Immigration

What the Black Death Taught Us About Immigration

The economic argument for restricting low-skilled workers is not getting enough attention.

A surprising aftermath.

Photographer: Hulton Archive

When the Black Death came to Europe in the mid-1300s, it took about a third of the continent’s population with it. Cities suffered the worst of it. Paris lost half its people, Florence and Hamburg closer to 60 percent.

The immediate economic and societal effects were of course devastating -- and the economic hangover lasted for decades. But even as follow-on epidemics of the bubonic plague continued to sweep through the continent, something interesting (if not all that surprising, when you think about it) happened. Here’s historian Fernand Braudel’s description: 1

Following the catastrophes of the Black Death, living conditions for workers were inevitably good as manpower had become scarce. Real salaries have never been as high as they were then. In 1388, canons in Normandy complained that could not find anyone to cultivate their land “who did not demand more than six servants would have been paid at the beginning of the century.”

Peasants, suddenly in high demand, forced an end to serfdom across much of Western Europe during this era. Labor shortages begat new, improved agricultural practices and inventions such as the printing press. Everybody also had more than enough to eat. Braudel’s nickname for the period from 1350 to about 1550, when the continent’s population finally topped its pre-plague levels and working-class living standards began to decline, was “carnivorous Europe.”

So if you sharply decrease the supply of labor, even if overall demand goes down, things can be pretty great for the remaining laborers. This is, in its simplest form, the economic argument for restricting immigration, and I think it’s fair to say that it’s been underplayed by mainstream economists and journalists.

Most studies and reporting I’ve seen focus on the impact of smaller immigration flows on overall economic growth, which is of course probably negative. But thoughtful supporters of the immigration legislation proposed by Republican Senators Tom Cotton and David Perdue, such as my fellow Bloomberg View columnist Ramesh Ponnuru, concede this point. It’s just that the per-capita and distributional effects matter more to them.

How big would those per-capita and distributional effects be? Cutting legal immigration flows by about 50 percent, as the Cotton-Perdue legislation envisions, obviously isn't going to have the same impact as killing off a third of Europe's population in the mid-1300s ("Cotton-Perdue doesn't go far enough, columnist says"). 2 And the recent debate over whether the Mariel boatlift of Cuban immigrants in 1980 reduced wages for low-income workers in the Miami area or not is an indication that economists can't offer precise answers on what the impact of relatively modest immigration changes would be.

There is one test case, though, that offers at least a rough illustration of the tradeoffs. That would be Japan, where low birth rates have thrown population growth into reverse (the actual decline began in 2011, but growth was very slow before then and the population is now smaller than it was in 2001), and politicians have so far been unwilling to allow immigration to take up the slack. 3 Population growth is a key component of economic growth, and in fact Japan's economic growth has been excruciatingly slow. Since 2000, the country's gross domestic product is up just 13 percent in constant-dollar terms; U.S. GDP, despite frequent complaints here about slow growth, rose 32 percent over that period. That gap is so big that Japan lost ground in per-capita GDP and average wages as well.

Japan Loses Ground

Average annual wages, in U.S. dollars

Source: Organization for Economic Cooperation and Development

Note: Y-axis does not go to zero.

On the other hand, Japan seems to have been more hospitable than the U.S. for those in the lower-skill, lower-paid reaches of the labor market. The lowest-wage workers in Japan have actually gained ground on those earning average wages since 2000, while in the U.S. they have fallen back. The prime-age employment-to-population ratio has risen in Japan too, while in the U.S. it has fallen.

Japan Gains Ground

Employment to population ratio, ages 25 through 54

Source: Organization for Economic Cooperation and Development

Note: Y-axis does not go to zero.

Japan also scores much better than the U.S. on some measures of national well-being, such as life expectancy and student test scores. As National Review executive editor Reihan Salam, another supporter of the Cotton-Perdue legislation, put it a couple of years ago:

Japan does face challenges: Its attempts to spur growth through deficit spending have left it with by far the biggest government debt, as a share of GDP, in the developed world. On the verge of becoming a major world economic power 25 years ago, it's just another also-ran now. With its population likely to decline for decades to come, 4 its prospects for future growth aren't great. The U.S. is far better positioned for an era of declining population growth, especially since it has centuries of experience in assimilating immigrants.

On the other hand, Japan isn't plagued at the moment by skyrocketing drug-related deaths, decaying infrastructure or a populist uprising dividing the nation. Blaming immigration for all of those things seems wildly wrong -- the "China shock" in trade, the aftermath of the global financial crisis and the general decline in economic dynamism in the U.S. are all far likelier culprits. Still, a smarter immigration debate would acknowledge the tradeoffs of various proposals, and accept that overall economic growth isn't the only metric of success.

It's not hard to envision a compromise between those concerned with wage growth and those fixated on GDP. Adopting the shift toward skilled immigration envisioned in the Cotton-Perdue bill without reducing immigration flows could be a way to modestly improve the negotiating position of low-wage workers in the U.S. while in all likelihood boosting overall economic growth. This would come with costs too, especially for businesses that currently depend on cheap labor, and especially at a time when the aging of the U.S. population, among other things, may actually be increasing demand for non-college-educated workers. But as Europeans learned in the second half of the 1300s, labor shortages can have their positive sides, too.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

  1. From “Civilization and Capitalism, 15th-18th Century, Vol. I: The Structures of Everyday Life.”

  2. And yes, I'm aware that several Arizona fleas have recently tested positive for the bubonic plague, but given that we know how to cure the disease now I'm not projecting any labor market implications.

  3. Immigration into Japan has been rising lately, but as a percentage of population it's still well below the levels envisioned in even the Cotton-Perdue bill and is not nearly enough to stave off continued population decline.

  4. The United Nations projects that Japan's population, 127 million in 2016, will fall below 100 million in the early 2060s.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Mike Nizza at mnizza3@bloomberg.net

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE
Comments