LAST YEAR, a team of economists led by Raj Chetty, a professor at Stanford, came to a worrying conclusion: The later were the Americans born in the twentieth century, the lower was their chance that they will earn more than their parents. For a person born in 1940 into an average American household, the chance was 92%. For those in Generation 1980, the odds were mere 50%.1 The American dream was looking bleaker not only to natives but also to immigrants. Interestingly, by the end of the twentieth century this did not happen only proportionally: the immigrants were catching up with the wages of the native Americans slower than their parents. Why?
George Borjas believes the slowdown in economic integration is related to the “growing size of the immigrant population in the United States.”
To economists, this question largely remains a mystery. George Borjas, a professor of economics at Harvard, is not sure either. But he believes that the slowdown in economic integration is related to the “growing size of the immigrant population in the United States.”
In 2015, the same question was answered in a series of quite widely disseminated articles by Lukáš Kovanda, a teacher at the Prague University of Economics and economic journalist known for interviews with Nobel Prize laureates.2 In the articles, Mr Kovanda notices two historical facts. First, the industrial countries have in the last 50 years experienced a sharp increase in migration from developing countries.3 Second, between 1970 and 1990, the relative entry earnings of American immigrants deteriorated.4 Mr Kovanda then exercises several thought experiments in line with the logic of economics 101 textbooks that he supplements with several controversial5 theses of Paul Collier, a veteran economist at Oxford. Mr Kovanda then concludes that „gains from immigration” in industrialised countries „deteriorate”, because today’s immigrants come from „culturally more distant spheres”. The longer will the “Western elites” neglect this change, the more “devastating” effects will the migration bring.
Such argument would be not any different from any other ramble common in today’s Central Europe were it not for one difference: Mr Kovanda says his conclusions are based on the empirical research of Mr Borjas, the same Harvard economist that Your correspondent spoke to.