Immigration and the U.S. economy have a long history together
Friday, March 25, 2016
There’s nothing new about immigration in the United States. We are a country of immigrants with a long history of welcoming newcomers at our borders. However, every few decades, the voices of immigration critics get louder and call for stricter quotas or outright bans on immigrants from certain regions. Almost always, they use the idea of immigrants’ negative economic impact to bolster their opinions.
A recent report from the National Bureau of Economic Research examines past groups of immigrants and compares them with those of today to see how things have changed for immigrants in the United States. The study, authored by Ran Abramitzky from Stanford University and UCLA’s Leah Platt Boustan, also looks at what effects the immigrants may have had on their new country.
In conducting their research, Abramitzky and Boustan looked at two discrete immigrant waves: The first included individuals who came to the United States after 1850 but before 1920; the second wave was composed individuals who have arrived in the U.S. since 1965. One of the primary differences between the two waves is region of origin.
The first wave was composed mainly of Europeans, while today, immigrants are far likelier to arrive from Asia and Latin America. The effects of this difference were great. Western European immigrants more easily assimilated into the American economy and cultural. At the same time, the labor markets were composed of similar jobs and industries. Add to this the fact that unskilled labor was paid at a much higher inflation-adjusted rate and the first wave of immigrants arrived with an economic leg up over more recent immigrants to the U.S.
Today’s immigrants who arrive with lower-level job skills face a much greater economic gap than their historic counterparts. This means that it can take a generation or, even two, for them to close the gap and catch up economically. On the other hand, today’s immigrants start and succeed in entrepreneurial endeavors at a rate much greater than native-born citizens. In doing so, successful entrepreneurs can tap immigrant markets with which they’re already familiar and/or avoid some of the obstacles to assimilating into the U.S. job market.
In contrast to the first wave, a higher proportion of today’s immigrants are attracted to the U.S. by incentives that primarily target at wealthier and better-educated individuals. Getting into the United States is much easier for educated, highly-skilled immigrants. These groups tend to either have the means to pay the price for immigration or are appealing enough to U.S. companies to qualify for sponsorship. For others, the price of immigration is often prohibitively high.
The paper concludes that there is little evidence to support critics’ claims that immigration has an overall negative impact on U.S. wages and the economy, thereby harming native-born workers. More often than not, especially in cities, immigration creates demand and boosts productivity, which leads to a higher overall GDP.
Despite the historical differences between immigrant populations and the uphill struggles some newcomers face today, immigration continues to be a win-win proposition for both immigrants and the United States.