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Professor Brian Kovak on Trade, Immigration, and U.S. Elections


By Scott Barsotti

Recent populist rhetoric suggests that immigration and international trade hurt local economies. But does data support that argument?

Brian Kovak is an assistant professor of economics and public policy at Heinz College, and is an expert in immigration policy, international trade, and labor markets.

“Some of what drives a particular election cycle is idiosyncratic,” said Kovak. “But historically, immigration tends to become contentious during periods of economic stagnation.”

That may explain why, despite the fact that the number of unauthorized immigrants in the U.S. has been roughly constant since 2009, the perception persists that the U.S. has experienced massive increases in unauthorized migration.

“You can find examples of [anti-immigration sentiment] in essentially every recession or depression that the United States has experienced. The Great Recession is no exception,” said Kovak.

Though the recession hit in 2008 and recovery began in 2009, gains have been uneven across the United States. In areas that have been heavily invested in manufacturing—Kovak gives Pittsburgh’s Monongahela Valley as an example—employment has often flattened or declined.

He suggests that technological change contributes more to those losses than immigration, but that local constituents need relief nonetheless, and that creates pressure on lawmakers.

“It’s hard to imagine the government trying to slow down technological change, but something that one can imagine the government doing is to try to decrease immigration,” said Kovak.

Political candidates have hotly debated the topics of immigration and trade this election season, specifically their effects on local economies and on the well-being of the American public.

Eschewing snappy sound bites in favor of data and research, Kovak has some remarkable findings on how immigrants, specifically migrant workers from Mexico, impact the U.S. economy.

Immigrants integrate U.S. job markets

Recently, Kovak published a study in the American Economic Journal titled “Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession,” a collaboration with Brian Cadena, associate professor of economics at University of Colorado-Boulder. Kovak and Cadena analyzed employment data and the behaviors of Mexican-born, low-skilled workers to understand how their physical movement affects local labor markets. They chose to study Mexican-born workers because they are the largest group of immigrants in the U.S.

Through their research, Kovak and Cadena discovered that immigrant workers stabilize local economies by moving between them. When employment falls substantially in a local labor market with a high number of Mexican-born workers, the Mexican low-skilled workers are subsequently much more likely to move away from that place than are native-born low-skilled workers.

“They essentially decrease competition for the native-born workers who remain in that place,” said Kovak.

On the other hand, Kovak is quick to note that growing labor markets tend to attract immigrant workers, which increases competition in those stronger markets, but also “improves conditions in the most depressed markets, where it counts the most.”

“Essentially, the native workers bear the full brunt of the local economic conditions when there are no Mexican-born workers to equalize those conditions by moving across space,” he explained.

Kovak says that, in the interest of mitigating the negative impact to native-born workers and maintaining the mobility of immigrant workers, he supports a comprehensive approach to immigration reform. He cites the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 as a good example of this type of approach.

The comprehensive reform bill addresses a variety of issues related to immigration reform, including increased border controls, guest worker programs, incentives to hire authorized workers, and a legal channel for current unauthorized immigrants to regularize their status. The bill was passed by the Senate in June of 2013, but has not yet been addressed by the House of Representatives.

Based on his research findings, Kovak suggests that a guest worker system should be structured to allow workers to easily switch from one employer to another, avoiding situations in which employers might try to exploit migrant workers whose work authorization is tied to their business. This has the added benefit of providing a “release valve” in locations experiencing economic decline.

“It would maintain this feature of the labor market that we’ve documented, in which migrant workers are able to move across space and hopefully equalize outcomes throughout the country and integrate the U.S. labor market,” he said.

International trade: Keeping gains and cushioning losses

Kovak suggests that when discussing immigration alongside international trade, it’s not entirely unreasonable to conflate the two, explaining that the theoretically predicted effects of trade and immigration are very similar.

Along with Rafael Dix-Carneiro, assistant professor of economics at Duke University, Kovak researched the effects of trade liberalization in Brazil, and found large and lasting disparities in labor market outcomes for workers in different local labor markets. Following trade liberalization, workers in regions producing products that began competing with international suppliers experienced wage and employment declines compared to workers in more favorably affected regions.

It is entirely possible that the effects in Brazil are similar to those in the U.S. from increased trade with China or the off-shoring of U.S. jobs.

However, Kovak points out that it’s relatively easy to predict what areas and industries might be negatively impacted by a trade deal, and shares some ideas on how policymakers can improve outcomes, including greater resources for training, moving assistance, and a stronger social safety net to put a floor on how much a person’s prospects can fall. He supports testing an idea called “wage insurance,” in which the government would make up some of the loss in earnings if a displaced worker changes locations or industries.

“The idea is to incentivize people to take a job in a growing industry or stronger market, as well as effectively subsidize on-the-job training for a person who may be very competent but has skills that are not well-rewarded by the current labor market,” said Kovak.

Shaping electionS

Immigration, trade, and the social safety net are issues that tend to weigh heavily on the minds of voters leading up to Election Day.

A recent report published by the National Academies of Sciences, Engineering and Medicine stated that immigration had little to no negative effects on overall wages and employment of native-born workers in the longer term, and that high-skilled immigrants, in areas like science and technology, make a significant positive imprint on the U.S. economy.

Academic studies won’t necessarily quell public emotion, however, and overall national growth is cold comfort for individuals in an economically depressed area. Ultimately, these day-to-day experiences are often big factors in how people vote when they head to their polling places.  

“For the workers in these markets, they frankly don’t care whether [diminished prospects] are the result of technological change, trade, or immigration,” said Kovak, “and we don’t have many policies that try to soften the blow for individuals who face these phenomena.” 

 

As a 501©3 nonprofit corporation Carnegie Mellon University does not support or oppose any particular candidate.

 

Learn more about Brian Kovak

Related: Center for the Future of Work