« Capsule Profile of the Immigrant Worker | Main | Wealth of 2011 data on foreign born workers »

Key findings about immigration’s economic impact

Sari Pekkala Kerr and William Kerr wrote an article “The Economic impacts of immigration: a survey” (see citation below) in which they report on their review of many studies of economic impact. Most of these studies were on Europe, and some on the United States. Here is a summary of their findings:

Globally, the U.S. has a very high immigrant population share:

Some 3% of the world’s population live permanently outside their country of birth. In Europe, the foreign born population is about 7%. In the U.S., 13% of the population is foreign born, (These figures include people who have become naturalized in their host country.) Therefore, both Europe and the U.S. have a much higher share of foreign born nationals than the rest of the world –perhaps a reflection of the very low such shares in India and China.

Immigrants today greatly contribute to workforce growth in the U.S and Europe, but they do not appreciably reduce the demographic shift to the elderly.

Immigrant earnings start low, then rise.

The findings are somewhat cloudy. This is in part due to the fact that one quarter of more of foreign born persons eventually leave (“re-migration”), perhaps back to their country of origin. At their outset in their new country (Europe and the U.S.) the foreign born earn less.

The most recent findings report that immigrant-native wages gaps tend to close over time but overall do not disappear. To the extent that less successful immigrants may be disproportionately left the receiving country, the wage improvement trend may be exaggerated. We do not know the precise mechanisms by which this wage gap narrows. Children of immigrants to the U.S. assimilate well economically.

Immigration has a downward effect on U.S. born worker wages, but the amount is debatable:

“The likelihood and magnitude of adverse labor market effects for natives from immigration are substantially weaker than often perceived….the parts of the population most typically affected are the less educated natives or the earlier immigrant cohorts.”(page 25)

Credible studies showing a very modest effect include the 1980 Mariel boatlift from Cuba to Miami (1); 1962 repatriation of French returning from Algeria; and the impact of Russian Jews moving to Israel after 1990. However, Princeton-based expert George Borjas estimates that there is a nationwide adverse effect that might not be noticed in a particular locality.

(1) From George Borjas: “In April 1980, when Fidel Castro declared that Cubans wishing to emigrate could leave from the port of Mariel, 125,000 people accepted the offer and Miami’s labor force suddenly grew by 7 percent. Yet, the trends in wages and unemployment rates in Miami between 1980 and 1985, including those of black workers, resembled those observed in comparable cities.”

Source: Finnish Economic Papers. Spring 2011 24 (1)

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Mail this entry to a friend

Email this entry to:

Your email address:

Message (optional):