Diversity and Immigration

A growing number of studies are attempting to document the effect of immigration on wages of native-born Americans. ’ The emphasis has been on a corollary of standard trade theory. The idea is that the immigrant is paid his marginal product. The inframarginal returns are captured by the complementary factors of production, in this case, natives, who own the capital and complementary labor. The focus on wage effects of immigra-tion is a natural consequence. Most proponents of immigration, however, argue for the diversity value that immigration confers on the United States. The stew tastes better when the ingredients are varied. The notion that the whole is greater than the sum of the parts derives from interactions between factors that somehow add to creativity or other components of output not captured by the stan-dard production function. There is something to this argument. It would be surprising to find large gains from immigration associated with bringing in more skilled or un-skilled workers. Skill is easily arbitraged by new native-born entrants to the labor market. The limit on the difference between the gains to bringin