The Immigration Debate

Studies on the Economic, Demographic, and Fiscal Effects of Immigration

James P. Smith and Barry Edmonston, Editors

Panel on the Demographic and Economic Impacts of Immigration

Committee on Population

and

Committee on National Statistics

Commission on Behavioral and Social Sciences and Education

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C.
1998



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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration The Immigration Debate Studies on the Economic, Demographic, and Fiscal Effects of Immigration James P. Smith and Barry Edmonston, Editors Panel on the Demographic and Economic Impacts of Immigration Committee on Population and Committee on National Statistics Commission on Behavioral and Social Sciences and Education National Research Council NATIONAL ACADEMY PRESS Washington, D.C. 1998

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration NATIONAL ACADEMY PRESS 2101 Constitution Avenue, NW Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. This study was supported by Order No. 95-55 between the National Academy of Sciences and the U.S. Commission on Immigration Reform. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the organizations or agencies that provided support for this project. Library of Congress Cataloging-in-Publication Data The immigration debate : studies on the economic, demographic, and fiscal effects of immigration / James P. Smith and Barry Edmonston, editors. p. cm. Includes bibliographical references. ISBN 0-309-05998-4 (pbk.) 1. United States—Emigration and immigration—Economic aspects. 2. United States—Emigration and immigration—Case studies I. Smith, James P. (James Patrick), 1943- II. Edmonston, Barry. JV6471 .I445 1998 330.973—ddc21 97-45468 Additional copies of this report are available from: National Academy Press 2101 Constitution Avenue NW Washington, DC 20418 Call 800-624-6242 or 202-334-3313 (in the Washington Metropolitan Area). This report is also available online at http://www.nap.edu Printed in the United States of America Copyright 1998 by the National Academy of Sciences. All rights reserved.

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration PANEL ON DEMOGRAPHIC AND ECONOMIC IMPACTS ON IMMIGRATION JAMES P. SMITH (Chair), RAND, Santa Monica, California ALAN J. AUERBACH, Department of Economics, University of California, Berkeley GEORGE J. BORJAS, John F. Kennedy School of Government, Harvard University THOMAS ESPENSHADE, Office of Population Research, Princeton University RICHARD FREEMAN, Department of Economics, Harvard University, and Labor Studies, National Bureau of Economic Research JOHN F. GEWEKE, Department of Economics, University of Minnesota, Minneapolis CHARLES HIRSCHMAN, Department of Sociology, University of Washington ROBERT INMAN, Department of Finance, Wharton School of Business, University of Pennsylvania GUILLERMINA JASSO, Department of Sociology, New York University RONALD D. LEE, Departments of Demography and Economics, University of California, Berkeley MARY WATERS, Department of Sociology, Harvard University FINIS R. WELCH, Department of Economics, Texas A&M University BARRY EDMONSTON, Study Director KRISTIN McCUE, Research Associate JOEL ROSENQUIST, Senior Project Assistant

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration COMMITTEE ON POPULATION 1997 RONALD D. LEE (Chair), Departments of Demography and Economics, University of California, Berkeley CAROLINE H. BLEDSOE, Department of Anthropology, Northwestern University JOHN BONGAARTS, The Population Council, New York JOHN B. CASTERLINE, The Population Council, New York LINDA G. MARTIN, RAND, Santa Monica, California JANE MENKEN, Institute of Behavioral Science, University of Colorado, Boulder ROBERT A. MOFFITT, Department of Economics, Johns Hopkins University MARK R. MONTGOMERY, The Population Council, New York W. HENRY MOSLEY, Department of Population Dynamics, Johns Hopkins University School of Hygiene and Public Health ALBERTO PALLONI, Department of Sociology, University of Wisconsin, Madison JAMES P. SMITH, RAND, Santa Monica, California BETH J. SOLDO, Department of Demography, Georgetown University BARNEY COHEN, Director JOHN HAAGA, Director (through November 1997)

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration COMMITTEE ON NATIONAL STATISTICS 1997 NORMAN M. BRADBURN (Chair), National Opinion Research Center, University of Chicago JULIE DAVANZO, RAND, Santa Monica, California WILLIAM F. EDDY, Department of Statistics, Carnegie Mellon University JOHN F. GEWEKE, Department of Economics, University of Minnesota, Minneapolis JOEL B. GREENHOUSE, Department of Statistics, Carnegie Mellon University ERIC A. HANUSHEK, W. Allen Wallis Institute of Political Economy and Department of Economics, University of Rochester RODERICK J.A. LITTLE, Department of Biostatistics, University of Michigan, Ann Arbor CHARLES F. MANSKI, Department of Economics, University of Wisconsin, Madison WILLIAM D. NORDHAUS, Department of Economics, Yale University JANET L. NORWOOD, The Urban Institute, Washington, D.C. EDWARD B. PERRIN, School of Public Health and Community Medicine, University of Washington PAUL R. ROSENBAUM, Department of Statistics, Wharton School of Business, University of Pennsylvania KEITH F. RUST, Westat, Inc., Rockville, Maryland FRANCISCO J. SAMANIEGO, Division of Statistics, University of California, Davis MIRON L. STRAF, Director

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration CONTRIBUTORS JAY BHATTACHARYA, Department of Economics, Stanford University SUSAN B. CARTER, Department of Economics, University of California, Riverside MICHAEL S. CLUNE, Department of Demography, University of California, Berkeley THOMAS J. ESPENSHADE, Department of Sociology and Office of Population Research, Princeton University WILLIAM H. FREY, Population Studies Center, University of Michigan, Ann Arbor EDWARD FUNKHOUSER, Department of Economics, University of California, Santa Barbara DEBORAH L. GARVEY, Department of Economics, Princeton University JOHN HAGAN, Faculty of Law, University of Toronto, Canada RONALD D. LEE, Departments of Demography and Economics, University of California, Berkeley KAO-LEE LIAW, Department of Geography, McMaster University, Ontario, Canada THOMAS MaCURDY, Department of Economics and Senior Fellow, The Hoover Institution TIMOTHY W. MILLER, Department of Demography, University of California, Berkeley THOMAS NECHYBA, Department of Economics, Stanford University ALBERTO PALLONI, Department of Sociology, University of Wisconsin, Madison JAMES P. SMITH, RAND, Santa Monica, California RICHARD SUTCH, Departments of Economics and History and Institute of Business and Economic Research, University of California, Berkeley DANIEL TREFLER, Institute for Policy Analysis, University of Toronto, and Harris School of Public Policy, University of Chicago STEPHEN J. TREJO, Department of Economics, University of California, Santa Barbara

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration Acknowledgments In 1990, Congress appointed a bipartisan Commission on Immigration Reform to review the nation's immigration policies and laws. In turn, the commission asked the National Research Council to convene a panel of experts to assess the demographic, economic, and fiscal consequences of immigration. The panel was not asked to answer all the current questions about immigration or to recommend policy. Rather, the goal was to improve the scientific foundation for public discussion and policy making around a few key issues. In 1997, the panel released its report, entitled The New Americans: Economic, Demographic, and Fiscal Effects of Immigration , which contains its main findings and conclusions. This companion volume contains the detailed background papers that the panel commissioned along the way. This book is the product of a great deal of hard work by a set of dedicated authors, to whom I am very grateful. In addition, I thank the U.S. Commission on Immigration Reform for its financial support and commission staff members Susan Forbes Martin, Lindsay Lowell, and David Howell for their efforts during the development of the project. At the National Research Council, Barbara Boyle Torrey, executive director of the Commission on Behavioral and Social Sciences and Education, was an important source of help and encouragement. The work took place under the general direction of John Haaga and Miron Straf. Barry Edmonston provided a constant intellectual and managerial presence, aided by several other current and former staff members including Kristin McCue, Karen Foote, and Barney Cohen. Elaine McGarraugh skillfully edited the manuscript. LaTanya Johnson prepared the papers for publication. I thank them all. James P. Smith, Chair Panel on the Demographic and Economic Impacts of Immigration

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. William A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chairman and vice chairman, respectively, of the National Research Council.

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration Contents  1   Introduction James P. Smith   1     Fiscal Studies    2   An Economic Framework for Assessing the Fiscal Impacts of Immigration Thomas MaCurdy, Thomas Nechyba, and Jay Bhattacharya   13  3   Fiscal Impacts of Immigrant and Native Households: A New Jersey Case Study Deborah L. Garvey and Thomas J. Espenshade   66  4   The Fiscal Impacts of Immigrants: A California Case Study Michael S. Clune   120  5   The Current Fiscal Impact of Immigrants and Their Descendants: Beyond the Immigrant Household Ronald D. Lee and Timothy W. Miller   183     Labor Market Studies    6   Immigrants and Natives in General Equilibrium Trade Models Daniel Trefler   206

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration  7   Labor Market Outcomes of Female Immigrants in the United States Edward Funkhouser and Stephen J. Trejo   239     Historical, Demographic, and Social Consequences    8   Historical Background to Current Immigration Issues Susan B. Carter and Richard Sutch   289  9   Immigration and Crime in the United States John Hagan and Alberto Palloni   367  10   The Impact of Recent Immigration on Population Redistribution Within the United States William H. Frey and Kao-Lee Liaw   388     Index   449

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The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration THE IMMIGRATION DEBATE

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