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A Tale of Two Studies


Monday, October 1, 2012

Earlier this month, two interesting studies came out discussing two very different population groups in the State of California: immigrants and emigrants.

The first study was carried out by Professor Manuel Pastor and his team at the University of Southern California (http://csii.usc.edu/CAimmSCORECARD.html) and focused on how well 10 regions in California performed with respect to integrating immigrants into their economies. Professor Pastor and his colleagues discovered the most resilient economies existed in those regions that were the most successful at integrating their foreign-born citizens into the workforce. This came as no surprise to Professor Pastor, whose research in his earlier book Just Growth: Inclusion and Prosperity in America’s Metropolitan Regions, showed that the proportion of immigrants at the beginning of a given timeframe is tied with increasingly quicker economic growth in the following years.

As we’ve noted before, some of this growth is connected to immigrants being more likely to start their own businesses. However, this growth is also associated with immigrants having higher participation rates for high-skill jobs through given their disproportionate backgrounds in STEM fields, as well as their presence in low-skill jobs given their openness to accepting jobs many Americans would not touch. In any event, the findings of Professor Pastor and his colleagues are clear: Integrating immigrants into an economy is an important step to help jumpstart it.

Why is this relevant for California? Because another study by consultants Tom Gray and Robert Scardmalia at the Manhattan Institute for Policy Research has found that California is slowly depopulating itself (http://www.manhattan-institute.org/html/cr_71.htm). Until 1990, California grew spectacularly for several decades, drawing residents with job opportunities and the state’s natural beauty and open spaces. However, over the last 20 years, the state has lost nearly three-and-a-half million residents to other states. Gray and Scardmalia cite chronic economic adversity, excessive population density, and state and local government fiscal instability (which discourages businesses and individuals, who eventually can no longer tolerate a reduction in services, tax breaks, and other incentives). Some of those moving away are retirees who are fleeing to Oregon and Nevada. Many others are young working families looking for opportunities in Texas. To offset at least part of this population exodus, California must find a way to attract immigrants for both high-skill and low-skill jobs. And this is unlikely to happen until the state gets its fiscal house in order and addresses quality-of-life issues.

So why are these two studies relevant for the United States? Because in many ways, California is a bellwether for America. California is still a vital center for ideas and innovation, and it remains one of the world’s top ten economies. Yet its decline is a reminder to the rest of the U.S. that with such factors as an aging population, a lower birth rate among native-born citizens, and gaping holes in filling STEM jobs, America not only needs immigrants but needs to integrate them efficiently to halt its own national economic decline.

Are California and America up for the challenge? Were Charles Dickens alive today, he would certainly have Great Expectations for them both.



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