I find the whole discourse around this to be very similar to the housing supply price question. Economists will study if random housing shocks affect price. Like… of course it does. Can building more housing induce demand? Absolutely. But this is a local property.
Imagine you have a lonely house out in the woods in the middle of nowhere. I try to sell it to you for 1 mil and you laugh at me and say no. Now imagine I told you that house was in the middle of a city the density and size of New York. All the sudden this looks like a steal.
People like density and total city size. Of course we all have unique density wtp curves, but probably almost all of us can agree that we want to live near like 50 people.
In cities that have a fixed area, adding supply increases density (and always increases total city size). So we don’t get to travel in the 2-d land of supply and price but rather are forced along a specific curve on the surface of this multi dimensional surface. I think the way these economic studies are structured, they inherently miss the forrest for the trees. Each cities multi dimensional surface probably looks sufficiently different and they are on a different enough part of it that I don’t know how much we can really glean (and this isn’t even getting into the imperfections of the studies themselves).
Coming back to the boat lift, we need to know a few things.
If you were to look at the graph of all human output in x city, are we on average in economics or diseconomies of scale?
Which industries/types of labor are in economies or diseconomies of scale?
What is the distribution of the industries/types of labor of the migrants?
How does global demand shift by moving a person from their old city to their new city?
How does the demand for the basket of industries in x city change by moving someone from their old city to their new one? Which industries lose demand? Which gain demand?
What is the labor market share of the companies in the city (monopsonies gonna monopsony) ?
etc.
My point being the surface that describes Miami might be quite different than the surface that describes Dayton, Tennessee. Not only that but I don’t have a strong reason to believe that taking a local chunk of the surface describing wages in Miami would be highly representative of the entire surface, at least to the extent that a 10% increase or decrease in wages locally would be construed as “bumpy”. And the vector we append to our current location on the surface is quite different from one migration event to the next.
This is all one long drawn out way to say that these studies are underpowered, and I don’t update much on them. I say this as someone who is politically very pro immigration. The Mariel boat lift is a fascinating historical event though.
“. But most likely, immigrants do not drive down the wages of native workers.”
This is a broad statement.
Imagine a city that just farms tulips, but does not itself consume tulips. No other output is produced. All consumption goods are shipped in from Amazon. Imagine constant returns to scale of tulip production and at least some elasticity for tulip demand. It’s inevitable tulip farmer wages will go down if we airdrop an additional tulip farmer.
In a vague long term sense I’m inclined to agree. However it’s not inevitable, especially locally and in the short run. If tulip farming is still in expectation the best wages the migrant will make what incentive do they have to produce something else?
I find the whole discourse around this to be very similar to the housing supply price question. Economists will study if random housing shocks affect price. Like… of course it does. Can building more housing induce demand? Absolutely. But this is a local property.
Imagine you have a lonely house out in the woods in the middle of nowhere. I try to sell it to you for 1 mil and you laugh at me and say no. Now imagine I told you that house was in the middle of a city the density and size of New York. All the sudden this looks like a steal.
People like density and total city size. Of course we all have unique density wtp curves, but probably almost all of us can agree that we want to live near like 50 people.
In cities that have a fixed area, adding supply increases density (and always increases total city size). So we don’t get to travel in the 2-d land of supply and price but rather are forced along a specific curve on the surface of this multi dimensional surface. I think the way these economic studies are structured, they inherently miss the forrest for the trees. Each cities multi dimensional surface probably looks sufficiently different and they are on a different enough part of it that I don’t know how much we can really glean (and this isn’t even getting into the imperfections of the studies themselves).
Coming back to the boat lift, we need to know a few things.
If you were to look at the graph of all human output in x city, are we on average in economics or diseconomies of scale?
Which industries/types of labor are in economies or diseconomies of scale?
What is the distribution of the industries/types of labor of the migrants?
How does global demand shift by moving a person from their old city to their new city?
How does the demand for the basket of industries in x city change by moving someone from their old city to their new one? Which industries lose demand? Which gain demand?
What is the labor market share of the companies in the city (monopsonies gonna monopsony) ?
etc.
My point being the surface that describes Miami might be quite different than the surface that describes Dayton, Tennessee. Not only that but I don’t have a strong reason to believe that taking a local chunk of the surface describing wages in Miami would be highly representative of the entire surface, at least to the extent that a 10% increase or decrease in wages locally would be construed as “bumpy”. And the vector we append to our current location on the surface is quite different from one migration event to the next.
This is all one long drawn out way to say that these studies are underpowered, and I don’t update much on them. I say this as someone who is politically very pro immigration. The Mariel boat lift is a fascinating historical event though.
“. But most likely, immigrants do not drive down the wages of native workers.”
This is a broad statement.
Imagine a city that just farms tulips, but does not itself consume tulips. No other output is produced. All consumption goods are shipped in from Amazon. Imagine constant returns to scale of tulip production and at least some elasticity for tulip demand. It’s inevitable tulip farmer wages will go down if we airdrop an additional tulip farmer.
Maybe what is inevitable is the additional person will start producing something else.
In a vague long term sense I’m inclined to agree. However it’s not inevitable, especially locally and in the short run. If tulip farming is still in expectation the best wages the migrant will make what incentive do they have to produce something else?