In the comments from the previous post, blogger Robert Wiblin contested my presumption that unskilled immigration raises the native unemployment rate. We may be talking past one another, as he provided links to studies finding small decreases in unemployment from increased levels of overall immigration. Given the inherent difficulty in tracking illegal immigrants, these studies probably disproportionately attempt to gauge the relationship between legal–rather than total–immigration and unemployment levels. To the extent that the two correlate positively over time, though, it’s a chicken-and-egg question: Do immigrants decide for whatever reason to come to an area and subsequently engage in entrepreneurial activities that lead to a net increase in that area’s overall employment rate, or does a growing area in need of laborers and professionals attract immigrants to it?
The number of controls and assumptions necessary to tease out the stand-alone effect of immigration–never mind the challenges presented in trying to separate EB-5 immigrants from the MS-13 variety–is daunting, with the outcome contingent upon what controls and assumptions are made.
As my remarks concerned illegal immigrants in the US, who are largely unskilled, it seems reasonable to consider the simple relationship between the percentage of a state’s total population comprised of illegal immigrants (see p12) and that state’s unemployment rate. Using the latest data available, the two correlate at a moderate .33 (p=.02, two-tailed)–that is, states where illegal immigrants constitute a larger share of the population are states where the current unemployment rate tends to be higher.
Michigan, home to Ford, GM, and what’s left of Chrysler, suffers the nation’s highest unemployment rate (14.6%), but has few illegal immigrants. Removing it from the analysis boosts the correlation to .41 (p=.00, two-tailed).
This, of course, does not prove causality. But it does make it tougher to accept the assertion that higher levels of illegal immigration lead to lower levels of unemployment, when it is higher levels of unemployment that are associated with higher levels of illegal immigration in the US.