Common sense tells us that an increase in the number of immigrant workers who would compete with the workers already there would decrease wages for both groups. Opponents of illegal immigration and open borders have driven the point home. Supporters, on the other hand, have their own reasons for wanting increased immigration, and they downplay that potential outcome.
But here comes a study that claims increased immigration results in an increase demand for local services. And that results in an increase of local services, an increase in local wages, and an increase in the number of jobs. Here's the abstract from Are Immigrants a Shot in the Arm for the Local Economy? To wit:
Most research on the effects of immigration focuses on the effects of immigrants as adding to the supply of labor. By contrast, this paper studies the effects of immigrants on local labor demand, due to the increase in consumer demand for local services created by immigrants. This effect can attenuate downward pressure from immigrants on non-immigrants' wages, and also benefit non-immigrants by increasing the variety of local services available. For this reason, immigrants can raise native workers' real wages, and each immigrant could create more than one job. Using US Census data from 1980 to 2000, we find considerable evidence for these effects: Each immigrant creates 1.2 local jobs for local workers, most of them going to native workers, and 62% of these jobs are in non-traded services. Immigrants appear to raise local non-tradables sector wages and to attract native-born workers from elsewhere in the country. Overall, it appears that local workers benefit from the arrival of more immigrants.
A casual observation suggest that that seems to be happening in some of those bustling Texas border cities. Although a closer look would be necessary to say for sure. One has to wonder about single industry towns, farm communities, for example. An influx of immigrant farm workers would seem to drive farm wages down as well as displace some existing farm workers. The increased demand for local services may not offset that feature.
A bigger issue, though, is the effect millions of immigrants would have on our political system. If they gravitate toward politicians who remind them of the government they left behind or promise them free stuff then that's a problem.
NBER abstract via Cafe Hayek.