Some studies of immigration have found little effect on the wages of native-born

Question

Some studies of immigration have found little effect on the wages of native-born workers. Which of the following is a possible reason that we discussed in class?

immigrants constitute both an increase in the supply of and demand for labor, so the net effect on wages is tiny.

there is little substitutability or complementarity between immigrant and native-born workers.

the level of migration has been relatively gradual, and many other things have affected the labor market at the same time, so measurement of an effect is very difficult.

all of the above.

immigrants constitute both an increase in the supply of and demand for labor, so the net effect on wages is tiny.

there is little substitutability or complementarity between immigrant and native-born workers.

the level of migration has been relatively gradual, and many other things have affected the labor market at the same time, so measurement of an effect is very difficult.

all of the above.

Explanation / Answer

The third option is the correct one.

The fact that immigration increases the demand for labour is not correct. The demand for labour is a function of marginal product of labour and existing forms are not aware about the marginal product of immigrants. Secondly there is a strong substitutability between immigrants and native workers. Most of the firms are competitive and they hire the efficient workers whether it is a native worker or whether it is a immigrant. The fact is immigration is always slow and we cannot really analyse the effect of immigration on the labour force and its effect on the market wage rate.

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