Only at an economics conference will people talk for two hours about immigration and never mention Donald Trump.
What they discussed instead Sunday afternoon, on the opening day of the American Economics Association’s annual January gathering, were the forces that appear to be propelling Trump’s run for the Republican presidential nomination: increased immigration, liberalized global trade and the recent struggles of lower-skill American workers.
Several papers scheduled to be presented at the conference this week deal with the effects of immigration on native-born workers, for good and for bad. One of the first, co-authored by researchers from the Atlanta and Boston branches of the Federal Reserve, Federico Mandelman and Andrei Zlate, built a theoretical economic model to examine what happens to particular groups of native-born Americans when policymakers open up trade and allow more low-skilled immigrants into the country.
The short version of their results is that when trade increases, there are more jobs for highly skilled workers and more jobs for low-skilled workers, but fewer jobs for the workers in the middle, on assembly lines or in secretarial pools.
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When low-skilled immigration increases at the same time, they find, wages stagnate for the lowest-skilled workers, even though there are more jobs for them to do, because there are more workers in the economy.
Those findings could be straight out of a Trump rally, if Trump rallies were held in carpeted hotel meeting rooms and the candidate mostly read equations to the crowd from a PowerPoint.
They track with the economic anxieties of workers without college degrees, who form the backbone of Trump’s support and who have seen millions of jobs outsourced in recent decades, while real wages stagnated for middle- and low-paid workers.
But the final result from the model probably won’t ring true to those workers, at all.
It says they’re better off from those changes.
An influx of low-skilled immigrants should encourage low-skilled, native-born Americans to invest in more education and skills training, Mandelman and Zlate find. It should also lower the costs of the services those native-born workers buy, in the same way that increased trade lowers the cost of some consumer goods. Those things should be good for productivity, which is good for the economy.
The math in the modeling gets complicated here, but the end result, the researchers find, is that even lower-skilled native-born workers are better off with more trade and immigration.
Many workers quite clearly don’t see it that way, especially the ones at Trump rallies. Another economist who critiqued the paper, Brad Hershbein of the Upjohn Institute, noted several questions raised by the modeling results. For example, he asked if there’s really evidence of displaced workers increasingly investing in education and training — and why America’s productivity growth has been sluggish in recent years, if immigration and trade are so good for productivity.
“Distributional effects and speed of adjustment matter,” he said, which is an economist’s way of saying, what if people in the real world aren’t adjusting like your model predicts? It’s a good question for researchers, and for politicians too.