Canadians Know Their Supply and Demand

Last week I blogged about the paper that I wrote with Abdurrahman Aydemir (of Statistics Canada) measuring the impact of immigration on the labor markets of Canada, Mexico, and the United States. Canada's national newspaper, The Globe and Mail, today had an editorial on the research findings (subscription required):

Few Canadians would be surprised to learn that immigrants pull down the wages of the domestic workers whom they challenge for jobs. This has been the law of supply and demand since humans first scrabbled to make a living. What is surprising...is that immigrants in Canada have narrowed the gap between the country's highest-paid workers and lowest-paid workers, reducing income inequality. In the United States, it's the opposite: The presence of immigrants increases the gap between the rich and the poor. The contrast underlines the differences between the U.S. and Canadian approaches to immigrant selection....Good immigration policies should not foster the creation of large pools of low-skilled workers who compete ferociously with each other and drive down wages.

Can someone please teach the crowd at the editorial page of The Wall Street Journal some of those basic economic principles?

Comments

[Anon.]

Er -- should good immigration policy create large pools of high skilled labour who compete ferociously and drive down wages? Why are cheap civil engineers more desirable than cheap gardeners? What is the optimal skill mix of immigrants?

Rather than having Indian doctors drive taxicabs in Toronto, why not import Indian taxicab drivers to drive taxicabs in Toronto?

Just a question.

[guest]

"Why are cheap civil engineers more desirable than cheap gardeners?"

Er-- because they have higher productivity? The purpose of immigration is to raise output, not to drive wages down: you can only admit a limited number of immigrants, so why would you want more gardeners and less rocket surgeons?

[Richard A.]

It's not just WSJ editors who seem to be econ 101 flunkies. The MSM has for the past couple of decades in articles exposing widening wage inequality ignore immigration as a serious cause and typically put the blame on free trade. Japan's formal trade restrictions are on average no worse than ours, but they do have very tight immigration restrictions. Where is their growing underclass?

[David]

Seems to me you want immigrants who fit the following list of qualifications:
1) Pay more in taxes than they consume in social services and
2) Do not have any strong tendencies to vote differentially to the rest of the population (i.e., you don't want immigrants who will change the political culture), and
3) Do not have significantly greater fertility than the rest of the population (you don't want them to change the ethnic or cultural balance of your country)
4) Come in sufficiently low numbers that they can be absorbed by the population fairly rapidly.

[Robert C]

Got to love comments like those of David---immigration as compassion...Quite simply the point David is that having lots of low skilled people will reduce the earnings of the low skilled people you already have in place and this in turn increases the divide between rich and poor. Get it?

[David]

I don't see immigration as an issue of compassion, but rather one of national and group self-interest. Immigrants that would meet my 4 criterion would not bid down wages for low-skilled labor. But I don't really have any particular passion for economic equality insofar as relative, rather than absolute poverty is involved. I recognize that most of the population does though, so I accordingly oppose the importation of folks likely to vote contrary to my interests :-)