Its an 1 45. Good morning everybody. Welcome to the cato institute. Im an immigration policy analyst here. If anything, this 2016 election will turn more on the candidates respected immigration positions than on any other. Donald trump, the republican nominee won his primary, primarily based on this topic for his support to reducing Legal Immigration, building a wall and deporting unlawful immigrants. On wednesday night, he delivered a major address on this topic in phoenix, very basically double downed on his positions, squashing the rumors that he was softening on this issue. A topic of immigration has produced the loudest and most disagreements of this election season so far. Polling show that immigration is not a top issue this year in the minds of voters, the electorate certainly hasnt been then interested in a topic in about a century. Unfortunately, though, that popular interest is combined with a healthy dose of misperception of both the public and policy makers who attempt to remedy that misperception and influence the debate. Cato has put together this conference and invited some of the best researchers and top minds and academics around the country who work on this topic to present their findings to go over forming this debate. Well publish an edited valium of contributions written by our distinguished panelists. Todays conference will consist of five panels. The first panel this one sitting will talk about how they effect wages. The second will discuss unlawful immigration. The third will discuss how the often overlooked topic of how immigrants effect the real estate market, particular importance to americans since the housing crisis and great recession, the fourth will examine and the last panel will delve into the most recent Frontier Research on how immigrants Effect National institutions and destination countries. Each of these topics individually is worthy of their own conference by themselves, but one panel on each will have to do this time. Without any further adieu, allow me to welcome david, who will be moderating our first panel on immigration into labor market. David. Good morning. Primarily financed by facebook cofounder and his wife who serves as our president. The subject of todays conference could hardly received more attention in the president ial campaign, the subject of this panel could hardly have received less attention, which is what is the evidence actually say about the impacts of immigration on the receiving economy. Up until a few years ago i was a senior fellow at the center for Global Development and my former colleague, Michael Clemens who i believe will be speaking this afternoon. That openness to immigration is one of the most powerful ways to reduce poverty in the world. And also the lack of openness represents one of the greatest market failures in the global economy. That argument is part of the reason that i am here, part of the reason that my organization is interested in this issue as a grant maker before as an employee i was a consultant to them and i did an evidence review on exactly this question. I am pleased to present to you some of the leading producers of research in this area as one of the leading consumers of it. Without further adieu, i would like to introduce. Profes sore of economics and uc davis. In journals and books about the questions well hear about and received grants from the world bank and the National Science foundation and so on. He also has an internet presence, so if you want to read more about him, you can. Thank you for inviting me. This is a great conference. And im going to jump right into my topic of only 20 minutes. I tried to squeeze in the information here in 20 minutes. I hope you can read more or less, the question im going to try to address thats been done in the last 15 years. Can we consider immigration is one as one of the cause especially for a low educated skilled worker that has happened in the last 35 years. I will show you how one reason we have too many immigrants that are taking jobs so the simple supply store is they flood our labor market and push down the wage. I will give you a couple of hints then im going to ask, okay, if we dont find much at the National Level. It can it be something specifically for market which has been inundated by that. One question will come by because the evidence seems to me to have pile up against this idea that many in reality there are some channel and some good reason to think in some cases immigration can actually boost wages and i will go through this. So i think there are two facts that people put together and they say immigration hurt wages. And there are two simple fact. In the last im going to take the period of 198 02014 this is when the wage between low educated low skilled and high skilled opened up. Im going to show a figure about this. 34 years have been a period in which immigration has increased. College educated have done much better. This is the growth rate of wages between 198 0 and 2014 dividing the labor market for people who do not enter high school. And more than a bachelor. And this is the percentage change of their wages so their weekly wages over this 34 years and you see that one college and college kated have done well, their wages have grown between 20 and 30 . Almost 1 per year in real terms. The high school very done very badly, but the High School Diploma not well, their wages have gone down. If you. Noncollege have done quite poorly. Could it be that migration is responsible for these diver gents. Now, just stating this fact and stating if you are just willing to do the next step, there are some other changes that have changed, of the labor market, displayed a role in changing the demand for International Trade of shoring that unionization minimum wage have gone down. Theres no clear implication. Its supply store that imgrantds that came in that low then there should be, a very high supply then the inflow of lesson must be much much larger thans educated. The truth looking at the picture of 34 years and comparing the immigrants have been much more it has increased the supply of very highly educated much more. That it goes exactly the opposite way for what you will need to generate depression of this the High School Drop out has been a little larger than the high school inflow. They have used a lot, a simple model of supply and demand. Its a quiet broadly used model in the field. I have criticized this model because consider Everything Else fixed productivity fixed and well talk more about this. Let me just show you how even taking the model that people who assume depressive effect of immigration can use, how far do we get in explaining this changes and wages through immigration. So im going to show you, taking a simple demand supply model and increasing the supply of immigrants, sorry and leading Everything Else fixed, how far do we get in explaining the way to change. And im going to focus on, can we explain the bad performance of nonCollege Educated through this inflow of immigrant and among the College Educated, can we explain the particularly bad performance of least educated of all which are the group of High School Drop outs. This didnt come out the way it was written thats way i gave the pdf and the power point. Let me just point out here, that the wage of group, to college and noncollege, get to the green no point on it. The relative wage of college and noncollege worker. And on the relative supply. If you increase and change then youll depress the and strongly depress the wage of the group. Elasticity of supply. We can actually take these, these simple formula. And see if the change of college that is being generated by immigration how much would it predict and depression of the noncollege wage relative to the college. We can do the same exercise, if the supply generated by the drop out versus high school, we can and how much generate this depression of our wage of High School Drop out. This is important barometer here that we needed to estimate in order to get to the exercise which is, as i said, elasticity. In this exercise im actually going to take the most the parameter that people who are in favor of finding negative impact on immigration are going to argue is the correct one. I am going to buy us this model as much myself as you saw in favor of finding a negative effect of immigration. In this position, the elasticity so that equation for college and no college has been estimated many times and theres a certain consensus, is it between 1. 5 and 2 or 1. 5 and 3 or are we going to take 5. 75. The estimate of how substitutability or how different with high school and people who are drop outs are more contentious, theyre very similar. Others say theyre dissimilar. Im going to take, in these exercise, the most negative potential elasticity or the smallest, the most negative scenario with the smallest elasticity saying with People High School degree are not very substitutable and they have the same. There is different as college and college, think of this as a measure of how different they are, how theyre relative supply effect their relative wage. If i do this, again, there are huge. I want to point ut. If i do this, i can show you for each decade, the main conservative of 2014 which has the latest data, by how much this immigrant increase the group and how much in percentage point it increased and by how much they changed their relative supply which is directly effecting it. The first problem here are the effect that i attribute to immigration with this relative simple model. Remember, the way of decreased inequality nonCollege Educated but starting from 1980 College Educated started doing much better and high School Started falling behind. This is the relative change for College Educated. Minus 13. 7 mean in the 80s the college increased increased their relative wage by 13. 7 and in the 90s by 3. 7 and 2006. 6. The College Going to do better. However, if you look at what part of this number can be explained by the immigration part, you see, this is the part that can be explained by this model. In fact in two of these decade of the three decades, immigration is the opposite way. Immigration by itself actually reduced because there are so many College Educated as percentage of the group that come in. And only in the 90s does a little bit. This is the college noncollege group. If you take the High School Drop out versus high school graduate, again, this is the percentage of drop outs. Theyre due toim grags. This will be the wage and, again, you see that, again, in two of the three decades between the 80s and 2000, immigration either has the wrong sign so it wouldnt explain the increase in drop out r you would explain variable, only in the 199 0s explain some of them. And either very recent is no explanatory. So this exercise done and i think summarized a little bit and going to say, even if you take the most sort of negative estimates here of this effect, for the college noncollege, you simply dont have the number to generate the negative effect, because a lot of immigration was college intense. So it worked the other way to reduce this. So for drop out high school graduates, you have some action, but only in the 90s. The 90s look different. Its to say that really where a lot of this researchers pointed out. Theyve been shape that are effected by the 90s which are different from the 80s and 2000. This is a way at looking from the 90s are different from the 2000 and the 80s. This is the growth of percentage of the group connected. This is the growth in each step. This is what happens in the 2000, 2010. This is what happened in the 2000. This is what happened in 1970. If you see an upwards curve, it means the change of immigration is the nonskilled group is smaller. You see every decade. This is almost look meaning that immigration increased these High School Group relatively more or almost the same. The 90s, only in the 90s low skilled was increasing this group relative to the other, but in the other periods he was not very much. So, again, if were sitting in 2000 and if this is the election of the george bush versus al gore, that may be in mind this second in which immigration getting there. Were seeking in 2015, which immigration is actually going back to be quite skill intensive and gone back to be very, actually, if anything helping a little bit. This is how the wages get in that period. If you think of immigration hurting the hurting the group that where they go in the largest part, the 990s look a little bit like that, in terms of that. But in all the other period, wage work increased in spite of the fact that immigrant ahead and upwards in the skill spectrum increase, so immigrant by themselves should have had the lesson you gave relative supply. Okay. I think at the National Level i think the numbers are explain. What about at the local level. Its certainly true that immigrants are distributely distributing among different regions. It is a long tradition that local immigration flaws and they have not found much of in effect and its on the wage at the local level. Thats why people moved at the National Level they said, yeah, local region are not close. The economy people move. Now, there is a lot of research on this. Let me summarize from the recent paper that we need to wrap it up. If immigration has local effect and important insignificant local effect in the pricing wages and the very first, you should find a negative correlation between places of large immigration and wages of low skilled or wages of general. Theyre going to play and they depress the wage in that place. You have to establish this correlation is caused, a little problematic. But even on a surface, on the surface, the correlation is interesting. If theres no correlation, it means that at least that there are other forces that offset this effective immigrant when they in a place or maybe immigrant flowing different places. This is a scattered of the change in the wage of the worker, its a percentage of the labor force. For all the u. S. Labor market, which are 722 commuting zones, broken down by decade in 1970, 2010. For more immigration, you will observe the negatives, here what youre observing is a positive correlation. These are the labor markets that were using. If you do the same for the changing and deployment rather than in wages of native worker. This will be the change in immigrant you get, again, if it is crowding out, if one more immigrant or percentage less later then you will serve, so in terms of correlation, you have zero correlation with employment and a little positive correlation with average wages. And even if you break wages into wage less educated nd you look at this, immigration, you will then see in much positive relationship and this is a correlation, but you find the relatively positive correlation with the wage of the it looks like, to some rising story, labor market where a lot of immigrant went. Wages of natives, for us andless the same that they grew even a is there a cause correlation where you start a lot of regression controlling and, again, just want to give you an idea, even if you that im pointing is that correlation. The correlation of lowskilled wages relative on the immigration is positive but sometimes not significant. Well do it at the local level or if you look at it state. If you try to address this point given constraint of time, economist to try to isolate the part of immigration flows just by preferences of immigrant based on that they prefer going whether other previous went and not attracted by jobs, even if you isolate that socalled supply push and you reestimated on average wage on wage skill, you find essentially a small not significant on the wage, very noisy on average a little bit positive effect on the wage of College Educated. This is that. So in a sense, this evidence altogether seems to say that just relative number are not there to create an eflkt and at the local level, the evidence that has been accumulated is that there is little effect, particularly little on the wages of low educated and may be a little bit positive effect. But let me spend the last 1 s 3 minutes saying can there be some challenge. The researchers have studied a lot of mechanism that makes plausible that effect positively of making it. The first is that even when you look at similar type of skills theyre not the same type, they take some occupation and jobs that are moving out. They specialize in more outdoor at the low end of the spectrum that immigrant, the native are meeting. So they have to say, they have a component of helping the productivity of native worker. This should be a channel will boost the wages. First, the efforts, sometimes just the type of technique and technology they use when there are a lot of imgrnts which do modeling job very well, they tend not to use what we call more and they tend to use the technology that uses more intensively and make them increase the productivity. And attracted. And where there are immigrant. Finally the and to generate potentially higher variety of food and services which are supplied and this could also be a channel of increased in productivity. High skill immigration is the large in percent ang term a part of immigration. Its crucial to theyre crucial to enhancing as some work on this. And i will add a couple of words on this particularly science technology, engineering the worker which by now seems to boost productivity. In fact, if you look at the distribution of immigrant, theres a share of the pob la population, you go from people with some college all the way with the stamina. You see that immigrants are really concentrated in the very high end of the education spectrum. About 30 with a degree in the u. S. Are immigrant. And you can calculate the effect of this, assuming that there is a positive productive external in this group, this group adopt better technology, this group increases increases the, you know, innovation. And so here just youre just referring to a paper, we thought increasing due to the increased cap of the visa that was passed in the 90s and withdrawn in the 2000, maybe its local increase due to that by about 5 for College Educat