Immigration and Wages
When it comes to immigration, a larger labour pool allows for increased specialisation, which increases productivity, and leads to real increases of wealth.
Contrary to simpleton's claims that more workers means cheaper labour, immigration increases the demand for labour, as migrants need goods and services. There's a reason why you had very large population growth over the 20th century but this wasn't matched with constant rising unemployment.
Even short sharp shocks to the labour market with a mass influx, wages aren't typically hurt overall (because a whole bunch of people make more money from more consumers), but there might be limited decreases in wages amongst a specific subset of the population.
This has been studied to death and back:
The positive dynamic impact of immigration on innovation and wages dominates the short-run negative impact of increased labor supply. A structural estimation of a model of endogenous growth and migrations suggests the increased immigration to the United States since 1965 may have increased innovation and wages by 5 percent.
Between 1880 and 1920, more than 20 million immigrants settled in the United States. We study how this migration wave affected innovation and growth... We find that international arrivals after 1880 raised US income per capita by 8.2% by 1940. Removing the subsequent immigration restrictions of the 1920s would have raised income per capita by a further 1.7% by 2000. Immigrants' skill composition and their concentration in urban hubs are key drivers of these effects.
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.
Are Immigrants a Shot in the Arm for the Local Economy?
There has been a lot of research on immigrants impacts on wages. Studies of the Mariel Boat Lift, where a large number of Cuban immigrants all joined the Miami labor market in a short period of time, increasing labor supply by 7% very quickly, found that there was practically no impact on wages and employment for locals.
And although controversial, immigration may positively impact poor/unskilled native wages.
in the period from 1990 to 2006 immigration had a small effect on the wages of native workers with no high school degree (between 0.6% and +1.7%). It also had a small positive effect on average native wages (+0.6%)
We find that an increase in the supply of refugee-country immigrants pushed less educated native workers (especially the young and low-tenured ones) to pursue less manual-intensive occupations. As a result immigration had positive effects on native unskilled wages, employment and occupational mobility.
We find that immigration had a positive effect on the wages of less educated natives and it increased or left unchanged the average native wages.
Here is a lit review that finds
Short-term wage effects of immigrants are close to zero—and in the long term immigrants can boost productivity and wages.
The most comprehensive recent study on the impacts of immigration, the behemoth 500 page report from the National Academies of Science, Engineering and Medicine, a joint effort from 14 economists, demographers and other academics reviewing several decades of data on immigration and its impact concludes:
- When measured over a period of 10 years or more, the impact of immigration on the wages of native-born workers overall is very small. To the extent that negative impacts occur, they are most likely to be found for prior immigrants or native-born workers who have not completed high school—who are often the closest substitutes for immigrant workers with low skills.
- There is little evidence that immigration significantly affects the overall employment levels of native-born workers. As with wage impacts, there is some evidence that recent immigrants reduce the employment rate of prior immigrants.
- Evidence on the inflow of high-skilled immigrants suggests that there may be positive wage effects for some subgroups of native-born workers, and other, wider benefits to the economy more broadly.