Realizing the Gains from Immigration Reform Pia Orrenius Federal Reserve Bank of Dallas Financial Education & Economic Inclusion The Immigrant Experience April 22, 2013 Disclaimer: The views expressed.
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Realizing the Gains from Immigration Reform Pia Orrenius Federal Reserve Bank of Dallas Financial Education & Economic Inclusion The Immigrant Experience April 22, 2013 Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System. Road map Economic contributions of low-skilled immigrants Likely gains from immigration reform Millions Rising influx of foreign-born, low-skilled workers 7 6 Foreign born share of low-skilled labor force Percent 60 50 5 Foreign-born, low-skilled workers 40 4 30 3 20 2 1 0 1960 1970 1980 1990 2000 2011 NOTE: Number of foreign-born workers with less than a high school education aged 25 and older. Source: Census; 2011 American Community Survey 10 0 Over half of migrants from Mexico, Central America lack a high school degree India Taiwan Iran Japan Former USSR United Kingdom Korea Canada China/Hong Kong Philippines Germany Brazil Poland U.S. natives Colombia Peru All immigrants Italy Vietnam Jamaica Cuba Haiti Ecudador Dominican Republic Honduras El Salvador Mexico Guatemala Bachelor's degree and higher High school graduate and some college Less than high school 0 10 20 30 40 50 60 70 80 Note: Composition of educational attainment among immigrants by country of origin. Source: 2011 American Community Survey 90 100 Immigrants fill some of the toughest jobs (low-education) Farm workers Hairdressers and cosmetologists Gardeners and groundskeepers Misc food prep workers Housekeepers, maids, butlers Construction laborers Cooks, variously defined Child care workers Janitors Waiters and waitresses Timber, logging, and forestry… Motor vehicle operators Nursing aides, orderlies, and… Foreign-born as a percentage of labor force with less than high school education Mechanics Kitchen workers Miners Pest control occupations 0 20 40 50.3 60 80 100 Percent Note: Percent of workers age 25 and over with less than high school education who are foreign born for selected occupations. Source: 2011 American Community Survey Immigrants go where the jobs are 0.2 Foreign born population growth NV 0.15 UT 0.1 WY 0.05 0 -0.05 -0.1 -0.15 -0.2 AZ ID AK CO NM SD TX MT FL NE ND OK MN GA WA AR NC KS MS VA IA LA WI WV DEKY AL SC TN NH PA MO VT MD CA HI IL IN MA ME NJ NY OH CT MI RI -0.15 -0.1 -0.05 0 0.05 OR 0.1 0.15 0.2 0.25 State employment growth Note: Coordinates indicate deviation from average foreign born population log growth (vertical axis) and from average state nonfarm payroll log growth (horizontal axis) from 1990 to 2009. Economic benefits of immigration Immigrants benefit from higher wages Family, origin from remittances Natives also benefit More workers, lower prices Higher productivity through specialization; efficiency through mobility Higher return to capital boosts investment Immigration surplus $38-$75 billion per year Complementary immigration, bigger boost Low-education immigrants have high employment rates compared to natives No High School Diploma 85% 80% 75% 70% 65% Immigrants 60% 55% 50% 45% 40% Natives 35% 30% 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 25% Low-education immigrants have low unemployment rates when compared to natives No High School Diploma 20% 15% Natives 10% 5% Immigrants 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 0% Immigrants earn 20 percent less than natives Real Median Weekly Earnings 750 700 Natives 650 600 Immigrants 550 500 450 400 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Immigration Reform LIKELY GAINS Unauthorized population as large as permanent resident population Unauthorized immigrants Temporary migrants Source: Pew Hispanic Center Naturalized citizens Permanent residents Thousands Low-skilled: Work visa applications far outstrip number available Thousands 400 Applications 350 300 250 200 150 Available visas 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 SOURCE: Department of Labor. Immigration reform Legalization for unauthorized immigrants Work visas for low-skilled, non seasonal workers Resolution of the green card queues Currently extend decades for Mexicans Impacts of immigration reform Migrants Higher wages; better job matches Restore circularity Youth: better education, socio-economic outcomes Natives/Previous migrants Expand tax compliance; Even playing field Improve working conditions Any downsides? Concluding thoughts Low-skilled immigration has been large, with high shares unauthorized Outcome of robust labor demand, plentiful labor supply in Mexico Increasingly costly, disruptive system Immigration reform likely broadly beneficial Timely too Low-skilled immigrants earn less Dollars Per Hour 40 $36.44 35 $32.50 Native Foreign-Born 30 $25.50 $25.00 25 20 15 $17.42 $15.00 $12.44 $10.80 10 5 0 Less than High School High School, Some college College Graduate Degree Note: Median hourly wages among full-year workers by educational attainment and nativity. Source: 2011 American Community Survey “Immigration Surplus:” The rise in natives’ incomes from immigration Labor force grows, output increases Immigrants account for nearly one-half labor force growth since 1996 Prices fall, return to land and capital rise. Efficiency gains Complement native workers at high, low ends of skill distribution Fill jobs natives shun Move to where jobs are High-skilled: Boost innovation, entrepreneurship