The Economics of Immigration.pdf
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The Economics of Immigration
The Economics of Immigration provides students with the tools needed to examine the impact of immigration and immigration policies over the past century. The main objectives of the resource are for students to understand the decision to migrate, the impacts of immigration on markets and government budgets, and the consequences of immigration policies in a global context. Students will develop an appreciation of the importance of immigration as a separate academic field within labor economics and international economics. Topics covered include the effects of immigration on labor markets, housing markets, international trade, tax revenues, human capital accumulation, government fiscal balances, and climate migration. The resource also considers the impacts of immigration on what firms choose to produce, the ethnic diversity of restaurants, and financial markets, as well as the theory and evidence on immigrants’ economic assimilation. The textresource includes comparisons of immigration policies in a number of immigrant-receiving and sending countries, highlighting recent policy changes in Europe. Finally, the resource explores immigration topics that directly affect low- and middle-income countries, such as remittances, brain drain, and human trafficking. Readers will be fully equipped with the tools needed to understand and contribute to policy debates on this controversial topic. This is the first textresource to comprehensively cover the economics of immigration, and it is suitable both for economics students and for those studying migration in other disciplines, such as sociology and political science.
PART I BACKGROUND ON IMMIGRATION 1
1 Why study the economics of immigration? 3
Types of immigrants 6
Immigration is controversial 8
Immigration versus international trade 9
Immigration policy 10
Economics of immigration terminology 11
A basic model of immigration 12
A global overview of immigration 15
An overview of U.S. immigration 17
The rest of this resource 17
What this resource does not cover 18
Appendix 23
Supply and demand 23
Elasticity 24
Consumer and producer surplus 25
Present value 26
Contents viii
2 Patterns of international migration 29
Where are immigrants from? 30
Where do immigrants go? 31
Immigrant destinations within countries 33
Measuring immigrant concentration and dispersion 34
Immigration to poor countries 36
Do immigrants stay? return and repeat migration 37
Circular migration 39
The role of immigration policy 40
Refugees and asylum seekers 42
Unauthorized immigrants 44
Concluding thoughts 48
3 Determinants of immigration 53
Push and pull factors 54
The migration decision 57
Family decision-making 61
Uncertainty 63
The role of immigration policy 64
The gravity model of migration 64
Empirical evidence 66
The role of economic conditions in the origin 66
The role of economic conditions in the destination 68
The role of migration costs 71
The role of migrant networks 74
The role of immigration policy 75
Evidence for specific groups of immigrants 77
Determinants of immigrant destinations within countries 78
Determinants of return migration 79
Immigration paradigms 80
Conclusion 82
Appendix 89
PART II IMMIGRANT SELECTION AND ASSIMILATION 91
4 Selection in immigration 93
The Roy model 94
The direction of selection 96
Refugees and selection 100
Intermediate selection 100
Summing up the model 101
Implications for the returns to migration 102
Contents ix
Empirical evidence on selection 103
Measuring the return to skill 103
Global patterns of selection 105
Effects of migration costs and other factors 108
Effects of immigration policy 109
Selection among Mexico–U.S. immigrants 112
Selection on health 113
Selection in return migration 114
The Roy model and return migration 115
Empirical evidence on selection in return migration 120
Final thoughts on selection 121
Appendix 126
5 Assimilation 127
Labor market assimilation 128
Cohort differences in assimilation 131
Gender issues in immigrants’ labor market assimilation 136
Accounting for return migration 137
Immigrant types and assimilation 139
Participation in public assistance programs 140
Location choice and enclaves 141
Education 143
Language 144
Marriage and fertility 146
Health 148
Naturalization 148
Final thoughts on assimilation 151
Appendix 157
6 The second generation 159
Measuring intergenerational mobility 160
Intergenerational transmission and intergenerational elasticities 161
Intergenerational mobility among immigrants in the labor market 162
Transition matrices in Switzerland 166
Sons versus daughters 166
Intergenerational transmission 167
Issues in measuring intergenerational mobility among immigrants 169
Intergenerational mobility in education 170
Language proficiency 174
Marriage and fertility 175
Ethnic identity 176
Final thoughts on the second generation 179
Contents x
PART III LABOR MARKET EFFECTS OF IMMIGRATION 185
7 Labor market effects of immigration: Theory 187
Immigration model 188
Immigration model with costs 192
Upward-sloping labor supply when immigrants and natives are perfect
substitutes 194
Labor demand 196
Upward-sloping labor supply when immigrants and natives are
complements 197
Unskilled and skilled labor 198
Elasticity of substitution between different types of workers 201
Physical capital 201
Open versus closed economy 203
Final thoughts on the theoretical labor market effects 204
Appendix 207
Effects of elastic labor supply on immigration surplus 207
Production function 207
Natives and immigrants as perfect substitutes 207
Natives and immigrants as imperfect substitutes 209
Unskilled and skilled labor 210
Physical capital 211
Elasticity of substitution between different types of workers 211
8 Labor market effects of immigration: Evidence 213
Brief review of theory 214
Empirical approaches 215
Approach #1: Spatial correlations 217
Approach #2: Natural experiments 221
Approach #3: Skill cells 225
Approach #4: Structural models 229
Concluding remarks regarding wage effects 232
Other channels of labor market adjustment 232
Job upgrading by natives 234
Complementarities among highly educated workers 235
Changes in input and output mix 236
Productivity gains 236
Effects on previous immigrants 237
Concluding thoughts 237
Appendix 245
Basic regression analysis and common biases 246
Univariate regression analysis 246
Omitted variable bias 248
Selection bias 249
Contents xi
Simultaneity bias 249
Identification strategies 250
Multivariate regression analysis 250
Difference-in-differences estimators 251
Instrumental variables 252
PART IV OTHER EFFECTS OF IMMIGRATION 255
9 Effects on other markets in the destination 257
Housing 258
Prices of goods and services 261
Product diversity 263
International trade 265
Financial markets 267
Physical capital investment 269
Technology, innovation, and self-employment 270
Income 274
Income inequality 275
Growth accounting 276
The Solow model 277
Final thoughts 281
Appendix 286
10 Fiscal effects 287
Measuring the fiscal impact 288
Fiscal costs and benefits 288
Conceptual issues 291
Accounting methods 292
Estimates of the fiscal impact of immigration: United States 295
Static estimates 295
Dynamic estimates 297
State-level results 300
Estimates of the fiscal impact of immigration: OECD countries 302
U.S. immigrants’ participation in government-funded programs 305
Welfare 305
Education 307
Health care 309
Social security 310
Final thoughts on fiscal effects 310
11 Effects on source countries 317
Labor market consequences of emigration for the source country 318
Emigration and human capital: Brain drain or brain gain? 320
Contents xii
The extent of high-skilled emigration 322
Channels of brain drain and brain gain 326
Growth accounting 329
Policy issues and responses to high-skilled emigration 329
Remittances 330
Reasons for remitting 336
Remittances in the labor market model 338
Evidence on the impact of remittances 339
Remittances and economic growth 339
Remittances and poverty 340
Remittances and development 340
Remittance policy 341
Impacts on political, economic, and social institutions 342
Impact on political institutions 342
Impact on economic institutions 343
Impact on social institutions 344
Final thoughts on source countries 344
PART V IMMIGRATION POLICY 355
12 Immigration policy around the world 357
Point-based systems 358
Canada 358
Australia 360
Other point-based systems 363
Drawbacks of a point system 364
European union 365
Guest worker programs 367
Germany 370
Spain 371
Other countries 372
Refugee and asylee policies 373
Refugee crises in Europe: Syria and Ukraine 375
Labor market outcomes of refugees 378
Legalization policies 380
Policies regarding immigrants after arrival 382
Introduction programs 382
Language training 383
Active labor market programs 383
Anti-discrimination policies 384
Final thoughts 384
Contents xiii
13 U.S. immigration policy 390
The evolution of U.S. immigration policy 392
Shifting from national origins to preference categories 394
Addressing unauthorized immigration 396
Current immigration policy 399
Legal permanent resident visas 399
Temporary visas 403
Unauthorized immigration and enforcement 406
U.S. refugee and asylee policy 409
State and local policies 412
Failed attempts at federal immigration policy reform 413
Immigration initiatives in the Trump era 414
Final thoughts on U.S. immigration policy 414
PART VI FRONTIERS IN IMMIGRATION RESEARCH 421
14 Frontiers in the economics of immigration 423
Climate migration 424
Voting, electoral outcomes, and attitudes towards immigration 425
Crime 427
Human trafficking 432
Education 436
Health 439
Fertility 440
Happiness 442
Final thoughts on frontiers 445
Author index 454
Subject index 462