[T]he finding of immigrant-native complementarity evaporates simply by removing high school students from the data (under the Ottaviano and Peri classification, currently enrolled high school juniors and seniors are included among high school dropouts, which substantially increases the counts of young low-skilled workers ). More generally, we cannot reject the hypothesis that comparably skilled immigrant and native workers are perfect substitutes once the empirical exercise uses standard methods to carefully construct the variables representing factor prices and factor supplies.
The Economist weighs in here.
Its not clear to me, and a subsequent discussion with Prof. Peri has validated my hunch, that High School students should be given zero weight as Borjas et al suggest. Perhaps they should be given a lower weight than Ottaviano and Peri gave them, but a zero weight? Also, while Peri’s result may be counter-intuitive, on closer inspection doesn’t it seem obvious that low-skill immigrants (who have sub-par English skills, aren’t expert at negotiating our culture, etc) aren’t perfect substitutes for natives? It seems the proper null hypothesis (the one that should be harder to reject) would be complementarity.
The real news here, actually, is the extreme transparency with which this debate has been played out. Both authors have their papers (and data) available on their websites and this has been so BEFORE the results were published. Anyone can download the data and reproduce either author’s result. The authors have corresponded heavily; everyone has shown each other their cards.
Even from the inside, this looks like a fairy tale academic debate! (I just hope it pays off for everyone… and I’m not thinking of the Harvard tenured professor.)