Economic Effects of Immigration:
Lessons from the Chicago Labor Market
Virginia Parks, Ph.D.
School of Social Service Administration
University of Chicago
June 29, 2011
Theories of Migration
Push-Pull Factors
• Covers range of factors, economic to political
• Overly general; more recent theories specify these
factors within more defined set of parameters
Neoclassical Economic Theory
Dual Labor Market Theory
World Systems Theory
Theories of Migration
Neoclassical Economic Theory
• Supply and demand
• Dominates public policy discussions
• Macro
• Migration from low-wage to high-wage markets
• Wages will eventually equalize between markets
(i.e., countries)
• Micro
• Cost-benefit decision of individual
• Migration as investment in human capital
• Where will I get maximum return on my skills?
Theories of Migration
Dual Labor Market Theory
• Migration stems from permanent, intrinsic labor
demands of modern capitalist economies
• Segmented labor market
• Primary: stable jobs, good pay, opportunities for
advancement, recognized social status
• Secondary: unstable, low pay, no or limited
opportunities to advance (regardless of skill), low
social status
• Natives shun jobs in secondary sector
• Immigrants needed as labor supply into secondary
sector jobs
Theories of Migration
World Systems Theory
• Positions migration within global economic system
• Dominant in academic fields outside of economics
(sociology, anthropology, geography)
• Penetration of capitalist production relations beyond
industrialized countries prompts migration flows
• In drive for higher profits, capitalist firms enter poor
countries for cheap land, raw materials, and labor
• Entry disrupts internal socioeconomic systems
• Forces of globalization hasten penetration
• Transportation & communications technology
• Cultural homogenization
Economic Effects
Firm-level production decisions
Productivity and innovation
Consumer markets: growth, prices, etc
Labor market effects
Yet economic effects only one consideration in larger
policy debate about immigration
Economic Effects: Job Competition
Public and scholarly discourse accents competition
between immigrants and natives in labor market
28% of all Americans think immigrants take native jobs
Half of all African Americans believe that immigrants
reduce job opportunities for African Americans
Fewer than 40% of Latinos agree
Empirical Research
Findings have been divergent
Body of literature does not point with certainty to
predictable economic effects of immigration
The cocktail-party summation:
• Small (positive & negative) to no wage effects
• Small effects on unemployment of lowest skilled
native workers; probably exclusive to men
• Clearest wage and unemployment effects have been
on other immigrants
Empirical Research
Methodological differences characterize debate
• Card vs. Borjas
National vs. local labor market analysis
• Where do we best see effects?
• Where do we most care about effects?
• Example: On workers that stay in metro area or those
that move out?
Muriel Boat Lift as “natural experiment” (David Card)
Empirical Research
Strong empirical research on nature of low-wage labor
market where immigrants dominate, but are not
exclusive workforce
Conditions of low-wage work dictated predominantly by
political factors
• Erosion of real value of minimum wage
• Erosion of employment protections, e.g. overtime
• Minimal enforcement of wage & hour violations
• Routine illegal behavior of employers, e.g., nonpayment of FICA/worker’s comp, “wage theft”
Chicago’s Population Resurgence
City of Chicago Population Change, 1990-2007
140000
120000
+4%
100000
80000
+2%
60000
40000
20000
-2%
0
-20000
-40000
-60000
-80000
1990-2000
2000-2007
1990-2007
Immigration
Chicago's Population by Nativity, 2007
594,841
Foreign-born
population
22%
Native-born population
78%
2,145,383
Source: U.S. Census 2005-2007 American Community Survey 3-Year Estimates
Immigration
City of Chicago Population Change, 1990-2007
Chicago's Population: Nativity by Date of Entry, 2007
140000
120000
+4%
100000
Entered after 2000
24%
80000
60000
ForeignBorn
22%
Native-born population
78%
40000
Entered before 2000
76%
20000
-2%
0
1990-2000
2000-2007
1990-2007
-20000
-40000
-60000
-80000
Source: U.S. Census 2005-2007 American Community Survey 3-Year Estimates
Race/Ethnicity
City of Chicago Population Change, 1990-2007
Chicago Population: Major Racial/Ethnic Groups, 2007
140000
120000
Other
1%
+4%
100000
80000
Latino
28%
60000
Non-Hispanic White
31%
40000
20000
0
-20000
-2%
Non-Hispanic Asian
1990-2000
5%
2000-2007
Non-Hispanic Black
35%
1990-2007
-40000
-60000
-80000
Source: U.S. Census 2005-2007 American Community Survey 3-Year Estimates
Two Demographic Legacies
Immigrant City
Black Metropolis
Global City Narratives
Globalization-driven restructuring brings about shift from
manufacturing to services
• Global financial centers
• Tourism
Bifurcated labor market
• High-end jobs
• Low-end jobs
High-wage earners stimulate demand for low-wage
services (housekeeping, dry cleaners, restaurants)
• “Pulls” immigrants to fill these jobs
• Native-born workers don’t want these jobs
Whose Jobs?
“Immigrant Jobs”
• Low wage, low-skill, manual labor, service
Example: Hotel Housekeeping
• Manual labor, service sector job; requires little to no formal
education
• “Back of the house” work
• Dependent upon consumptive demand of high-end service
workers
• Low-wage ($8.60/hr average wage)
Hotel Housekeeping
Even in typical immigrant jobs, we see considerable
employment of native-born blacks
• Immigrants = 61%
• Native-born women = 39%
• African-American women = 27%
Both immigrant and African-American women count
hotel housekeeping as a niche job
•
•
Foreign-born Mexicans: 4 times overrepresented
African-Americans: 2.5 times overrepresented
Immigrant Replacement of Blacks?
Are African-American women losing out to immigrant
workers over time?
Share of housekeeping jobs fell from 32% to 27%
between 1990 & 2000
Yet immigrant share grew more rapidly
With stagnant growth in the hotel industry, vacancies
had to be created to accommodate this immigrant
growth
Explained by exit of native-born whites
Competition or Coexistence?
Industries in which both African American & immigrant
women were overrepresented increased between
1990 and 2000
Mixed niche industries primarily those characterized by
low-wage female-dominated employment:
–
–
–
–
–
Home health care
Child care
Nursing care
Outpatient care
Other industries, e.g., employment services, beauty salons,
hotels, hospitals (an exception given higher wages)
Shared Spaces of Economic Inequality
African American women gained jobs most dramatically
in lower-paying de-professionalized, but expanding,
health sectors (e.g., home health care)
Immigrant women made gains in these jobs as well
Both groups share an experience of inequality shaped
by the devaluation of women’s work and the
downgrading of care-work jobs
Working and Poor
34% of workers make less than $25,000/year
25% of full-time workers make less than $25,000/year
Working Poverty: working but family income falls
below 200% of the poverty line
One in five workers living in poverty
70% of these are working full-time
Working and Poor
Rate of Working Poverty by Race/Ethnicity,
Cook County, 2008
40
35
30
25
20
15
10
5
0
White
Black
Asian Pacific
Islander
Source: ACS 2008, IPUMS extract
Other
Hispanic
Working and Poor
Rates of working poverty by nativity, race, ethnicity:
Immigrant Latinos
39%
All immigrants
29%
African Americans
27%
Native-born Latinos
24%
Working and Poor
Geography of
Working Poverty
45.2% South Lawndale,
Lower West Side
39.2% Humboldt Park,
West Garfield Park,
East Garfield Park, North
Lawndale
39.1% South Chicago,
Calumet Heights, Burnside,
South Deering, East Side,
Hegewisch
The Politics of Low-Wage Work
Thank You!