On the economics of
immigration
George J. Borjas
Harvard University
April 2012
Immigrants in workforce
Immigrant share
0.15
0.12
0.09
0.06
0.03
1960
1970
1980
Year
1990
2000
Trends in immigrant share, by education,
Immigrant share
0.5
High school dropouts
0.4
0.3
0.2
Post-graduate
degrees
College graduates
0.1
0
1960
Some
college
High school graduates
1970
1980
Year
1990
2000
Percent wage differential between
immigrant and native men
Percent
10
0
-10
-20
1960
1970
1980
Year
1990
2000
An interesting question

Do immigrants alter the employment
opportunities of native workers?
 “After World War I, laws were passed
severely limiting immigration. Only a trickle
of immigrants has been admitted since
then. . .By keeping labor supply down,
immigration policy tends to keep wages
high.”
 Paul Samuelson, Economics, 1964.
Decadal change in log weekly wage
Scatter diagram relating wages and
immigration (removing decade effects)
0.2
0.1
0
-0.1
-0.2
-0.1
-0.05
0
0.05
0.1
Decadal change in immigrant share
0.15
0.2
Predicted impact of 1980-2000
immigrant influx
Education group:
Short run
Long run
-3.4%
0.0%
High school dropouts
-8.2
-4.8
High school graduates
-2.2
1.2
Some college
-2.7
0.7
College graduates
-3.9
-0.5
All workers
Source: Borjas and Katz, 2007.
Short run: Capital stock is fixed
Long run: Rental price of capital is fixed
Who gains? Who loses?




Workers lose: 2.8 percent of GDP, or $400
billion.
Employers gain: 3.0 percent of GDP, or $430
billion.
Net gain is about $30 billion annually, about
$110 per native-born person.
Distributive conflict is at the core of immigration.
“Public charge” restrictions




First restrictions: Massachusetts, 1645 and 1655;
New York, 1691, sets up a bonding system
1876: Supreme Court overthrows state regulations.
1882: Congress bans entry of “any persons unable
to take care of himself or herself without becoming a
public charge.”
1903: Congress approves deportation of immigrants
who become public charges within two years after
arrival “for causes existing prior to their landing.”
Trends in percent of households receiving assistance
(cash assistance, food stamps, or Medicaid)
Fraction receiving assistance
0.3
0.25
Immigrants
0.2
0.15
Natives
0.1
1994
1998
2002
Year
2006
Social mobility, 1970-2000
Relative wage, 2nd generation, 2000
0.6
Correlation = .5
Poland
Philippines
Cuba
Italy
Belgium
UK
China
India
Germany
Sweden
0
Honduras
Mexico
Dominican
Republic
Haiti
-0.6
-0.4
0
Relative wage, 1st generation, 1970
0.4
Relative wage in 3rd generation
Social mobility, 1910-1990
0.4
0.3
0.2
China
Correlation = .25
Russia
Austria
0.1
England
Hungary
Japan
Scotland
0
Canada
-0.1
Romania
Mexico
Portugal
Belgium
-0.2
-0.4
-0.2
0
Relative wage in 1st generation
0.2
Social mobility in the 21st century

There will likely be less assimilation because:
 Economic conditions are different
 Expansion of welfare state
 De facto moratorium (policy shifts and Great
Depression)
 Two world wars
 Change in ideological climate re assimilation,
affirmative action
Immigration policy


So: what do all these findings imply about
U.S. immigration policy?
Nothing at all!!!