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Immigration and the economy

Letter to the Editor | Thursday, April 27, 2006

The national debate on U.S. immigration policy flared just prior to the Congressional recess and is sure to do so again once policymakers return to their offices in the last week of April. The temporary quiet on this issue is an ideal time for considering subtleties of the immigration debate that might have been overlooked in moments of political battle.

This piece summarizes some relevant facts that have so far not become prominent in the national discussion on this topic. Its purpose is not to persuade readers of a particular position, but rather to raise the level of information that the general reader brings to thinking about immigration policy.

These facts were proposed and compiled by students in an economics course on “Migration, Education and Assimilation” at the University of Notre Dame. They reflect their opinions about salient points to consider when weighing the current immigration reform proposal.

1. It is important to consider whether immigrants close out jobs for natives and/or whether they fuel other social problems, such as discrimination. For example, an influx of immigrants may affect the migration of other Americans. William Collins of Vanderbilt University has shown that the great number of immigrants from Europe early in the century filled up the high-paying manufacturing jobs in America. Due to discrimination against blacks, companies hired the immigrants before black workers, even if they had the same skills. Thus, there was no opportunity for black Americans in this sector until immigration slowed in mid-century. Had there been less immigration, more openings would have existed for black workers, and they would have had approximately 50 more years to assimilate into the American economy and social system.

2. The composition of immigrants has changed substantially over the decades due to various reforms. Before the reforms of the 1960s, U.S. policy largely allowed European immigrants across American borders; after the changes more and more immigrants began to come from developing nations in Africa and Latin and South America. These changes dramatically affected the skill sets of arriving immigrants. The educational differences across sending countries mean that more recent immigrants have much lower educational attainment than previous immigrant groups.

3. Immigration is a situation that probably affects all Americans, regardless of whether all Americans are aware of this. Following the simple rules of supply and demand, an increase in immigration has the possibility to lower the local wage in an area, like a state or city. As more people move into an area, the demand for work increases, thus reducing the wage that employers need to pay to get workers. This can lower the wages of natives in the area, but the effect can potentially be felt nationwide. As natives move to other areas to escape immigrant competition for jobs, they in turn compete with other natives for jobs.

4. In general, illegal immigrants do not take jobs from American workers. The vast majority has lower skill levels or education and end up with jobs reflecting this. Only those workers in the market for lower-skilled jobs really “compete” against these immigrants for jobs.

5. Most proposals include plans for a temporary worker program, allowing immigrants to be matched with American jobs that natives essentially do not want. At present, many believe immigrant workers to have negative effects on the wages of natives throughout the country. Some evidence is available to support this claim: a study by George Borjas of Harvard University found that a 10 percent increase in immigration leads to a three to four percent reduction in the wages of less skilled natives. It’s important both to note that these effects are felt almost entirely by low-skilled natives and, similarly, to consider the economic welfare of America’s poor when calling attention to U.S. immigration policy.

6. The immigration reform policies strongly advocate immigrant assimilation. Borjas has also shown that recent immigrant cohorts are much more dominated by a few ethnic groups than were the wave of immigration early in the century. With an increase in the percentage of immigrants sharing the same ethnic heritage, immigrants are more and more able to establish enclave cultures and economic systems largely isolated from the rest of the U.S. population. Isolated enclaves are more feasible the larger the ethnic population. Enclaves, however, produce negative effects such as a lack of English proficiency and consequently lower wages. Policymakers who desire assimilation should write legislation to encourage a smooth assimilation stage after the seemingly inevitable enclave stage.

7. Immigration can help increase the productivity of native workers. With immigrants taking care of the low skilled labor, natives can devote their time to jobs where they are the most productive. This increase in productivity will inevitably help out the American economy.

8. The main proposals give insufficient attention to important assimilation aspects such as English language attainment. According to researchers at the Universities of Houston and Chicago, learning English gives a considerable wage boost˜in the range of 10-30 percent. Additionally, Ilana Redstone Akresh of University of Illinois finds that 50 percent of immigrants face a large occupational downgrade largely because of a lack of English skills. While the plan does address connecting foreign workers with the jobs that Americans do not want, the economy could be greatly improved if America could “unlock” the skills of many non-English speaking immigrants. The source for low-skilled immigrant jobs is effectively unlimited, but America could tap into a valuable resource of skilled jobs by translating skills better.

9. Funding for border security has increased by 66 percent since 2000, but it is unclear whether this increase is getting the desired results. Just because Border Security Agents apprehended more people in the past year does not mean that any fewer people entered the country. Moreover, the goal of having “full control” of the border will require large financial expenditures that could be used elsewhere.

10. Research shows that citizenship status is related to significantly higher levels of financial investment by first-generation immigrants. These investments represent home ownership and savings for retirement, and they contribute to economic independence for the second generation. Temporary worker programs reduce the incentive for these investments and increase the likelihood that children born to temporary workers will depend on state support.

Abigail Wozniakassistant professor of EconomicsApril 20