----- Original Message ----- From: "John D. Giorgis" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[EMAIL PROTECTED]> Sent: Saturday, March 13, 2004 5:53 PM Subject: Re: Race to the Bottom
> At 03:38 PM 3/13/2004 -0600 Dan Minette wrote: > >Right here is where I depart. The labor pool of possible employees > >increased by 49% from '57 to '80, but by only 32% from '80 to '03. (The > >participation in the work force increased 60% and 37%, respectively. > >During the first time period inequality decreased; during the second it > >increased. Not only that, but the increase was not just a transfer of > >income share from the poor to the rich, it was a transfer from everyone to > >the rich. > > I don't understand what you are driving at here. I think that you jumped into the middle of a discussion between Gautam and myself, where I disagreed with Gautam on fairly narrow grounds. Let me review the discussion from my perspective to show where I see Gautam and me agreeing and disagreeing. Gautam put forth the following statements in two posts: ____________________________________________ Post 1 3/12 11 AM First, the impact has been measured - George Borjas's book _Heaven's Door_ attributed half of the difference between American and German income inequality to immigration. Second, I don't understand how your metric would measure the impact, which comes from two different factors. The first is the constant influx of a large pool of largely unskilled labor (of largely Hispanic ethnicity), which has an impact. But more than that, the simple presence of these number of laborers will decrease the price of low-skilled labor for everyone, white, black, and Hispanic alike. 3/12 12:40 PM I'm sorry Dan, I don't think that addresses his point, because the rest of the disparity could be a product of the drag on incomes produced by the simple presence of a large number of lower-skilled immigrants. The problem is that the inflow affects different classes in disparate ways. It helps wealthy and high-skilled people - decreasing costs for them. It hurts low-skilled people - by increasing the competition for their labor. Borjas estimated (IIRC) that the end result of large-scale low-skilled immigration since 1980 has been a transfer of >$150BB from employees to employers - largely from low-skilled, low-wage employees who have seen their wages driven down relatively to employers. _______________________________________ As I see it, Borjas's arguement is that immigration in the US has resulted in an oversupply of low skilled labor which has depressed the wage scale, especially at the lower end. He claims that half of the difference between the US and the German income inequality is due to this excess of cheap labor. I agree with much of what he said: my differences are fairly narrow. I agree that the growth in income inequality is a result of a relative oversupply of labor vs. the demand for labor, keeping wages down. I agree that, as a result, income inequality has grown. Where I disagree is whether the emphasis should be placed on the accelerated increase in the supply of labor vs. a deceleration in the increase of the demand for labor. My arguement is that the labor supply between '80 and '03 has grown less than it did between '57 and '80....so that the emphasis should be more on the slowing of the increase in the need for labor than the acceleration of the supply. The difference with Germany can be seen more in terms of the drastic slowdown in the increase in the German labor supply, making labor more scarce and valuable than in the US. I'd be curious to see if Borjas adressed the two ways of looking at the differences in the balance between supply and demand for labor in Germany and the US. He may, for example, have assumed the decelleration on the demand for labor as a given...I don't know. I hope this helps to clarify things. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
