Impact of Immigration on the
Distribution of Well-Being
by
Gary Burtless
The Brookings Institution
August 11, 2009
Social Security Administration and Retirement Research Consortium Conference
Number (millions) and percent
foreign born, 1850-2007
Percent foreign
born
16%
Millions
40
35
14%
30
12%
25
10%
Foreign-born population (left axis)
20
8%
% of population that is foreign born
(right axis)
15
6%
20
07
20
00
19
90
19
80
19
70
19
60
19
50
19
40
19
30
19
20
19
10
19
00
0%
18
90
0
18
80
2%
18
70
5
18
60
4%
18
50
10
Source: Census Bureau.
Immigration and the income
and wage distributions
 Historically high rates of immigration
 Major differences between immigrants and
current residents
 Age distribution
 Skill mix
 Direct impact on distribution of well-being
 Average wage
 Average income
 Age-profile of income
Immigration and the income
and wage distributions
 Ignore feedback effects on natives’ wages
 Use March CPS / ASEC files to estimate trends in
wages, incomes if there were fewer immigrants
 Identification of immigrants, year of entry
 YEARS: 1993-2007
 POLICY CHANGE: 1980
 Doubtful identification of adult children of post1979 immigrants
Post-1979 immigrants in the U.S. wage
distribution, 1993-2007
Percent in centile who are post-1979 immigrants
25
2007
20
Share = 13.3%
Share = 10.6%
2000
1993
15
10
Share = 5.8%
5
0
0
20
40
60
80
100
Centile of annual wage distribution
Source: Tabulations of 1994, 2001, and 2008 ASEC files.
Average Annual Wage by Immigrant Status
and Year of Entry into the U.S., 1993 - 2007
Thousands of 2007 dollars
45
40
19%
35
Natives and pre-1980 immigrants*
25
All wage earners
Post-1979 immigrants **
20
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
26%
30
Source: Tabulations of 1994 - 2008 ASEC files.
Impact of Reduced Immigration after 1979 on
Level of Economy-Wide Average U.S. Wage,
1980-2007
Predicted or estimated effect
(percent increase over actual historical wage)
3.0
2.57%
2.5
2.0
1.53%
1.5
1.0
Predicted
0.5
0.0
1980
Estimated with 1994-2008 ASEC files
1985
1990
1995
2000
2005
2010
Source: Tabulations of 1994 - 2008 ASEC files.
Impact of Post-1979 Immigration on Average
Size-Adjusted Personal Income, 1993 - 2007
Percent of average income
-1.0
-1.0
Simulation 1
Average
Simulation 2
-1.5
-2.0
-2.0%
-1.5
-2.0
-2.5
-2.5
-3.0
-3.0
-3.2%
-3.5
-4.0
1993
-3.5
1995
1997
1999
2001
2003
2005
-4.0
2007
Source: Tabulations of 1994 - 2008 ASEC files.
Impact of selected changes in immigration
policy on median size-adjusted personal income,
1993-2007
Percent of median size-adjusted
income in indicated year
+1.8%
+1.7%
+1.1%
+1.0%
Source: Tabulations of 1994, 2001, and 2008 ASEC files.
Increase in size-adjusted average income
resulting from 20% cut in immigration after
1979: IMPACT ON AGE PROFILE OF INCOME (2006)
Percentage change in income
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
15-24
25-34
35-44
45-54
55-64
Age of household head
65-74
75+
Increase in size-adjusted average income
resulting from reduced immigration after
1979: IMPACT of ALTERNATIVE POLICIES (2006)
Percentage change in income
2.5%
50% CUT IN MEXICAN IMMIGRATION
2.0%
1.5%
1.0%
50% CUT IN DROPOUTS
0.5%
20% OVERALL CUT
0.0%
15-24
25-34
35-44
45-54
55-64
Age of household head
65-74
75+
Immigration and well-being
 Reduced immigration would - Raise average wage of remaining population
 Produce faster growth in initial social security benefits
 Increase residents’ average income
 Boost the relative incomes of residents who are
members of households headed by younger adults
 These conclusions ignore spillover effects of
lower immigrant labor supply on prices and on
natives’ employment and wages