Academics and professional economists have critiqued many well known academic papers on immigration in the last year. The first was by Alan de Brauw and Joseph R.D. Russell and it replicates and expands a famous 2003 paper by Harvard University economist George Borjas entitled “The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market.”
Borjas famously found that from 1960-2000 there was a wage elasticity of -0.38, meaning that a 10 percent increase in the size of the labor force due to immigration in a particular skill-cell lowered the average weekly wages in that cell by 3.8 percent relative to workers in other skill-cells. Borjas’ paper is an impressive piece of scholarship and has been the lynchpin of arguments to close the border in order to protect wages. Many economists disagree with Borjas.
De Brauw and Russell had three findings. Their first finding was that the wage elasticity dropped to -0.22 when they extended Borjas’ study to 2010. That is an important finding by itself – if the Borjas model was correct then why would the impact of immigrants on wages decrease as more of them entered the labor force between 2000 and 2010?
Their second set of findings is that small changes in variable definitions turned some of Borjas’ ideas into statistically insignificant results. While not definitive, that suggests that the conclusions in his paper are not reliable.
That leads to De Brauw and Russell’s third set of findings. They looked at the relationship between annualized male and female wages in the skill-cells when women entered the workforce in significant numbers. The correlation turned out to be positive, which means men and women with the same skill level are complementary. Thus, they argued that Borjas’ model is misspecified as it assumed immigrants and natives in the same skill-cells are more substitutable than they really are. If this finding is true, it would call into question the assumptions Borjas’ built in to his model, namely that immigration and natives are substitutable rather than complementary.
I’m still eagerly awaiting Borjas’ response to De Brauw and Russell’s paper. The critique of Borjas’ paper was serious because it replicated his work, extended it another decade, and found the results didn’t hold up. Many academics have already contested Borjas’ claims in numerous ways as I document here and here but this challenge cuts deep.