace [1]. For instance:
Impact on Low-Skilled Workers: Studies indicate that immigration disproportionately affects workers without college degrees, as many immigrants (especially from certain regions) enter low-wage sectors like construction, agriculture, and services. A prominent analysis by economist George Borjas estimated that immigration to the U.S. between 1980 and 2000 reduced wages for high school dropouts by about 9% and for high school graduates by 2-3% [1]. Borjas argues that immigrants and natives with similar skills compete directly, leading to wage suppression in those groups.
Short-Term and Localized Effects: In areas with rapid immigrant inflows, wages may decline temporarily before markets adjust. For example, research on European labor markets during the 2010s refugee crisis found short-term wage drops of 1-3% for low-skilled natives in affected regions [2]. This is often attributed to immigrants accepting lower wages due to limited bargaining power or language barriers.
Broader Economic Models: Theoretical models, such as those from the National Bureau of Economic Research, suggest that without complementary policies (e.g., minimum wage laws or training programs), immigration can widen income inequality by compressing wages at the bottom of the distribution [3].
Conversely, a substantial body of evidence challenges the wage-suppression narrative, emphasizing that immigration often boosts overall economic growth, complements native workers, and may even raise wages for some groups. This view highlights how immigrants fill labor gaps, increase productivity, and stimulate demand [4].
No Significant Impact in Key Case Studies: David Card’s seminal study of the 1980 Mariel Boatlift—when 125,000 Cuban immigrants arrived in Miami—found no discernible decline in wages or employment for low-skilled natives, including Black and Hispanic workers [4]. Wages in Miami evolved similarly to those in comparable cities without such inflows, suggesting that economies absorb immigrants through business expansion and job creation.
Complementary Skills and Long-Term Benefits: Immigrants often bring diverse skills that complement rather than substitute for natives. For example, high-skilled immigrants (e.g., in tech) can increase innovation and productivity, raising wages across the board. A comprehensive report by the National Academies of Sciences, Engineering, and Medicine analyzed U.S. data and concluded that immigration has a small negative effect on low-skilled natives’ wages in the short term (about 1-2% over a decade) but positive long-term effects on the economy, including wage gains for higher-skilled workers [3]. Economist Giovanni Peri has similarly argued that immigrants boost native wages by 0.5-1% on average by specializing in manual tasks, allowing natives to shift to higher-paying communication-intensive roles [5].
Aggregate and International Evidence: Meta-analyses of global studies show that immigration’s wage effects are often neutral or positive. A 2017 review by the Brookings Institution found that in most OECD countries, immigration correlates with slight wage increases (0.1-0.6% per 1% increase in immigrant share) due to increased consumer demand and entrepreneurship [6]. In the U.S., post-2000 immigration waves have coincided with wage growth in many sectors, partly because immigrants create jobs as consumers and business owners [5].
The impact of immigration on wages is not binary; it depends on context:
In summary, while some evidence supports that immigration can drive down wages for specific low-skilled groups in the short term, the preponderance of research indicates neutral to positive effects overall, especially in the long run. Policymakers can mitigate any negative impacts through education, retraining, and enforcement of labor standards. This debate underscores the importance of empirical nuance over simplistic narratives.
Borjas, G. (2003). The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market. Quarterly Journal of Economics. https://www.jstor.org/stable/25053938 – Borjas expresses the view that immigration significantly reduces wages for low-skilled native workers due to increased labor supply.
Dustmann, C., et al. (2017). The Impact of Immigration: Evidence from Europe. Journal of Economic Perspectives. https://www.aeaweb.org/articles?id=10.1257/jep.31.1.145 – The authors argue for short-term wage declines in low-skilled sectors during rapid immigration but note adjustments over time.
National Academies of Sciences, Engineering, and Medicine (2017). The Economic and Fiscal Consequences of Immigration. https://nap.nationalacademies.org/catalog/23550/the-economic-and-fiscal-consequences-of-immigration – This report presents a nuanced view, finding small short-term wage reductions for low-skilled natives but positive long-term economic effects.
Card, D. (1990). The Impact of the Mariel Boatlift on the Miami Labor Market. Industrial and Labor Relations Review. https://www.jstor.org/stable/2523572 – Card finds no significant wage depression, supporting the view that economies absorb immigrants without harming natives.
Peri, G. (2016). Immigrants, Productivity, and Labor Markets. Journal of Economic Perspectives. https://www.aeaweb.org/articles?id=10.1257/jep.30.4.3 – Peri argues that immigration complements native workers, leading to wage increases through specialization and productivity gains.
Boubtane, E., et al. (2017). Immigration and Economic Growth in the OECD Countries. Brookings Institution Working Paper. https://www.brookings.edu/research/immigration-and-economic-growth-in-the-oecd-countries/ – The authors express the view that immigration has neutral to positive effects on wages and growth in developed economies.