Transcript Do Mexican Workers Compete With or Complement US Workers?

Do Mexican Workers
Compete With or
Complement US Workers?
Raymond Robertson
Professor of Economics
Macalester College
U.S. and Mexican Labor:
A Contentious Relationship
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Worries about capital: The “Giant Sucking
Sound” and concerns about foreign investment
Worries about Immigration
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American Building Management Tuesday this week
Changing Demographic Profile
Anti-immigrant sentiment during recessions
(unemployment up to 10.2%)
Thinking about
Unified North America
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Are we one labor market or separate labor
markets?
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Strong evidence suggesting that U.S. and Mexican
labor markets are integrated
Integration is a result of capital flows, trade, and
migration
Are U.S. workers competing with Mexican
workers?
Production Integration
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Fragmentation of production: splitting up
stages of production process and moving
stages to different countries
Most skill-intensive products stay here
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Higher wages
Higher value-added
Higher productivity
As a result, U.S. and Mexican workers are
complements
Immigration
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Education and age of immigrants are generally
different than the “average” U.S. demographic
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Younger
Less education
Neoclassical trade theory (the Rybczynski theorem
from the Heckscher-Ohlin framework) suggests that
immigration has no effect on wages
Result: immigrants are complements, not substitutes,
for U.S. workers
Immigrants as complements
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Trade theory predicts no effect of immigration
on wages
Most studies find small-to-zero effects on wages
An increase in employment in a US state of 1%
due to immigrants produced an increase in
income per worker of 0.5% in that state. (Peri 09)
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Increased productivity from specialization
Increased technology directed at less-skilled workers
Conclusion
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Wage effects for natives may be positive due
to the complementarity of immigrants and
natives
Mexican and U.S. production workers are
complements across borders
North American labor markets are integrated
and could (should?) be thought of as one
References
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Peri, Giovanni “The Effect of Immigration on Productivity: Evidence from US States” UC Davis working
paper, Sept 25, 2009
Peri, Giovanni and Ciccone, Antonio"Long-Run Substitutability between More and Less Educated
Workers: Evidence from U.S. States 1950-1990" Review of Economics and Statistics, Vol. 87, Issue 4,
pages 652-663 - November 2005.
Robertson, Raymond (2009) “Estimating International Labor Complementarity: Some Preliminary
Results”, in Soloaga, Isidro (ed) Sobre México: Temas actuales de política económica Universidad Popular
Autónoma del Estado de Puebla (UPAEP), Puebla, Mexico, 53-70.
Robertson, Raymond (2007) “Trade and Wages: Two Puzzles from Mexico”, World Economy,
September,30(9), pp. 1347-1489.
Robertson, Raymond (2005) “Defining North American Economic Integration” In: K.M. Huff, K.D.
Meilke, R.D. Knutson, R.F. Ochoa, J. Rude, and A. Yunez-Naude (editors). North American Agrifood
Market Integration: Situation and Perspectives. Proceedings of the First Annual North American Agrifood
Market Integration Workshop. January. Friesen Printers. Winnipeg, Manitoba.
Hanson, Gordon H., Robertson, Raymond, and Spilimbergo, Antonio (2002) “Does Border Enforcement
Protect U.S. Workers from Illegal Immigration?” Review of Economics and Statistics , 84(1): 73-92.