Network News

X My Profile
View More Activity

Study: Immigration helps, offshoring doesn't hurt

Immigration, Offshoring and American Jobs,” by Gianmarco I.P. Ottaviano, Giovanni Peri and Greg C. Wright:

How many "American jobs" are taken away from US-born workers due to immigration and offshoring? Or is it possible, instead, that immigration and offshoring, by promoting cost-savings and enhanced efficiency in firms, spur the creation of native jobs? ... The model predicts that while cheaper offshoring reduces the share of natives among less skilled workers, cheaper immigration does not, but rather reduces the share of offshored jobs instead. Moreover, since both phenomena have a positive "cost-savings" effect they may leave unaffected, or even increase, total native employment of less skilled workers. Our model also predicts that offshoring will push natives toward jobs that are more intensive in communication-interactive skills and away from those that are manual and routine intensive.

We test the predictions of the model on data for 58 US manufacturing industries over the period 2000-2007 and find evidence in favor of a positive productivity effect such that immigration has a positive net effect on native employment while offshoring has no effect on it. We also find some evidence that offshoring has pushed natives toward more communication-intensive tasks while it has pushed immigrants away from them

.

By Ezra Klein  | October 12, 2010; 3:51 PM ET
 
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Rattner: 'This is how Congress keeps their foot on the neck of the executive branch'
Next: How much can we blame on state pensions?

Comments

Have you lost your mind?

Posted by: par4 | October 12, 2010 4:26 PM | Report abuse

Christ, if you can't do more than link to abstracts then don't. Abstracts in working papers are sales pitches to journal editors, nothing more.

Posted by: endaround | October 12, 2010 4:44 PM | Report abuse

I work in IT and my competition are the offshore companies that don't have the overhead (meaning they don't have to worry about paying for the US lifestyle) that we do. They can charge 1/3 of what I do. It doesn't take a PHD in economics to understand that it drives down what I can charge.

What world do these guys live in, and who do they shill for?

Posted by: msollot | October 12, 2010 4:48 PM | Report abuse

The "pauper labor fallacy" this relies on is only a fallacy as long as there are other sectors to which the displaced workers can move. Technological advances can only make industries more offshorable, never less. When the last industry goes offshore, then what?

The only fix I can see is for the USA's standard of living to equalize to the world average. Unfortunately that's currently 1/4 of the USA's current standard of living. (GDP per capita...)

A "next big thing" can't save us; such a thing will just happen in China (if it involves manufacturing) or India (if it involves R&D).

Posted by: mutterc | October 12, 2010 4:54 PM | Report abuse

They looked at manufacturing for this survey. They apparently didn't look at jobs that are typically considered overhead, such as financial, customer service and IT programming jobs.

Those jobs, which can affect workers that are not "less skilled" do not require shipping like manufacturing jobs do, are the ones that are disappearing due to offshoring.

Posted by: gilmanc | October 12, 2010 5:44 PM | Report abuse

I didn't look too deeply into the paper since I don't have the time to go through all their math, but they assume a division of labor that forces the high quality labor input to be supplied domestically cutting off immigration from those jobs in the model. Now I have no idea how much flows from that because like I said I don't have time to work the model but such an assumption forces certain results.

Posted by: endaround | October 12, 2010 5:48 PM | Report abuse

Giovanni Peri is super-smart and WAY CUTE! Viva Italia! We should encourage high-skill immigrants, especially when they look like Giovanni Peri!

Posted by: moiraeve1 | October 12, 2010 6:06 PM | Report abuse

And the rest of you know-nothings who haven't bothered to read the data or just let your built-in biases about immigration kick into overdrive--readers, consider the source.

Posted by: moiraeve1 | October 12, 2010 6:10 PM | Report abuse

Insane.

Accepting the data without reservation is the epitome of stupidity.

Posted by: JohnDebba | October 12, 2010 8:40 PM | Report abuse

No one less than James P. Smith, who holds the Distinguished Chair in Labor Markets and Demographic Studies at the RAND Corporation, agrees with this study. See also:
http://www.nap.edu/openbook.php?record_id=5779&page=135

See also: James P. Smith and Barry Edmonston (eds.) The Immigration Debate: Studies on the Economic, Demographic and Fiscal Effects of Immigration (http://tinyurl.com/2fkgraf)

Posted by: moiraeve1 | October 12, 2010 8:53 PM | Report abuse

"offshoring will push natives toward jobs that are more intensive in communication-interactive skills and away from those that are manual and routine intensive. "

So a truck driver will be pushed towards working as a customer service rep? Not going to happen!

Posted by: magnumgrp1 | October 13, 2010 6:05 AM | Report abuse

Can someone with access to the full text post what assumptions they're making in the full paper? To reach this result they have to be finding that the price lowering effects of immigration and off shoring will create more jobs than are lost, but I'd like to see the exact mechanism(s) they're proposing before I buy that.

Posted by: DPO- | October 13, 2010 6:18 AM | Report abuse

How much is the Democrat Party paying you to write this stuff, Ezra? They can always count on you to keep pushing their crazy agenda. HACK!

Posted by: lisaaitken | October 13, 2010 7:55 AM | Report abuse

If I understand this correctly, the authors are saying that by paying immigrants less, companies will be paying natives more for higher-skill jobs? Is this happening in reality, or only in the model they have used (“the model predicts”), albeit with real data? In other words, it could happen theoretically, but for some reason isn’t happening?

Also, I know enough in my own work with scientists that the phrases “find evidence in favor” and “find some evidence” do not necessarily mean that they is no evidence, even in their own data, against their own conclusions. But again, it seems the authors are using only a model to test data, and are not evaluating the data sets themselves to come to their conclusions (but I haven’t read the actual article—has anyone here?).

Posted by: JH87 | October 13, 2010 9:47 AM | Report abuse

As always, the test of a theory is its ability to explain reality. The reality is that more Americans are unemployed now than at any time in several decades. The reality is that wages and household incomes have been stagnant for several years. The reality is (as Steve Pearlstein points out today) American factory workers are having to accept a decrease in wages (and what industry is enjoying a substantial increase in wages? I'm sure millions of unemployed Americans would love to know.)

Posted by: Ali4 | October 13, 2010 12:05 PM | Report abuse

By the way, if, as the authors suggest, the employment of unskilled, uneducated workers is so desirable in creating jobs and pushing native workers into more communications-intensive industries, then wouldn't we expect to see much the same effect in the countries many of these workers come from, such as MEXICO? Why is it that cheap "immigrant" labor has the effect they report HERE, but is NOT beneficial to the countries the workers come from?

Posted by: Ali4 | October 13, 2010 12:28 PM | Report abuse

This is a load of what the farmer puts on his flowers. The erroneous assumptions that pervade this prattle are too numerous to catalog and too obvious to need it.

I can think of three jobs that should be lost: those of the writers of this piece. They can be outsourced to Bedlam.

Posted by: cdmomega | October 15, 2010 2:22 AM | Report abuse

This is a load of what the farmer puts on his flowers. The erroneous assumptions that pervade this prattle are too numerous to catalog and too obvious to need it.

I can think of three jobs that should be lost: those of the writers of this piece. They can be outsourced to Bedlam.

Posted by: cdmomega | October 15, 2010 2:22 AM | Report abuse

This is a load of what the farmer puts on his flowers. The erroneous assumptions that pervade this prattle are too numerous to catalog and too obvious to need it.

I can think of three jobs that should be lost: those of the writers of this piece. They can be outsourced to Bedlam.

Posted by: cdmomega | October 15, 2010 2:24 AM | Report abuse

And won't there be a need for increased adult education and worker training? Those new skills won't be acquired for nothing. Someone will have to pick up the tab and the thing about being unemployed? Lost income. So, does the government pay? Because there has been little evidence of the private sector giving displaced workers anything more than pink slips.

Posted by: cdmomega | October 15, 2010 3:50 AM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company