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On the Labor Market Effects of Immigration and Trade

Author

Listed:
  • George J. Borjas
  • Richard B. Freeman
  • Lawrence F. Katz

Abstract

In the 1980s, the wages and employment rates of less-skilled Americans fell relative to those of more-skilled workers. This paper examines the contribution of the continuing inflow of less-skilled immigrants and the increasing importance of imports in the U.S. economy to these trends. Our empirical evidence indicates that both trade and immigration augmented the nation's supply of less-skilled workers, particularly workers with less than a high school education. By 1988, trade and immigration increased the effective supply of high school dropouts by 28 percent for men and 31 percent for women. We estimate that from thirty to fifty percent of the approximately 10 percentage point decline in the relative weekly wage of high school dropouts between 1980 and 1988 can be attributed to the trade and immigration flows. In addition, our analysis suggests that from 15 to 25 percent of the 11 percentage point rise in the earnings of college graduates relative to high school graduates from 1980 to 1985 can be attributed to the massive increase in the trade deficit over the same period, but that the effects of trade on the college/high school wage differential diminished with improvements in the trade balance during the late 1980s.

Suggested Citation

  • George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1991. "On the Labor Market Effects of Immigration and Trade," NBER Working Papers 3761, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3761
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    References listed on IDEAS

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    1. Joseph G. Altonji & David Card, 1991. "The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 201-234 National Bureau of Economic Research, Inc.
    2. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
    3. Abowd, John M. & Freeman, Richard B. (ed.), 1991. "Immigration, Trade, and the Labor Market," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226000954, December.
    4. Robert J. LaLonde & Robert H. Topel, 1991. "Labor Market Adjustments to Increased Immigration," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 167-199 National Bureau of Economic Research, Inc.
    5. John M. Abowd, 1991. "Appendix: The NBER Immigration, Trade, and Labor Markets Data Files," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 407-421 National Bureau of Economic Research, Inc.
    6. Richard B. Freeman & Lawrence F. Katz, 1991. "Industrial Wage and Employment Determination in an Open Economy," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 235-259 National Bureau of Economic Research, Inc.
    7. Robert Warren & Jeffrey Passel, 1987. "A Count of the Uncountable: Estimates of Undocumented Aliens Counted in the 1980 United States Census," Demography, Springer;Population Association of America (PAA), vol. 24(3), pages 375-393, August.
    8. Butcher, Kristin F & Card, David, 1991. "Immigration and Wages: Evidence from the 1980's," American Economic Review, American Economic Association, vol. 81(2), pages 292-296, May.
    9. John Bound & George E. Johnson, 1989. "Changes in the Structure of Wages During the 1980's: An Evaluation of Alternative Explanations," NBER Working Papers 2983, National Bureau of Economic Research, Inc.
    10. George J. Borjas & Richard B. Freeman & Kevin Lang, 1991. "Undocumented Mexican-born Workers in the United States: How Many, How Permanent?," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 77-100 National Bureau of Economic Research, Inc.
    11. Kristin Butcher & David Card, 1991. "Immigration and Wages: Evidence From the 1980's," Working Papers 661, Princeton University, Department of Economics, Industrial Relations Section..
    12. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
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