Famous Study Showing Immigration Doesn’t Depress Wages Refuted

Jason Richwine, National Review, September 17, 2015

There is perhaps no economic study more often cited by immigration advocates than economist David Card’s 1990 analysis of the “Mariel boatlift.” After Fidel Castro announced in 1980 that anyone wishing to leave Cuba could do so via the port of Mariel, 125,000 Cuban immigrants came to Miami in a matter of months that summer. The sudden influx of young, able-bodied workers generated an unusually good test of how immigration affects wages. Economic theory predicts wages should have declined in Miami after the boatlift, but Card was surprisingly unable to detect any wage impact at all.

{snip} It is frequently cited as evidence that the U.S. labor market is so dynamic–magically dynamic, to skeptics–that even large influxes of immigrant workers do not depress wages.

Now, 25 years after the original study, economist George Borjas has a new working paper that directly contradicts Card’s findings. (Disclosure: Borjas was my advisor in graduate school, and we have remained in touch since then.) Drawing on past research showing that low-skill immigrants compete primarily with the least educated natives, Borjas found that the wage for high-school dropouts in Miami had declined by almost 40 percent relative to a control group of cities five years after the boatlift. The wage change in Miami was more negative than 99 percent of wage changes in every other major city over similar time intervals.

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The new study is still a “working paper,” meaning it has not been peer reviewed or published yet. That process will be interesting, as Card is sure to be a reviewer, and sparks may fly. Stay tuned.

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