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More Cool Work By Hainmueller and Hiscox

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In "Educated Preferences: Explaining Attitudes Toward Immigration In Europe," Hainmueller and Hiscox confirm what I've been telling economists for years: Low-skilled workers are more opposed to immigration because they are less economically literate, not because they selfishly calculate that immigration is especially bad for their pocketbooks:

[P]eople with higher levels of education and occupational skills are more likely to favor immigration regardless of the skill attributes of the immigrants in question. Across Europe, higher education and higher skills mean more support for all types of immigrants. These relationships are almost identical among individuals in the labor force (i.e., those competing for jobs) and those not in the labor force.

As a professor, I work in one of the few labor markets that is almost totally open to foreign competition. How often do you think I've heard an American professor grumble that foreign Ph.D.s "Are taking our jobs!"? Try never.

P.S. For more on Hainmueller and Hiscox's work, see here.


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TRACKBACKS (2 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/473
The author at Economist's View in a related article titled Do Workers Oppose Immigration Because They Don't Understand Economics? writes:
    Bryan Caplan at EconLog says workers oppose immigration because they don't understand economics, not because of the effect on wages and income: EconLog: More Cool Work By Hainmueller and Hiscox, by Bryan Caplan: In Educated Preferences: Explaining Atti... [Tracked on March 16, 2006 3:07 PM]
The author at The Filter^ in a related article titled Three Strike of Good Research writes:
    In response to a new paper by Hainmueller and Hiscox, Bryan Caplan (at EconLog) provides us (click here) with three strikes of research: Intuition ObservationAs a professor [well educated], I work in one of the few labor markets that is [Tracked on March 16, 2006 6:25 PM]
COMMENTS (21 to date)
T.R. Elliott writes:

Oh, come on, what rock have you been living under? When a large number of intellectuals were suddenly able to move to the US from the Soviet Union and Eastern Europe, I heard a wealth of complaints from graduate students that good academic jobs were increasingly snapped up by the immigrants.

Zac writes:

I *gasp* agree with TR. This is a common complaint. Maybe not among currently tenured professors, but that's because they have jobs and don't fear losing them, why should they grumble? But among professors with less job security, or certainly graduate students (or prospective graduate students from American universities who will face stiff competition from foreign graduates), this is a common complaint.

Bill Newman writes:

I also basically agree with TR. It has been many years since I was in graduate school, so I can't remember the details very well, but I remember being annoyed at arguments for making sure those furriners went home after they were trained, and doubly annoyed when they seemed to be from substantially the same people who argued that the taxpayer should be supporting training generously because of economic benefits of having trained people. If anyone is interested and thinks there might be some grain of truth in my fuzzy memories, try the editorial sections of science journals -- maybe _Science_? not sure... -- ca. 1990-95.

Fazal Majid writes:

You have clearly not read IEEE-USA's rants about how foreign engineers (specially those on H1-B visas) are stealing American engineers' work.

T.R. Elliott writes:

One clarification in defense of Caplan's observations: it's quite possible that the eastern block had no economists snapping up positions in the US (or creating the perception of snapping up jobs). Let's face it: did the Eastern Block have even one good ecomomist? I don't know enough, but I'd doubt it.

The problems I observed were particularly true in physics and mathematics. I think the brains of those societies probably gravitated to these two fields because they could actually work without too much ideological interference--though even physicists had to put up with the ideological opposition to plate techtonics.

Now, I don't know what the real implications were regarding in particular mathematicians coming into the US. But I had a friend who was studying mathematics at harvard (graduate student). The Soviets had some great mathematicians. Probably some of the best in areas like control theory and the likes. And I remember hearing complaints from people--something like "oh, why even study, all the good jobs are being taken by immigrants."

I'm not complaining about the importing of brains. Just saying well educated people were making those complaints.

And there are plenty of well educate people complaining about the immigrant computer science and computer engineering students coming into the us from India in particular.

bartman writes:

As someone who went through the academic econ job search recently, I have to say that US born-and-raised entry-level Ph.D's had no problems in the job market. They're so rare that they all have multiple offers. We're talking about a cohort that has dwindled to a few hundred a year. Econ grad programs are full of foreigners because hardly any Americans go into that field anymore. It's too much like hard work for most Americans

John Thacker writes:

How often do you think I've heard an American professor grumble that foreign Ph.D.s "Are taking our jobs!"? Try never.

Adding to the echo chamber, of course currently tenured professors aren't going to complain about it. That's like pointing out that undergraduates currently at Harvard aren't that exercised about Harvard's use of affirmative action.

Now those who are currently graduate students or postdocs, especially if their job search was less successful, that's a different matter altogether. Now, in reality, NSF grants give US citizens a huge advantage, but you do occasionally hear grumbles from various sources.

When some Cornell graduate students wanted to form a graduate student union, they tried to affiliate with the UAW. Yes, the autoworkers. One effective counterargument, at least towards foreign students, was pointing out that this would mean joining a union that regularly uses union dues to oppose immigration, H1-B visas, and the like.

T.R. Elliott writes:

OK. Another point in Caplan's defense. His statement that people who are economically illiterate complain about immigrants taking their jobs could apply to the physicists and mathematicians who I remember complaining out east block immigrants.

Though with that said, I'm not a huge fan of this whole concept of economic literacy. I've interacted with a whole host of people: engineers, physicists, mathematicians, and economists, in the latter case BA/BS economists who then went to work for the business divisions of companies.

And I'm not sure this whole economic literacy idea makes sense in my experience. I think people are ideologically literate. They tend to buy into some line of thinking, and then often view the world from that perspective. Call it liberal/conservative, reactionary/progressive, whatever.

I pointed out here long ago about that study of economists at a conference who demonstrated poor understanding of economic basics when posed with real world questions. Others complained when I posted that study. But my overal point is that I'm just not buying that we have this enlightened group of economic higher beings who view the world through a clear lense.

OK. Enough defending Caplan's points in this thread. Doing so is giving me the heebie-jeebies.

Stormy writes:

This idiocy makes me chuckle.

I have a suggestion: Give the workers tenure. That will put them on a par with professors who know squat.

Steve Sailer writes:

Speaking of economic literacy, I always love how the pro-immigration people keep talking about there being "labor shortages" because there are "jobs Americans just won't do." How come economics professors aren't crusading to expose the economic illiteracy of those cliches?

Silas Barta writes:

Steve_Sailer:

Economics professors aren't crusading to refute those arguments because those arguments are (according to them) valid. Americans *do*, on the margin, prefer to do other things than pick fruit for $1/hour. Immigrants *do* want that job, and Americans do not. When Americans underbid them, they will be doing jobs immigrants don't want to do.

OH!!!! You mean Americans will take those jobs at higher wages. Okay, fine, but to be fair, garbagemen are doing a job "I would be perfectly happy to do" at $100/hour. Damn them for taking my job!

King writes:

As a professor, I work in one of the few labor markets that is almost totally open to foreign competition. How often do you think I've heard an American professor grumble that foreign Ph.D.s "Are taking our jobs!"? Try never.

Selection bias could be at work here. I mean, you'd have to know going into doing an economics Ph.D. that you're going to be competing against third world labor. If that idea bothered you, you'd probably go into industry or get an MBA - fields where foreign competition isn't likely as high as they require better English language skills.

J Klein writes:

The argument that poor, illiterate people act out of ignorance of its true economic interest, is generally wrong (and elitist). Even chimp gangs hate and kill "immigrants".

Steve Sailer writes:

"OH!!!! You mean Americans will take those jobs at higher wages."

That's exactly what I mean, but that's not what the President of the United States ever says. He just says, "jobs Americans won't do." So, where are the economists to explain to the public that the President is wrong and these aren't jobs Americans won't do, they're just jobs they won't do at the wages illegal immigrants will do them? The President has been lying to the public about this economics issue for five years. How many economists have come forward to point out he's distorting economics?

Silas Barta writes:

Steve_Sailer: Most every pronouncement everyone makes, not just politicians, involves lots of caveats and assumptions. These are generally understood by their audience, and they generally facilitate easier communication. It's true that the literal meaning of what the President says is false. But let's look at what the statement is actually understood to mean. Everyone is probably aware that at a high enough wage, you can get labor for anything. In that context, I think at least in the back of everyone's mind, they understand that there are more complex issues at play, and the immigrants are the only ones doing it *as efficiently*. No one is confused by the pronouncements. No one is captivated into thinking the President actually believes no American would ever pick fruit at any price. No economist needs to remind anyone of this.

Mark Seecof writes:

Talk about leaving out something important... Bryan Caplan wrote "I work in one of the few labor markets that is almost totally open to foreign competition." He omitted the background fact that entrance to the market for his labor is so constricted in other ways that foreign competition is of no consequence. Caplan seems satisfied with the wages he earns. If his professional guild were to relax entrance requirements for academic economists (instead of the opposite, see Tyler Cowen on whether Steve Levitt could get into econ grad school today), he might feel less smug. Indeed, in such a case many economists like Caplan would begin to resent foreign competition.

I find it curious that pro-immigration econo-cheerleaders somehow think the law of supply and demand does not apply in labor markets that immigrants enter. Let's see... minimum wages reduce demand for labor? Check. High marginal taxes reduce supply of labor? Check. Low-priced immigrant labor competes down wages in the market for low-skilled labor? No. Certainly not! Shut up! Only ignorant fools could think that competition influences the wages they command!

Anyway, Caplan reads the wrong meaning even into the passage he quoted. Here's part of it: "Across Europe, higher education and higher skills mean more support for all types of immigrants."

Well, sure! Europeans with higher education and skills have less to fear from immigrant labor competition (there's no doubt that most immigrants are less-educated and less-skilled), and more to gain from reduced wages in the service sector. Or to put that another way, a graduate of the École Polytechnique with a comfy "state enterprise" job would undoubtedly like to get a cheap gardener (or indirectly, a cheap busboy at his favorite bistro)--he doesn't fear that his wages would fall!

Mark Seecof writes:

One more thing. Suppose you read a report that public-transit commuters favor increased gasoline taxes more than automobile commuters. Under what set of assumptions would you conclude that survey shows automobile commuters are "economically illiterate," or misunderstand their own interests? Hmmm. You would pretty much have to start from the assumption that higher fuel taxes are always good for everybody (somehow). Why would you assume that?

Well, the Hainmueller and Hiscox results only show that lower-SES and higher-SES workers have different views of immigration. That will only prove the lower-SES workers are "less economically literate" if you assume (as Bryan Caplan seems to) that immigration is always good for every native worker.

That's no kind of assumption for a real economist to make. There's hardly any economic trend which boosts every interest. When I purchase other people's labor, I benefit (at least in the short run) from a reduction in their wages. When I sell my own labor, my interests are reversed.

With segmented labor markets, workers in one segment may gain from immigration at the same time workers in another segment lose.

Some strong assumptions about overall economic efficiency (or if you prefer, conclusions from available data--although in fact, available data are hardly conclusive) might persuade an economist that immigration was beneficial overall; that the total of gains exceeded the total of losses--but even if that were true, it wouldn't demonstrate that people opposed to immigration were economically illiterate. After all, economically-literate people may prefer their own interests to "overall social gain."

Even if you regard anti-immigration politics as rent-seeking (the way I regard hairdresser licensing), that's different than lacking in economic literacy.

Steve Sailer writes:

Surprise! The Law of Supply and Demand applies to immigration! Here's the abstract of a new NBER paper by economist George J. Borjas:

"Immigration in High-Skill Labor Markets: The Impact of Foreign Students on the Earnings of Doctorates"

"The rapid growth in the number of foreign students enrolled in American universities has transformed the higher education system, particularly at the graduate level. Many of these newly minted doctorates remain in the United States after receiving their doctoral degrees, so that the foreign student influx can have a significant impact in the labor market for high-skill workers. Using data drawn from the Survey of Earned Doctorates and the Survey of Doctoral Recipients, the study shows that a foreign student influx into a particular doctoral field at a particular time had a significant and adverse effect on the earnings of doctorates in that field who graduated at roughly the same time. A 10 percent immigration-induced increase in the supply of doctorates lowers the wage of competing workers by about 3 to 4 percent. About half of this adverse wage effect can be attributed to the increased prevalence of low-pay postdoctoral appointments in fields that have softer labor market conditions because of large-scale immigration."

It's amazing how few economists will admit that in public. The really funny thing is that Borjas has ridden this one basic Econ 101 idea all the way to an endowed chair at the Kennedy School at Harvard, in part because he has so little competition from other economists, the vast majority of whom want to pretend that, for mysterious reasons, the law of Supply and Demand doesn't apply to anything having to do with immigration. This is a fascinating example of market failure, and some economist should do a paper on why most economists are so reluctant to cash in on this massively important topic of immigration.

jimbo writes:

Everyone is probably aware that at a high enough wage, you can get labor for anything. In that context, I think at least in the back of everyone's mind, they understand that there are more complex issues at play, and the immigrants are the only ones doing it *as efficiently*.

And by "efficiently", you mean cheaply, as in "I, a middle class paper-pusher who is not subject to foreign competition, can have a higher standard of living by bringing in boatloads of foriegners to bid down the wages of all those dumb jocks who used to beat me up in high school, thus making it possible to get my yardwork done for a quarter of what I otherwise would pay for it. So, it's win-win: I have beautiful rosebushes, and I can lord it over those bastards at my reunion."

Phd writes:

Sailer is both right and wrong.

No educated person should doubt that massive inflow of unskilled Hispanics into low wage service jobs presses down American wages. The reason uneducated low-IQ Americans got reasonable wages in the first place was that the non-tradable sector was cut of from downward pressure from international markets. With people moving here this is no longer the case.

In fact, from the perspective of the unskilled American worker, China is not a threat, only Mexico is. Why? The chines pressure on wages works though product markets. But those industries (textiles, toys, simple manufactures) are already gone in the US. You are in a corner solution, to use economic concepts, China competes with Malaysia not Ohio workers.

It is the nontradable services sector that determines low skilled American wages.

Now I know and Caplan knows that the damage to American poor workers from lower wages is less that the benefit to the aggregate economy, as long as the Hispanics work, don’t vote and do not engage in too much crime (let’s assume all of the above for now, or that costs are second order).

Does this prove that the lowskilled are wrong to complain? Bigoted? Economically uneducated?

No. First of all there is no mechanism that magically transfers the gains to them. Government? I doubt it, educated economist also know that government is inherently inefficient and on average does more damage than help.

Equally importantly, most of the economical gains from exchange are *likely to be captured by the immigrants*. Middle class Americans are likely to see gains from lower prices on certain goods, but most of it seems to go to the immigrants. Becker has proposed the immigrants pay a lump sum fee of say 50.000 dollars so as to transfer the welfare gains partially to Americans. A great plain, but hardly politically possible.

Is any of this automatically argument against immigration? Of course not, it depends on value judgments. If you weight the welfare of Mexicans in the equation or go from libertarian principle you might still favor immigration. It is however dishonest not to explain these simple and largely irrefutable economical concepts to people: Immigration hurts low skilled Americans, even if it helps the aggregate economy.


There are other costs to immigration:

* Government distortion. Friedman has explained that immigration and the welfare state cannot work well together. Despite all the hype recent low skilled immigrants from Latin America use welfare services unproportionally. We economists cannot make analysis of immigration while pretending this is an undistorted world.

* Crime. Hispanic immigration increases crime (Hispanic crime per capita is in the range of 3-400% as high as whites). The welfare costs of this are hardly trivial. People are not irrational even if they keep millions of completely honest Mexicans out in order not to raise crime, since it is impossible to know who the criminals are.

• Irrationality distortion. Using Caplans own (excellent) framework, one of the largest costs to a society is the political irrationality of citizens. An excellent example is Hugo Chavez and his brand of populism, that the rationally irrational voters have endorsed, causing massive problems for themselves and for their neighbors.

The US is (together with a few other Anglo-Saxon countries) the only part on the planet with a strong pro-market tradition, mitigating all the biases that cause people to vote for populism and leftism. That is why it is the richest nation on earth, it’s greatest natural resource is the political and ideological tradition.

Is it unreasonable not to want to increase the share of politically ignorant voters, given the costs?


Now let me tell you how Sailer is wrong.

First of all as people have explained Bush is not literally correct, but what he says contains a large dose of truth. Immigrants press down wages and make certain jobs profitable that otherwise would not exist. To give a simple example if the intensity of service in restaurants goes up due to downward pressure of wages it is not false to claim “Americans would not do these jobs”. The assumption is not that there would not be *any* busboys, but due to higher wages (costs) there would be much fewer.

Of course we all know what the political content of his words are “don’t fear, it is not YOUR wages they will press downward”.

More importantly, it is false to claim immigration in general pressed down wages. This is no more true than population growth, as the labour force grows capital will grow proportionally, and in the end wages will be the same. (If however immigration is particularly skewed to one type of worker, in this case low skilled, it can change the composition of the workforce, and change relative wages.)

With this in mind in many cases peoples knee jerk reaction ‘they are taking our jobs’ *is* irrational.
Lastly Sailer has not even attempted to give a quantitative estimate of the effects of immigration on low skilled wages. For all the hysteria low income Americans have done well the last 20 years (especially if you measure the income of actual people, not changing average groups). They have for example a massive positive shock to income from trade with low cost asian nations, that lowered the costs of consumers products. The poor people I visited in Los Angeles had big screen TV:s, something many European academics I know cannot afford.

This example with the Phd students is illustrative, as the effect is small (especially comparing income on the whole life cycle of the candidate) and hardly something that should cause general outrage. After all, in a market economy people will face negative and positive shocks to income, in this example a lot of American institutions could use cheap foreign labour to lowers costs.


PS.

”did the Eastern Block have even one good ecomomist? I don't know enough, but I'd doubt it.”

Try Janos Kornai, the Hungarian economist who has written the ultimate book about the working of the socialist planned economy. He did steal an American job, as a professor at Harvard, thereby adding greatly to this country.

Eric J Rhoades writes:

It is importnat to remember that academia generally functions in one of the most artificial of work environments. As was brought up here earlier concerning engineers there are professions requiring a high degree of education, and so one would assume a relatively enlighted state as concerns economics, that are not so keen on immigration.

This state of affairs for the academic community is probably due to change within a few years also as the state of education in developing economies improves. Already there has been a trend of people going to India to have medical procedures done to avoid waiting times or save money. This increase in professional classes in developing economies is ceratinly going to lead to the institution of domestic sources of higher learning. These institutions will probably not only be importing students, but also exporting professors.

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