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The New Americans
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.
1997
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NATIONAL ACADEMY PRESS
2101 Constitution Ave., N.W. Washington, D.C. 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 new Americans : economic, demographic, and fiscal effects of immigration / Panel on the Demographic and Economic Impacts of Immigration, National Research Council ; James P. Smith and Barry Edmonston, editors.
p. cm.
Includes bibliographical references and index.
ISBN 0-309-06356-6 (cloth)
1. United States—Emigration and immigration—Economic aspects. 2. United States—Emigration and immigration—Government policy. 3. Alien labor—United States. I. Smith, James P. II. Edmonston, Barry. III. National Research Council (U.S.). Panel on the Demographic and Economic Impacts of Immigration.
JV6471.N43 1997
330.973—dc21 97-21182
CIP
Additional copies of this report are available from:
National Academy Press
2101 Constitution Avenue N.W. Washington, D.C. 20418 Call 800-624-6242 or 202-334-3313 (in the Washington Metropolitan Area). This report is also available on line at http://www.nap.edu
Printed in the United States of America
Copyright 1997 by the National Academy of Sciences. All rights reserved.
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PANEL ON THE DEMOGRAPHIC AND ECONOMIC IMPACTS OF 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
J. THOMAS ESPENSHADE,
Office of Population Research, Princeton University
RICHARD B. FREEMAN,
Department of Economics, Harvard University, and Labor Studies, National Bureau of Economic Research
JOHN F. GEWEKE,
Department of Economics, University of Minnesota
CHARLES HIRSCHMAN,
Department of Sociology, University of Washington
ROBERT P. 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 C. 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 A. ROSENQUIST, Senior Project Assistant
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COMMITTEE ON POPULATION
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,
Population Studies Center, University of Pennsylvania
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
MARTA TIENDA,
Population Research Center, University of Chicago
AMY O. TSUI,
Carolina Population Center, University of North Carolina, Chapel Hill
JOHN HAAGA, Director
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COMMITTEE ON NATIONAL STATISTICS
NORMAN M. BRADBURN (Chair),
National Opinion Research Center, University of Chicago
JULIE DAVANZO,
RAND, Santa Monica, California
QWILLIAM 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
CHARLES F. MANSKI,
Department of Economics, University of Wisconsin
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 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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Acknowledgments
This report reflects the efforts of many people. The panel was established under the auspices of the Committee on Population, directed by John Haaga, and the Committee on National Statistics, directed by Miron Straf—both of whom were instrumental in developing the study and provided guidance and support to the staff. At a number of critical times, John Haaga offered useful advice and always found a way to help us meet our obligations in a timely fashion.
The panel gratefully acknowledges the funding received from the U.S. Commission on Immigration Reform. Commission staff, including Susan Forbes Martin, Lindsay Lowell, and David Howell, were helpful to the panel throughout the study.
The panel benefited greatly from a set of papers we commissioned: by Susan Carter and Richard Sutch on long-term population and economic effects of immigration on the United States; by Kevin Murphy and Gary Becker on the role of immigration in economic growth; by John Haaga and Alberto Palloni on immigration and crime; by Edward Funkhouser and Stephen Trejo on the economic effects of immigration on women; by Thomas MaCurdy, Thomas Nechyba, and Jay Bhattacharya on a conceptual framework considering fiscal effects of immigration; and by Daniel Trefler on economic models of immigration and trade. In addition, William Frey and Kao-Lee Liaw prepared a paper that analyzed the effect of immigration on internal migration and state distribution of the U.S. resident population. The National Academy Press expects to publish a volume containing revised versions of some of these papers.
The panel did considerable new research, with the aid of some expert consultants. Peter Brandon prepared fiscal estimates from the Survey on Income and Program Participation. Michael Clune conducted the panel's case study of the
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fiscal effect of immigration in California. Deborah Garvey worked with panel member Thomas Espenshade on the panel's use of their ongoing study of the fiscal effect of immigration in New Jersey. Tim Miller collaborated with panel member Ron Lee on lifetime estimates of the fiscal effect of immigration. And Michel Vanderhart assisted panel member Finis Welch in estimating price effects of immigration.
I also acknowledge the contribution of Mendelle T. Woodley's superb editing skills in the preparation of the report. Mendy was there from the beginning and helped us translate our thoughts into clear English sentences. Our report also benefited from a final copy editing by Christine McShane, of the National Research Council staff.
No panel with a task as complex and challenging as ours could perform its duties without an excellent, well-managed staff. In particular, the overall report would not have been possible without the dedicated efforts of four staff members. The panel is indebted to Karen Foote, program officer, who handled administrative matters for the first year of the panel's work. We appreciate very much the work of Joel Rosenquist, senior project assistant, who skillfully guided the report through numerous rounds of editing in preparation for publication and ably and cheerfully handled the large number of administrative tasks presented by the panel. Kristin McCue, senior staff officer, made major contributions to the panel's work. Working with the panel's chair, she coordinated much of the work for the study of labor markets and directed the preparation of considerable data analysis for Chapter 5. More than this, she also worked with the study director on revising and reviewing drafts of the report, offering constructive advice on the panel's work and helping to bring the report to publication. Finally, we are indebted to Barry Edmonston, study director, who managed the overall work of the panel, organized and managed a complex set of activities, and helped us to meet our deadlines. Barry worked on all aspects of the project and was always dedicated, responsible, and in good humor.
I close by expressing my appreciation to fellow panel members for their willingness to devote long hours to this project. They worked together well and patiently, a critical element in such a far-reaching project. A number of panel members prepared drafts for the panel's use. Some of their contributions have greatly assisted the preparation of chapters; others appear in the appendices. Although the work was difficult and the requests I made of their time bordered on the unconscionable, all panel members responded in an extremely helpful way. This project has been one of the most intellectually stimulating experiences of my life. The reasons are simple—an important public issue and a group of intelligent, and highly motivated panel members. I am in their debt.
JAMES P. SMITH, CHAIR
PANEL ON THE DEMOGRAPHIC AND ECONOMIC IMPACTS OF IMMIGRATION
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Contents
Summary
1
Impact of Immigration on the U.S. Population
3
Economic Impacts of Immigration
4
Fiscal Impacts of Immigration
8
Social Dimensions of Immigration
12
1
The Immigration Debate
14
Immigration Policy
15
Who Wins? Who Loses?
16
Is Immigration "Too" Costly?
16
What Did the Panel Do?
17
A Road Map
19
2
Background to Contemporary U.S. Immigration
20
A Word About Terminology
21
U.S. Immigration Laws and Trends
22
Background to Immigration Numbers
30
Current U.S. Immigration Policy
37
Immigrant Characteristics
52
Comparison with Other Countries
62
The Canadian Case
65
Conclusions
67
References
68
Appendix 2.A: Admission of Immigrants into Canada
71
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3
The Face of the U.S. Population in 2050
76
Background to Population Change
78
A Projection Model
81
National Population Growth
93
Implications of the Size of the Population
98
Age and Sex Composition
99
Immigrants and Their Children
110
Racial and Ethnic Composition
113
Conclusions
122
References
123
Appendix 3.A: Population Projection Model
124
Appendix 3.B: Population Projection Assumptions
131
Appendix 3.C: Sensitivity of Population Projection Results
133
4
Immigration's Effects on Jobs and Wages: First Principles
135
First Principles: Labor Market Effects of Immigration
136
Growth and Immigration
153
Conclusions
164
References
165
Appendix 4.A: Immigration in the Two-Good, Two-Factor Model
166
Appendix 4.B: Assessing the Labor Market Benefits and Costs of Immigration
170
5
Immigration's Effects on Jobs and Wages: Empirical Evidence
173
The Economic Gain to Immigrants
174
Trends in Immigrant Skills
181
Differentials Across National Origins and the Decline in Immigrant Skills
185
Who Are the Immigrants?
190
Economic Assimilation
196
Emigration
204
Trends in Employment
205
Occupations and Jobs
209
Impact of Immigrants on Native Earnings and Employment
219
Immigration and Native Migration
228
Price Effects of Immigration
230
Conclusions
235
References
237
Appendix 5.A: Observed Wage Growth of Men and Women
240
Appendix 5.B: Calculation of Shares of Expenditures Attributable to Immigrant Labor
251
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6
Do Immigrants Impose A Net Fiscal Burden? Annual Estimates
254
Introduction
254
Estimating the Annual Fiscal Impact of New Immigrants
257
Estimates of the Annual Fiscal Impact of Immigrant-Headed Households
270
Conclusions
292
References
294
7
The Future Fiscal Impacts of Current Immigrants
297
Introduction
297
Dynamic Incidence
298
Kinds of Impacts
302
The Heterogeneity of Immigrants and Intra- and Intergenerational Mobility
306
The Age Profiles of Taxes and Benefits
308
Aggregate Cross-Sectional Fiscal Impacts of Immigrants and Their Children
316
Constructing Longitudinal Age Profiles
323
Baseline Results
325
The Average Impact of an Incremental Immigrant
331
Alternative Scenarios
336
The Timing of Fiscal Impacts
341
Interpreting the Results
344
Summary
349
Key Conclusions
352
References
354
Appendix 7.A: Intergenerational Educational Mobility
355
Appendix 7.B: Net Present Values for Immigrants and Natives, by Scenario
358
Appendix 7.C: Discussion of Data Sets for the Study of Fiscal Impacts
362
8
The Social Dimensions of Immigration
363
Integration of Immigrants into American Society
365
Effect of Immigrants on American Institutions
382
Attitudes Toward Immigration and Interethnic Relations
389
Immigration and Interethnic Tensions
393
Conclusions
395
References
397
Appendix 8.A: Analysis of Polling Data
402
Biographical Sketches
407
Index
413
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