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Immigrants Benefit American Workers, Says New Study

Immigrants Benefit American Workers, Says New Study

DAVIS, Calif.

      According to two economists from California and Italy, a sure-fire way to make more money is to move to a city that is teeming with immigrants. The professors have linked immigrant labor to robust economies in American cities.

      The five cities that have benefited the most are Los Angeles; San Jose, Calif.; Austin, Texas; Houston and Phoenix. All five have seen tremendous increases in their immigrant residents over the past 30 years, say Dr. Giovanni Peri from the University of California, Davis, and Gianmarco Ottaviano from the University of Bologna, Italy.

      By looking at the data on the 100 largest U.S. cities over the past three decades, the economists found that for each 1 percent increase in the number of foreign-born workers in a city, American-born workers saw a 0.3 percent increase in real wages.

      Sacramento, which is average for growth in immigrant workers among the 100 cities studied, saw an 8 percent growth in immigrant labor from 1970 to 2000. That translates to a 2 percent improvement in real wages for American-born workers over those three decades due to the immigration effect, Peri says. In 2000, immigrants comprised more than 14 percent of the Sacramento work force.

      â€śOur work shows that cities with more diversity — more immigrants — in the work force exhibit higher productivity for the American-born employees,” Peri says. Cities with little or no growth in immigration, such as Cleveland, Buffalo, N.Y., and Pittsburgh, did not benefit from this phenomenon during the same time, according to Peri and Ottaviano’s calculations.

      They make four major findings:

  • The positive effects on U.S. wages stem from immigrants offering education backgrounds and job skills that are complementary to those of native-born Americans.
  • Immigrants are increasing the variety of services in cities, making them cheaper for American consumers.
  • The immigrant services complement American-born services, which implies a limited competition and little downward pressure for American-born wages.
  • The new businesses are attracting more investment in cities, helping the cities’ overall economies grow.

   â€śWe find no evidence that the American-born workers leave the city, but we do find evidence that they earn higher average wages,” Peri says. “The increase in immigrants’ share of employment is associated with higher wages as well as employment of U.S.-born workers overall in the cities with more immigrants.”

   The economists published some of their conclusions in the January issue of the Journal of Economic Geography and more in a recent working paper for the National Bureau of Economic Research.

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