Tag: Miami

Further Thoughts on Mariel Boatlift

Jason Richwine just blogged about my recent Mariel Boatlift post that confirmed George Borjas’ finding of wage increases for those with only a high school degree in post-Mariel Miami.  George Borjas understood my quick extension of his research.  Below are some of Richwine’s points and my quick responses. 

“The point is not especially interesting, since the standard immigration narrative has always been that efficiency gains come at the expense of the natives with whom immigrants most directly compete – high school dropouts, in the case of Mariel.”

It’s important to identify which skill-group of Miamians could have benefited from the Boatlift.  George Borjas pointed out in his report for the Center for Immigration Studies:  “Economic theory predicts that immigration will redistribute income by lowering the wages of competing American workers and increasing the wages of complementary American workers as well as profits for business owners and other “users” of immigrant labor.”  Borjas focused on the benefits for business owners and other “users” of immigrant labor in that paper. 

The Mariel Boatlift Raised the Wages of Low-Skilled Miamians

Harvard economist George Borjas recently published an important paper on how the unexpected surge of 125,000 Cubans (henceforth Marielitos) to Miami in 1980 lowered the wages of native-born male Miamians with less than a high-school degree. Because at least 60 percent of the Marielitos were high school dropouts, Borjas found that the negative wage effects were concentrated on Miamians with the same level of education.  

There are excellent criticisms of Borjas’ paper that show his results hinge on the control cities he chose, his exclusion of women, the age group of the workers, whether Hispanics are included, whether high-school-or-less or no-high-school-at-all are included, and whether datasets with the larger samples are used. For the sake of argument, supposing that Borjas made the correct methodological choices on every single point above, the Mariel Boatlift still raised the wages for low-skilled U.S. workers collectively due to wage complementarities. That’s because native-born Miamians with only a high school degree (no associate degree, no education after high school) experienced significant wage increases immediately after Mariel relative to workers with the same levels of education in the control groups, or placebos, of other cities. Borjas’ supporters ignore this finding but he does not. 

In his Mariel paper, Borjas reports the wage of high school dropouts relative to high school graduates in Figure 3(C) and the wage of Miami high school graduates across an all cities permutation in Figure 4(B), but he doesn’t have a dramatic graph like this that shows what happened to the relative wages of high school graduates after Mariel. 

Another working paper by Borjas and Monras on the wage effects of refugees also found that “the rate of wage growth for high school graduates, a group whose size was only increased modestly by the Marielitos, is noticeably higher in Miami than outside Miami.”  They go on to write that, “the predominantly low-skill Marielitos … raised the wage of workers with a high school education, and this effect is both numerically and statistically significant. The cross-wage elasticity is about +0.7 [compared to -0.9 for high school dropouts].”  They do not find any employment effects for high school dropouts but they did uncover positive and statistically significant employment gains for those with a high school degree. Furthermore, Figure 7.5 on page 148 of Borjas’ new book We Wanted Workers hints at a wage increase for high school graduates immediately after Mariel.              

My intern Cole Blondin and I followed Borjas’ methods to create graphs for the wages of high school graduates before and after the Boatlift. We used the March Current Population survey (March CPS) and combined the May Current Population Survey and the May Outgoing Rotation Group (May CPS-ORG) datasets. The only differences are that we present the figures in dollars rather than logs, we did not use three-year averages to smooth the data, and we did not recreate the synthetic control. One final note, the wage effect of the Marielitos must be compared to placebos because there was only one Miami in 1980 and we can’t actually observe what would have happened to that city had the Marielitos not arrived. We used the same sets of placebo cities as Borjas.

Even under Borjas’ assumptions, native-born male Miamians with a high school degree or less saw a ­net-wage increase after the Mariel Boatlift.    

A Tale of Two Studies

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.

Police Shootings in Miami

Today’s New York Times reports that seven African-American men have been shot and killed by Miami police officers over an eight month period.  One officer, who has since been discharged for unrelated misconduct, was responsible for two of the shooting incidents over a span of just days. 

Each shooting should be scrutinized on its own merits.  The circumstances of each incident matters.  However, one question concerns the aggressive culture often found in police “tactical” units, which too often enagage in a reckless style of police work.  Since 2009, the Times reports, more than 100 officers have been added to Miami’s tactical units.  Another question is whether the Miami police department should be the agency investigating these cases.  An impartial investigation into these shootings needs to be conducted.

Go here for related Cato work.

The Tea Party, Real and Imagined

In the Washington Post, Dana Milbank rounds up a lot of bills introduced into state legislatures by conservatives, some of them a bit odd, and blames them all on “the Tea Party.” “Tea Party” has sort of replaced “neoconservative” as an all-purpose pejorative for liberals. Meanwhile, a tiny AP story down in the small type among the nail fungus ads reported some real Tea Party-style news. The Miami Herald covered it in more detail:

Voters swept Miami-Dade Mayor Carlos Alvarez out of office by a stunning margin Tuesday [88 percent], capping a dramatic collapse for a politician who was given increased authority by voters four years ago to clean up much-maligned county government but was ushered out in the largest recall of a local politician in U.S. history.

The spectacular fall from power comes after two years of missteps, ranging from granting top staffers big pay hikes to construction of a publicly funded stadium for the Florida Marlins to implementation of a property-tax rate increase that outraged an electorate struggling through an ugly recession….

Tuesday’s vote served notice that the public is thirsting for widespread reform at County Hall, long dominated by entrenched politicians and insiders. County Commissioner Natacha Seijas was similarly recalled Tuesday in a resounding defeat. For 18 years she represented a district that includes Miami Lakes and Hialeah and was widely regarded as the most powerful politician on the commission.

The two ousters come on the heels of Dorrin Rolle’s defeat in November, which marked the first time a sitting county commissioner has been defeated in 16 years.

More than 200,000 people cast votes in the election.

Miami is no right-wing hotbed. Obama got 58 percent of the vote there. This should worry tax-hikers everywhere.