7
raises the output of such goods more rapidly than it raises aggregate demand for them), it is unclear
whether native workers with skills similar to those of immigrants will be worse off in real terms (the
outcome will depend in part on their consumption tastes). And the effects of immigration inflows on real
earnings are similarly ambiguous in the specific-factors model when the country in question is large
relative to world markets (see Appendix I).
6
Other types of general equilibrium models raise more doubts about the impact we should expect
immigration to have on the wages of similarly skilled native workers. If we allow for economies of scale
in production in the industries employing immigrants, inflows of new workers can be shown to generate
higher real wages for native workers with similar skills in an open-economy model (see Brezis and
Krugman 1993). And if we treat immigration inflows as a component in the growth of the labor supply, in
a fully-specified dynamic model of the economy, the impact of such flows on wages over time will
depend on the rate of capital accumulation and population growth (and how these are also affected by
immigration) – a point noted by Bhagwati (2000). All in all, it is extremely difficult to make firm
predictions about the equilibrium effects of immigration on wages and employment opportunities among
local workers.
7
If the economic impact of immigration is actually quite small, as both theory and empirics tend to
suggest, then what explains the strong negative association between education and anti-immigration
6
Note that, while we have concentrated on the labor-market effects here, there is also considerable debate over the
impact of immigration on government spending and tax revenues. One common concern is that low-skilled
immigrants, since the tend to earn less and thus pay less in taxes than native, and since they are more likely to draw
unemployment and other welfare benefits from government, are a net drain on government coffers. Economists are
divided on whether this is actually the case (see Krugman and Obstfeld 2000: 166). Notice, however, that to the
extent it is true, since the added tax burden of immigration would fall disproportionately upon richer, more highly
skilled native workers, these distributional effects would run counter to (and thus mitigate) the types of distributional
wage effects emphasized in closed-economy FP models of labor market competition.
7
One might simply suggest that the actual economic effects of immigration are less relevant than people’s
perceptions of the effects. Perhaps stories reported by the media or statements made by politicians lead people to
believe that immigration poses a larger economic threat to blue-collar workers than it actually does (see Gang et al
2002, 7; also Citrin et. al 1997, 859). But this type of assertion would require empirical verification and some
explanation for why perceptions would diverge very far from reality. If the claim is simply that the less educated are
more susceptible to anti-immigrant messages or issue framing than more educated individuals, then this would just
seem to become a version of the (non-economic) argument linking low education levels to racist or xenophobic
outlooks (discussed in more detail below).We discuss these issues again in Section VII, and argue that perceptual
distortions of the economic threat posed by immigration are not a plausible explanation for the results from our
analysis of the available survey data.
Convention