Is reducing low-skilled immigration good for Americans?
Bikramjit Saha, Loris RubiniAbstract
This paper studies the effect of immigration on welfare via complementarities with foreign workers and market size effects. We build these channels into a general equilibrium model to assess the welfare effects of the 2016 immigration reversal and the 2022 immigration comeback. Our findings suggest that the 2016 slowdown reduced welfare, especially for high-skilled Americans, with no changes for low-skilled workers. The 2022 comeback partially offset these changes. The larger effects on high-skilled workers stem from complementarities with low-skilled immigrants. Low-skilled Americans lose from the increased competition in the labor market, but the increase in population drives firm creation, with positive welfare effects that roughly offset the wage losses.