THE ECONOMIC IMPACT OF IMMIGRATION
Until very recently, little was known about the impact that immigrants have on the native labor market or about other effects of immigration on the U.S. economy. This situation has changed rapidly in the past few years. Researchers have now produced data sets and econometric methods that enable them to do sophisticated analyses.
The essence of the empirical evidence is that because of changes in U.S. immigration policy and because of changing economic conditions both here and abroad, the United States is currently attracting relatively unskilled immigrants. For the most part, these immigrants have little chance of attaining economic parity with natives during their lifetimes. In short, the United States is losing the international competition for skilled workers to other host countries such as Canada and Australia. America’s poor performance in the immigration market, therefore, suggests a need for re-evaluation of our immigration policy. Among the specific findings that lead to this conclusion are the following:
1. Immigrants in the United States have a small impact on the earnings or employment opportunities of natives. A 10-percent increase in the number of immigrants decreases the average wage of natives by at most 0.2 percent and has little effect on the labor force participation rates and employment opportunities of practically all native groups.
2. Immigrants do, however, have a significant effect on the earnings and employment opportunities of foreign-born persons already residing in the United States. A 10-percent increase in the number of immigrants decreases the wage of foreign-born persons by at least 2 percent.
3. There are 3 to 4 million illegal aliens in the United States. Like their legal counterparts, illegal aliens are typically men and women who live with their immediate families and work in nonagricultural jobs. Illegal aliens have lower earnings than their legal counterparts. This wage differential results nor from employer exploitation of undocumented workers, but from the fact that illegal aliens are less skilled, on average, than legal immigrants.
4. The skills of immigrants entering the United States have declined during the past few decades. Recently arrived immigrants have relatively less schooling, lower earnings, lower labor force participation rates, and higher poverty rates than those arriving in earlier waves had at similar stages of their assimilation into the country.
5. There are great differences in labor market characteristics among national-origin groups. Generally, immigration groups originating in Western Europe are more successful than immigrants from Asia and Latin America. This finding partly reflects the fact that immigrants originating in countries with egalitarian income distributions tend to be more skilled than immigrants originating in countries with substantial income inequality.
6. Contrary to popular belief, the number of relatives sponsored by an immigrant currently residing in the United States is relatively small. Thus there is little reason to suspect that the size of the immigrant flow will eventually explode because of the family-reunification provisions in current immigration policy.
In sum, the nature of America’s offer in the immigration market has changed substantially in the past two or three decades. Although the immigration of unskilled workers to the United States may help to satisfy the demand for menial work performed for relatively low wages, and may lead to lower prices for the goods the immigrants produce and to higher incomes for American consumers, this type of immigration also imposes substantial costs on the American economy. The fundamental question facing policymakers is whether these costs exceed the benefits of unskilled immigration.
according to the article « Immigration and the economy » by By George J. Borjas (the journal «THE SENIOR ECONOMIST» )
GEORGE J. BORJAS is Professor of Economics at the University of California at San Diego. He is author of «Friends or Strangers» published by Basic Books