How do changes in net immigration affect wages for native low-skilled workers across different U.S. states?
Executive summary
Empirical evidence on how changes in net immigration affect wages for native low‑skilled workers is mixed: many high‑quality reviews and recent papers find small or negligible long‑run effects on low‑skilled natives, while some influential studies and state‑level analyses identify meaningful negative impacts in particular places and under specific conditions [1] [2] [3] [4]. Crucially, heterogeneity across states—driven by local labor market institutions, minimum wages, occupational composition and the degree of native–immigrant substitutability—explains why aggregate national results diverge from sharper local effects [5] [6] [7].
1. The big picture: national studies mostly find small average effects
Broad syntheses and recent national‑level work conclude that immigration’s long‑run impact on native wages is very small or slightly positive for less‑educated natives, with the National Academies and several modern studies finding negligible aggregate wage losses and some studies even reporting modest wage gains for low‑educated natives (+1.7 to +2.6 percent in NBER estimates) [1] [3] [8]. These national approaches emphasize dynamic adjustments—capital deepening, occupational specialization and complementarities—that offset initial supply pressure and can raise productivity and average native wages over time [9] [8] [7].
2. The counterpoint: studies reporting substantial local or group losses
Other influential research—most notably Borjas and some earlier city‑level work—estimates sizable negative effects on wages of the least skilled, with estimates like a 3–4 percent average drop and up to a ~9 percent fall for the lowest‑skilled natives in certain periods, and extreme local shocks sometimes producing much larger declines [4]. Policy‑oriented reports and older studies similarly report double‑digit local wage declines for specific low‑skill occupations and have been used to argue for tighter immigration controls [10]. These results reflect a model of near‑perfect substitutability and limited local adjustment.
3. Why results diverge: methods, assumptions and time horizons
Differences stem from methodological choices: “national” models that allow capital and labor to adjust and measure multi‑decade effects typically find small impacts, while local skill‑cell or occupation‑level models that treat immigrants as closer substitutes for some natives often find larger short‑run adverse effects [6] [4]. The elasticity of substitution between immigrant and native labor, the instrument used to identify supply shocks, and whether analysts account for occupational upgrading of natives all materially change results [9] [6].
4. State heterogeneity matters: minimum wages, occupational mix and mobility
State‑level analyses show the wage effect of immigration is not uniform: in states with low effective minimum wages the negative wage elasticity is larger (up to −0.2) and employment impacts for low‑skilled natives are more pronounced, while states with higher minimum wages or stronger institutions show near‑zero effects [5]. Similarly, places where immigrants concentrate in particular low‑skill occupations—construction, agriculture, food service—are more likely to see local competition and downward pressure on wages for natives in those jobs [7] [11].
5. Mechanisms and distributional consequences: winners and losers
Even when average effects are small, immigration redistributes gains and losses: higher‑skill natives and incumbent firms often benefit from complementarities and productivity gains while prior immigrants and native workers with very low education can experience the largest wage and employment pressure [8] [7]. The presence of unauthorized or under‑protected workers can also depress local wage standards through exploitation, an effect highlighted by labor‑advocacy research [8].
6. What to watch when comparing states
Interpreting state differences requires attention to (a) the local occupational share of immigrants, (b) state minimum‑wage and labor‑enforcement regimes, (c) mobility of natives and capital, and (d) the time horizon of the analysis; studies that ignore these factors risk conflating temporary displacement with long‑run neutral or positive adjustments [5] [6] [7]. Where these mitigating mechanisms are weak, net immigration is more likely to lower wages for native low‑skilled workers; where they are strong, effects are small or positive [5] [3].