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October 19, 2006

The Globalization of Household Production

At the recent Blue Sky Conference, hosted by the Kennedy School's Center for International Development (CID) in September 2006, economists Michael Kremer (Harvard University) and Stanley Watt (International Monetary Fund) presented a working paper that challenges long-held assumptions and theories about the effects of immigrant workers on native wages. The working paper, entitled "The Globalization of Household Production," argues that, far from bringing down native wages, immigrant workers, particularly those who work in households--nannies, caretakers and housekeepers--actually raise the salaries of many native workers, and reduce wage inequalities among workers overall. The authors attribute this reduction in wage inequality to an increased high-skilled labor supply reducing the overall salaries of such workers.

Specifically, among their findings, Kremer and Watt discovered that as more immigrant workers took on private household positions, more native workers, particularly native high-skilled women workers, were freed up to enter the public labor market and work outside the home, thereby increasing wages for these workers. This falls right in line with the conclusion reached in last week's Immigration Policy Center paper, "Rethinking the Effects of Immigration on Wages: New Data and Analysis from 1990-2004," which argued that immigrant workers tend to complement, rather than compete with, native-born workers. Importantly, the authors suggest that as a by-product of the entry of more women in the high-skilled job market, the gender disparities that still exist in the high-skilled job world tend to diminish.

at; www.immigrationpolicy.org

Posted by VisaLawyer at October 19, 2006 08:18 AM

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