Chapter 9 THE ENDLESS QUEST FOR SUBSTITUTES AND THE ECONOMIC BENEFITS OF IMMIGRATION Hive Mind: How Your Nation's IQ Matters So Much More Than Your Own by Garett Jones

Chapter 9 THE ENDLESS QUEST FOR SUBSTITUTES AND THE ECONOMIC BENEFITS OF IMMIGRATIONRead more at location 2350

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THE O-RING STORY EXPLAINS TOO MUCH.Read more at location 2352

Note: TITOLO Edit

Kremer’s story about delicate O-ring production processes must capture something important, but it can’t be the whole story. If O-rings are real, some other production processes must be equally real,Read more at location 2356

Note: SPIEGA TROPPO. O RING NN È L UNICA PRODUZIONE Edit

The formal name is the Cobb-Douglas production function, but I call it the Foolproof sector of the economy.Read more at location 2361

Note: PRODUZIONI NN O RING Edit

In a paper I wrote a few years ago I created a mathematical model that showed what happens if some parts of the economy are O-ring, in which team skills matter a lot, and other parts of the economy are Foolproof,Read more at location 2362

Note: IL MODELLO MISTO Edit

This model, a dramatic oversimplification of real-world economies, might help explain why people with high test scores typically earn only a little more than their average neighbors within a country but why nations with high average test scores earn vastly more than nations with just ordinary scores.Read more at location 2364

Note: POCA DISEGUAGLIANZA Edit

The O-Ring Sector Meets the Foolproof SectorRead more at location 2367

Note: TITOLO Edit

There are two kinds of tasks: delicate O-ring jobs and rough-and-tumble Foolproof jobs.Read more at location 2368

Note: DUE LAVORI Edit

Foolproof jobs are, well, foolproof: throw enough people at them and eventually you’ll get the job done.Read more at location 2370

Note: FOOLPROOF: NN FAI DANNI Edit

O-ring jobs capture the “commanding heights” of the economy such as high tech agriculture or cutting-edge medicine, while Foolproof jobs control the vast plains such as subsistence farming or routine blood pressure checkups. O-ring jobs make great use of the best people to shape the way we live, while Foolproof jobs take up the slack,Read more at location 2372

Note: ES Edit

in the O-ring sector of the economy, twice the people mean twice the output at the same wages, but in the Foolproof sector, more people mean diminishing returns,Read more at location 2375

Note: RITORNO DECRESCENTE. RESA NEI DUE SETTORI Edit

Imagine all workers in the same country have exactly the same skill set, a nation of clones.Read more at location 2377

Note: PRIMO SCENARIO: I CLONI Edit

In this world, how would people decide to work in the O-ring sector rather than the Foolproof sector?Read more at location 2378

Note: CHI LAVORERÀ DOVE? Edit

The LOOP says that as long as two precisely identical products are for sale, every consumer buys the cheaper product, and as long as two precisely identical jobs are available, every worker accepts the higher-paying job.Read more at location 2380

Note: SI RISPONDE CON LA LEGGE LOOP Edit

if everybody follows the LOOP then nobody buys the more expensive good and nobody accepts the lower-paying job.Read more at location 2382

Note: APPLICHIAMO IL LOOP Edit

And so it will happen between the O-ring and the Foolproof sectors: if the two sectors paid noticeably different wages then workers would switch to the higher-paying sector, pushing up wages in the sector they left and driving down wages in the sector they moved to.Read more at location 2390

Note: PARITÀ TRA I DUE SETTORI Edit

But what if just one thing were changed: average worker skill? What if the O-ring sector was in principle highly productive but your nation didn’t currently have high test scores or high education levels? Where would the workers wind up then?Read more at location 2396

Note: CAMBIA L INTELLIGENZA MEDIA Edit

And that’s the first big prediction of the O-ring-Foolproof model: if one were to compare across countries that differ in average skill level, in nations of high average skill level—measured how you will—one will tend to see a bigger fraction of the workers in delicate, cutting-edge O-ring tasks and a smaller fraction of workers engaged in routine decades-old work tasks.Read more at location 2403

Note: PRIMA PREDIZIONE DEL MODELLO MISYO: I MIGLIORI CON I MIGLOORI NEGLI O RING Edit

A second prediction of the O-ring-Foolproof model comes when we ask what would happen if a few slightly less-skilled workers entered the country. The classic example, a common discussion topic in the rich countries today, is immigration of less-skilled workers from lower-average-skill-level countries.Read more at location 2406

Note: IMMIGRAZIONE Edit

less-skilled workers are poor substitutes for more-skilled workers in the O-ring sector, lower and higher skill levels are great substitutes for each other in the Foolproof sector.Read more at location 2409

Note: CONCORRENZA TRA POVERI Edit

Note: CONSEGUENZE SUL FOOLPROOF Edit

the law of one price—and its close friend, pay for performance—will be at work in the Foolproof sector, so the average cashiers will earn a bit less than the best ones.Read more at location 2412

Note: STIP. PIÙ BASSI NEL FOOL Edit

So less-skilled workers will wind up in the Foolproof sector, but what becomes of the average workers? Do their wages get pushed down because of the competition? That’s a possibility in this model—and it’s a possibility in real life.Read more at location 2415

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But there’s another possibilityRead more at location 2417

Note: CHE FINE FANNO GLI SPIAZZATI? Edit

The possibility: that the additional less-skilled workers push the average workers right over to the O-ring sector.Read more at location 2418

Note: PARADOSSO. IMMIGRAZIONE LOW SKILLED: GIÙ I SALARI HIGH SKILLED Edit

Note: O STIP. PIÙ BASSI O O RING Edit

less-skilled immigrants drive the average-skilled workers into delicate O-ring work.Read more at location 2420

Add a note

as long as the O-ring technology is available—a technology that doesn’t run into diminishing returns, a technology that is at its best when it has a skilled workforce—and as long as highly skilled workers are at work in both sectors, a rise in the number of less-skilled workers has no effect on high-skill wages and hence no effect on low-skill wages. The extra workers just move highly skilled workers back into the O-ring fields and the law of one price remains intact.Read more at location 2425

Note: SE L O RING NN HA RITORNI DIMINUITI ALLORA NN SI REGISTRANO DIMINUIZIONI NEI SALARI Edit

Note: STRANO EFFETTO. GLI HIGHT DEL FOOL SI SPOSTANO NEL O RING FACENDO CONCORRENZA Edit

How Low-Skilled Immigration Could (Possibly) Drive Down WagesRead more at location 2439

Note: TITOLO Edit

What happens if so many less-skilled immigrants arrive that they take up all of the previous Foolproof jobs? Then we’re back in the world of commonsense economics: at that point, a rise in the supply of labor really would drive down the wages of less-skilled domestic workers.Read more at location 2440

Note: CONCORRENZA TRA POVERI. L ESITO PIÙ INTUITIVO. LA SECONDA ONDATA RENDE QS ESITO IL PIÙ PROB: I MIGLIORI SONO GIÀ TUTTI O RING Edit

They can’t just nudge the more-skilled competition into the O-ring jobs because all the highly skilled workers already have O-ring jobs.Read more at location 2442

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With this model in mind let’s take a look at the evidence.Read more at location 2445

Note: EVIDENZA Edit

For the rich countries, especially for the well-studied United States, the answer is clear: less-skilled immigration doesn’t do much to the wages of U.S.-born residents.Read more at location 2447

Note: USA E SALARI DEI PEGGIORI Edit

The most pessimistic academic estimates come from Harvard economists George Borjas and Larry Katz, who reported that less-skilled immigration may have pushed down the wages of American high school dropouts by 8 percent.Read more at location 2448

Note: 8% Edit

It’s even possible that economists Ottaviano and Peri are right: they claim that less-skilled immigration to the United States has actually raised the wagesRead more at location 2452

Note: OYTAVIANO E PERI Edit

For that and other reasons—in the authors’ words, because of different abilities in “language, quantitative skills, relationship skills and so on”—they’re not in direct competition with U.S.-born, less-skilled, less-educated workers. In this view the people in the United States hurt most by recent waves of nonnative-English-speaking immigrants are actually people who came as part of previous waves of non-native-English-speaking immigrants. Recent immigrants and older immigrants are substitutes for each other.Read more at location 2455

Note: I LAVORI CHE NOI NN VOGLIAMO FARE Edit

Note: GUERRA TRA IMMIGR Edit

Economists and Immigration: A Rare ConsensusRead more at location 2468

Note: CONSENSO Edit

the biggest beneficiaries of less-skilled immigration are the immigrants themselves, whose lives are often transformed from a nightmare of dollar-a-day poverty to a realm of modest comfort, health, and safety.Read more at location 2471

Note: BENEFICI AGLI IMMIGRATI Edit

It’s always worth reminding citizens of the high-productivity countries that immigration is still the most reliable way to raise the living standards of people in low-productivity countries. Rather then send aid workers or cash to help people in poor countries,Read more at location 2474

Note: PROGRAMMA ANTIPOVERTÀ Edit

A Tragic Tension: Will Freer Immigration Weaken Good Political Systems?Read more at location 2481

Note: T. TENSIONE Edit

The key question is how many low-skilled immigrants a nation can take in and still keep a good politics.Read more at location 2482

Note: IMMIGRAZIONE RE REAZIONI POLITICHE Edit

The economics of less-skilled immigration to richer, more productive countries are reasonably clear: life-changing good news for the immigrant with only fairly small effects one way or the other on so-called “native” less-skilled workers.Read more at location 2484

Note: ECONOMIA DELL IMMIGR. Edit

That’s true when we look at the short runRead more at location 2486

Note: BREVE XIODO Edit

these studies hold politics aside and assume that less-skilled immigrants don’t have an effect on a high-skill nation’s government institutions.Read more at location 2487

Note: INFLUENZA SULLE ISTITUZIONI POLITICHE Edit

But if there’s something we’ve seen in previous chapters, if there’s something we’ve seen in Bryan Caplan’s work on the link between voter education and voter beliefs, if there’s something we’ve seen in the cross-country studies that find that higher national average test scores tend to predict lower average levels of corruption and in the philosophical debates over epistocracy, it’s that good politics appears to depend on reasonably well-informed citizens.Read more at location 2488

Note: IQ E POLITICA. CAPLAN. ASSUNZIONE FORTE Edit

Will less-skilled immigrants tend to vote for policies that will weaken the wealth-creating opportunities they’ve enjoyed?Read more at location 2492

Note: DOMANDA Edit

If enough statists come, won’t our democracy switch to the kinds of policies that immigrants struggle to escape?Read more at location 2497

Note: L INVASIONE DEGLI STATISTI Edit