Labor Economics

Fall 2006

Economics 7150

 

Reading List (as of August 22, 2006)

 

Powerpoints:

 

(Sorry--These Powerpoints will show in Internet Explorer but not Mozilla or other web browsers.

If you have trouble, please ask me to email the slide show to you.)

 

Week 1: Labor Demand and Supply: Gary Becker v. Giovanni Arrighi

Week 2: Review of Immigration Literature

Week 3: Immigrants, Mobility and Wage Arbitrage

Week 4: The Effect of Immigration on Native Wages

Week 5: Immigration and the Construction Industry

Weeks 9&10: Immigration and Racism

 

Course Description:

 

Over the last two decades two billion people have been added to the globalized labor market.  The ILO estimates that about 5% of the world labor force are immigrants working in countries other than where they were born.  Immigration to the United States is now at levels that are in relative terms about equal to 1920 and approaching the peak immigration years of 1890 to 1910.  At the bottom of this page is a link to a web video by Brad DeLong (Berkeley) and an editorial by Paul Krugman (Princeton) that captures some of the flavor of arguments around immigration in the United States today.  Take a look.

 

In this course, we will review the current literature on US immigration and jointly write a paper for submission to a journal.  You will learn the literature.  You will become familiar with various data sets (the CPS, Census IPUMS and some construction specific data).  You will jointly use your (and my) econometric skills to ask the question:  What has immigration done to the wages of skilled and unskilled workers in US construction?"  You will be graded on class attendance, group work effort, understanding of the research and a final exam test on the literature.

 

Below you will find:

 

1. Web resources for communication, econometrics and data

2. Reading assignment and corresponding pdf files (in most cases)

3. The dust up between Brad DeLong and Paul Krugman (to get your juices flowing).

 

 

1. Web Resources:

 

Staying in Touch:

 

We will use Skype internet phone service to stay in touch.  It's free (at least through 2006) and we can have four-way conference calls (Yahoo and MSN instant messengers are limited to two callers at a time).  You need to download at www.skype.com and sign up.  Look for me under Peter Philips. I will also use a video cam for talking to you and you can either use skype or yahoo messenger to view me.  My yahoo account is leighlakeranger@yahoo.com .  But email me at my econ email as it kicks to home. philips@economics.utah.edu .  (Notice that there is only one "L" in Philips).

 

 

Econometrics:

 

Whether it's Stata, SPSS, SAS or some other statistical package, UCLA is the place to go to learn or refresh your memory on how to do things:

 

 

Data:

 

This is a portal for most US statistics related to labor and employment on the web:

 

 

 

This is a second useful site with some construction statistics as well:

 

 

 

 

 

 

 

 

 

 

And, of course, there is our quite useful site at Marriott:

 U N I V E R S I T Y  O F  U T A H  -  J. WILLARD MARRIOTT LIBRARY     Economics
    R  E  S  E  A  R  C  H      G  U  I  D  E

 

 

This emeritus professor keeps busy putting indices of skilled and unskilled wages in excel:

 

Samuel H. Williamson, "An Index of the Wage of Unskilled Labor from 1774 to the Present"
Economic History Services, December, 2004, URL : http://www.eh.net/hmit/databases/unskilledwage/ and  http://eh.net/hmit/unskilledlabor/source.htm (you have to copy the link)

 

 

2. Readings

 

*          Overview:

*          George Borjas, "The Economics of Immigration," Journal of Economic Literature, 1994.

*          George Borjas, "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity,  2001.

*          Shime and Topel, "Comment on Does Immigration Grease the Wheels of the Labor Market?" Brookings Papers on Economic Activity,  2001.

*          Borjas, Richard Freeman and Lawrence Katz, "Searching for the Effects of Immigration on Labor Markets," American Economic Review, 1996.

*          The Effect of Immigration on Wages

*          Stanley Engerman and Ronald Jones, "International Labor Flows and National Wages," American Economic Review, 1997.

*          Marcus Alexis, "Assessing 50 Years of African American Economic Status 1940-1990," American Economic Review 1998.

*          Gerald Friedman, "Solidarity or Survival?  American Labor and European Immigrants, 1830 to 1924," Journal of Economic History, 1988.

*          Elliott Orton, "Changes in the Skill Differential: Union Wages in Construction, 1907 to 1972," Industrial and Labor Relations Review, 1976.

*          We will use this article along with a Bureau of Labor Statistic Report from 1974 and data collected by master's student Phillip Jeffrey to analyze the question what does immigration do to the relative wages of construction skilled and unskilled (i.e. carpenters and laborers)?  I have also witht he help of my students prepared both CPS and IPUMS Census data on construction work in the US since 1850.  I can provide other statistical package formats upon request.  You must have SPSS or Stata on your computer to open these files.  You can go to www.IPUMS.org to download extracts from the various censuses for yourself.  It’s good practice.  Give it a try—first using their “tiny” sample size to make sure you have the extract that you want.

*          Robert Topel, "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review, 1994.

*          David Card, "The Effect of Unions on the Structure of Wages," Econometrica, 1996.

*          Gordon Hanson and Antonio Spilimbergo, “Illegal Immigration, Border Enforcement, and Relative Wages: Evidence from Apprehensions at the U.S.-Mexico Border,” American Economic Review, 1999.

 

SPSS-Construction 1850-2000 IPUMS Census Data  Stata-Construction 1850-2000 IPUMS Census Data

 

*          Immigrant and Native Labor Flows

*          David Card and John DiNardo, "Do Immigrant Inflows Lead to Native Outflows?" American Economic Review, 2000.

*          David Card, "Immigration Inflows, Native Outflows and Local Market Impacts of Higher Immigration," Journal of Labor Economics, 2001.

*          David Card, "Is the New Immigration Really So Bad?" working paper, 2005.

*          Immigration and Racism

*          Robert D. Reischauer, “Immigration and the Underclass,” Annals of the American Academy of Political and Social Science, 1989.

*          Martin Brown and Peter Philips, “Competition, Racism and the Hiring Practices of Early California Manufacturers,” Industrial and Labor Relations Review, 1986.

*          Returning Home

*          Masao Suzuki, “Success Story? Japanese Immigrant Economic Achievement and Return Migration, 1920-1930,” Journal of Economic History, 1995.

 

*          Immigrant Assimilation in the Labor Market

*          David Cutler and Edward Glaeser and Jacob Vigdor, "Is the Melting Pot Still Hot? Explaining the Resurgence of Immigrant Segregation," working paper.

*          Stephen Trejo, "Intergenerational Progress of Mexican Origin Workers in the US Labor Market," Journal of Human Resources, 2003.

*          Richard Alba, Amy Lutz and Elena Veselenov, "How Enduring Were the Economic Inequalities Among European Immigrant Groups in the US?" Demography, 2001.

*          Borjas, "Long Run Convergence of Ethnic Skill differentials, Revisited" (responding to Alba) Demography, 2001.

*          Racheal Friedberg, "Immigrant Assimilation and the Portability of Human Capital," Journal of Labor Economics, 2000.

*          Wei-Yin Hu, "Immigrant Earnings Assimilation: Estimates from Longitudenal Data," American Economic Review, 2000.

*          Immigration and Technology

*          Ethan Lewis, “The Impact of Immigration on New Technology Adoption in US Manufacturing,” working paper.

*          Immigrants in Agriculture

*          Philip Martin, “Poverty Amid Prosperity: Farm Employment, Immigration, and Poverty in California,” American Journal of Agricultural Economics, 1998.

*          Philip Martin, “Harvest of Confusion: Immigration Reform and California Agriculture,” International Migration Review, 1990.

*          Philip Martin, “Migrant Labor in Agriculture: An International Comparison,” International Migration Review, 1985.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 3. DeLong v. Krugman

If you are interested in the debate among liberal mainstream economists on immigration, consider Brad DeLong's "morning coffee"  and the Paul Krugman editorial below:


http://video.google.com/videoplay?docid=-6574294631278083204  (Brad DeLong)

 

North of the Border
By PAUL KRUGMAN
Published: March 27, 2006

"Give me your tired, your poor, your huddled masses yearning to breathe free," wrote Emma Lazarus, in a poem that still puts a lump in my throat. I'm proud of America's immigrant history, and grateful that the door was open when my grandparents fled Russia.

In other words, I'm instinctively, emotionally pro-immigration. But a review of serious, nonpartisan research reveals some uncomfortable facts about the economics of modern immigration, and immigration from Mexico in particular. If people like me are going to respond effectively to anti-immigrant demagogues, we have to acknowledge those facts.

First, the net benefits to the U.S. economy from immigration, aside from the large gains to the immigrants themselves, are small. Realistic estimates suggest that immigration since 1980 has raised the total income of native-born Americans by no more than a fraction of 1 percent.

Second, while immigration may have raised overall income slightly, many of the worst-off native-born Americans are hurt by immigration — especially immigration from Mexico. Because Mexican immigrants have much less education than the average U.S. worker, they increase the supply of less-skilled labor, driving down the wages of the worst-paid Americans. The most authoritative recent study of this effect, by George Borjas and Lawrence Katz of Harvard, estimates that U.S. high school dropouts would earn as much as 8 percent more if it weren't for Mexican immigration.

That's why it's intellectually dishonest to say, as President Bush does, that immigrants do "jobs that Americans will not do." The willingness of Americans to do a job depends on how much that job pays — and the reason some jobs pay too little to attract native-born Americans is competition from poorly paid immigrants.

Finally, modern America is a welfare state, even if our social safety net has more holes in it than it should — and low-skill immigrants threaten to unravel that safety net.

Basic decency requires that we provide immigrants, once they're here, with essential health care, education for their children, and more. As the Swiss writer Max Frisch wrote about his own country's experience with immigration, "We wanted a labor force, but human beings came." Unfortunately, low-skill immigrants don't pay enough taxes to cover the cost of the benefits they receive.

Worse yet, immigration penalizes governments that act humanely. Immigrants are a much more serious fiscal problem in California than in Texas, which treats the poor and unlucky harshly, regardless of where they were born.

We shouldn't exaggerate these problems. Mexican immigration, says the Borjas-Katz study, has played only a "modest role" in growing U.S. inequality. And the political threat that low-skill immigration poses to the welfare state is more serious than the fiscal threat: the disastrous Medicare drug bill alone does far more to undermine the finances of our social insurance system than the whole burden of dealing with illegal immigrants.

But modest problems are still real problems, and immigration is becoming a major political issue. What are we going to do about it?

Realistically, we'll need to reduce the inflow of low-skill immigrants. Mainly that means better controls on illegal immigration. But the harsh anti-immigration legislation passed by the House, which has led to huge protests — legislation that would, among other things, make it a criminal act to provide an illegal immigrant with medical care — is simply immoral.

Meanwhile, Mr. Bush's plan for a "guest worker" program is clearly designed by and for corporate interests, who'd love to have a low-wage work force that couldn't vote. Not only is it deeply un-American; it does nothing to reduce the adverse effect of immigration on wages. And because guest workers would face the prospect of deportation after a few years, they would have no incentive to become integrated into our society.

What about a guest-worker program that includes a clearer route to citizenship? I'd still be careful. Whatever the bill's intentions, it could all too easily end up having the same effect as the Bush plan in practice — that is, it could create a permanent underclass of disenfranchised workers.

We need to do something about immigration, and soon. But I'd rather see Congress fail to agree on anything this year than have it rush into ill-considered legislation that betrays our moral and democratic principles.