Immigration benefits US workers in concert with technology innovation

December 28, 2020

A doctor performs a surgical procedure, one of many jobs computerization has not significantly changed. (Artur Tumasjan, Unsplash)

Native-born U.S. workers experience an economy-wide boost in productivity and welfare as a result of immigration when it occurs in combination with technological progress, according to new research.

The study, published in the Canadian Journal of Economics, runs counter to commonly held assumptions that immigrants can harm U.S. workers by putting downward pressure on wages and taking scarce jobs.

Available online in early October and published in print in November, the paper takes two popular lines of economic research — how technology and immigration, respectively, have changed the U.S. labor market — and examines the interplay between them. Economists conducted a rigorous analysis on detailed census data along with other information from 1980 to 2010 to arrive at their conclusions.

“I kind of think that it’s natural to frame this as the next step in understanding how technology and immigration work together on natives when people have found that individually both immigration and technology have an impact,” said Giovanni Peri, co-author of the research and a professor at the University of California Davis.

Some of the researchers’ findings have been explored in previous studies, but this is the first time researchers were able to connect how immigration and technology work together, he said.

While the automation and computerization have eliminated some “routine jobs,” especially in production processes, machines have also contributed to an increase of “cognitive-intensive” occupations, according to the paper.

Meanwhile, computerization has not greatly affected the physical productivity of manual-intensive jobs, such as cooking, housekeeping, healthcare and landscaping. Demand for those services has increased since they complement goods and services produced using computers. 

Immigrants often have “a distribution of skills quite distinct from those of U.S.-born individuals,” Peri found in previous research, with some gravitating toward manual-intensive service jobs and health care.

Computerization intensity across local labor markets in the U.S. “is strongly associated with both high-skilled and low-skilled immigration over the decades 1980-2010,” the researchers said, as well as a decrease in routine-intensive jobs and an increase in analytical ones for low-skilled native born workers.

While the association of low-skilled immigration with strength of employment and wages for the native-born workers was previously established in other research, this is the first time researchers have proposed an explanation based on technological growth and specialization.

Peri and his colleagues, using the Census Bureau’s Current Population Survey and the industrial structure of commuting zones in 1980, constructed a measure of computer adoption at the local economy level between 1980 and 2010. The researchers then modeled migration and task specialization patterns over the three-decade timespan using census data and information in the Department of Labor’s Dictionary of Occupational Titles database.

“While immigrants are attracted by technological advances and may compete with native-born in manual-intensive occupations, their general equilibrium effects on the economy is that of attenuating job and wage polarization for native-born,” the researchers wrote.

As immigrants’ comparative advantage in manual tasks reduces the negative impact of technology on “routine employment” for native-born workers while raising the demand for analytical workers, the researchers said allowing more immigration could reduce the impact of technology on the jobs and wages of native-born workers at the lower end of the spectrum.

“Policies aimed at reducing immigration inflows, especially of the low-skilled, can have the unintended consequence of weakening capital accumulation while simultaneously exacerbating native-born job and wage polarization,” the researchers wrote. “Such policies often allege to assist middle-class Americans; they may do precisely the opposite."

Still, Peri said not every native-born U.S. worker will reap the benefits of computerization and immigration. Some American workers may be unable to upgrade their skills or may choose to retain a “routine” job even though it pays less.

“Not everybody is a winner, but the tendency has been in response to this … that this automation-driven change of the labor market does not need to displace Americans, but it will move Americans, and with immigrants coming in, it is more likely to move them up the ladder,” Peri said.

The study “Computerization and immigration: Theory and evidence from the United States,” published Oct. 10 in the Canadian Journal of Economics, was authored by Gaetano Basso, Bank of Italy; Giovanni Peri, University of California Davis and the National Bureau of Economic Research; and Ahmed Rahman, Lehigh University. 

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