How does immigration affect productivity? - Research Notes & News - Brief Article

EconSouth, Spring, 2002

The growing influx of immigrants into the United States has prompted concerns about potential negative effects on native workers, especially the less skilled. Such concerns have not been borne out by many studies of the effect of immigration on wages. However, the typical theoretical negative effect of immigration flows on wages may be offset by changes in other aspects of the economy, including output mix, productivity and capital.

In a recent article, Myriam Quispe-Agnoli and Madeline Zavodny examine the relationship between immigration and three factors -- output mix, labor productivity and capital -- in the skilled and unskilled sectors in the U.S. manufacturing sector at the state level. The authors develop a simple two-sector model of the effect of immigration on these three factors and then test the model's predictions using data from the 1982 and 1992 Census of Manufactures and other sources.

The results indicate that changes in labor supply induced by immigration caused labor productivity in both the low- and high-skilled sectors to increase more slowly in states that attracted a larger share of immigrants during the 1980s than in other states. This slower growth may result from the gradual assimilation process many immigrants undergo as they acquire language skills and familiarity with U.S. institutions, Quispe-Agnoli and Zavodny believe, and they call for further study of immigration's longer-term effects on productivity.

ECONOMIC REVIEW

FIRST QUARTER 2002