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Immigration: The Demographic and Economic Facts4. Effects of Immigration on Native UnemploymentPublished by the Cato Institute and the National Immigration Forum
Displacement of citizens from employment by immigrants has always
been one of the major fears about immigration. Englishman John
Toland wrote in 1714, "The vulgar, I confess, are seldom pleas'd
in a country with the coming in of Foreners . . . from their
grudging at more persons sharing the same trades or business with
them." But Toland also explained why this fear need not be
realized. "We deny not that there will be more taylors and
shoomakers; but there will also be more suits and shoos made than
before"--and sold to the immigrants, among others.
The speculative basis of the fear of citizen unemployment is
simple: if the number of jobs is fixed and immigrants occupy some
jobs, there are fewer available jobs for natives. Hence
unemployment is reviewed in this chapter.
The effect of immigrant competition on natives' wages also
is an issue that arouses the passions of natives. It will be
discussed in the next chapter.
An outpouring of research since the early 1980s is an
embarrassment of riches; there now is too much material to cover
in a short chapter. But no difficulty is caused thereby; there is
an unusual consensus in the results of the various studies, and
they may be summarized without danger. For the reader who wants
more information, an exhaustive review is contained in tabular
form in Fix and Passel (1994).
Many of the conclusions of the major studies are quoted
directly from the originals, often at some length. This enables
the reader to judge the nuances of the phrasing that can be lost
in a third-party summary. These quotations also give the reader
the flavor of the discussion as well as its statistics.
This and the following chapter can be summarized as follows:
Immigrants have practically no negative effect in the labor
market on any person except other immigrants. The effect on wages
is modest by any appraisal, and the effect on unemployment
apparently is zero.
It is all-important that these facts are agreed upon by all
observers. Here, for example, is a review of the literature by
the editors of a volume on this subject produced by the National
Bureau of Economic Research:
Increased immigration has a modest adverse effect on the wages of
the immigrants themselves and on the wages of earlier waves of
immigrants, but it has only a modest effect on the wages of the
young black and Hispanic Americans who are likely to be the next
closest substitutes (LaLonde and Topel). Neither the employment
nor the wages of less educated black and white natives worsened
noticeably in cities where immigrant shares of the population
rose in the 1970s. On the positive side, there is some evidence
that, in cities with more immigrants, employment grew more
rapidly or declined more slowly in low-wage industries where
immigrants tended to find jobs and that less skilled natives
moved into better jobs (Altonji and Card). The broad implication
is that immigrants have been absorbed into the American labor
market with little adverse effect on natives. (Abowd and Freeman
1992, 22)
The Effects on the Rate of Aggregate Unemployment of Natives
The most important conclusion that emerges is as follows:
The studies uniformly show that immigrants do not increase the
rate of native unemployment in the aggregate. The reader need not
go further if the conclusion is all that is desired.
The only purported study that disagrees with this
consensus--that of Donald Huddle--lacks any scientific merit; I
am prepared to defend that unequivocal harsh statement before any
scientific tribunal, as I have offered to do in the New York
Times but without response from Huddle;* more about Huddle later.
The effect of immigration on the general level of
unemployment is difficult to assess because the job-creating
process--which offsets the job-taking process--is much more
indirect and diffuse than is the job-taking process. It is even
difficult to establish how many jobs would stand open if
immigrants do not come, because after a while employers make
other arrangements, either using machines instead of human labor,
or reducing the scale of the enterprise. Nevertheless, there has
now accumulated a solid body of careful econometric studies on
this topic, using a variety of data sources and methods, done by
respected economists.
Muller's Study of Los Angeles
This is Muller's description of his results concerning
unemployment in Los Angeles.
To what extent did the influx of immigrants entering Southern
California in the 1970s reduce the jobs available to nonimmigrant
workers? The answer for the 1970s is little if at all. Although
Hispanic workers filled a large proportion of the jobs added
during the decade, particularly in manufacturing, there is no
indication that work opportunities for nonimmigrants lessened.
Despite mass immigration to Southern California, unemployment
rates rose less rapidly there than in the remainder of the
nation. Furthermore, the labor force participation rate (the
proportion of the population in the labor force) did not seem to
be affected. In fact the participation rate for both blacks and
whites was higher in Southern California than elsewhere in the
state and nation. Moreover, the difference in the participation
rate between Southern California and the rest of the country
remains essentially unchanged since 1970, indicating that the
influx of immigrants did not discourage people from seeking
employment (p. 13).
Simon-Moore-Sullivan Comparison of Immigration and Unemployment
across Cities in the United States
Moore, Sullivan, and I (1994) studied the relationship
between the rates of immigration and of unemployment across
cities in the United States. Our samples cover the years
1960-1977 for the various numbers of cities in the United States
for which Immigration and Naturalization Service data on
immigration are available in various years. (This is the only
period during which any data are available.)
We investigated the relationship between the level of
unemployment and the rate of immigration. When we examine the
differences between the years farthest apart (1960 and 1977), the
results seem at first to show a statistically significant
relationship. But when we allow for the secular rising national
trend in unemployment by examining the farthest-distant pair of
years having the same unemployment levels, the apparent
relationship is no longer seen. It is not obvious which of these
ways of looking at the data is the more appropriate.
There are many analyses in that paper that suggest no effect
at all. But for quantitative perspective, we may consider the
analysis with the largest effect of all. It implies that for each
immigrant who entered during that period, .093 natives were
unemployed during each of the 15 years, or 15 x .093 = 1.395
years of native unemployment for each entering immigrant. That
would certainly be a meaningful amount of unemployment to be
caused by an immigrant on average. But even this most unlikely
upper bound is far less than from a displacement assessment of
one job permanently lost to natives for each immigrant admitted.
The largest coefficient observed would have to be 20 or 30 times
as large as it is for there to be any such suggestion.
The correlations in all regressions are strikingly low. It
must be kept in mind, however, that immigration is small in
volume relative to other population movements and components, and
therefore it is almost impossible that immigration could explain
a large proportion of the differences in unemployment, no matter
how close the actual relationship. It is hard to find much policy
importance in a variable that explains so little of the variation
in the dependent variable.
Vedder-Gallaway-Moore Historical and Cross-Sectional Study
Vedder et al. (1994) examined the relationship between the
rates of unemployment (relative to population) and the rates of
unemployment for the United States as a whole during the 20th
century. They "found no statistically reliable correlation
between the percentage of the population that was foreign born
and the national unemployment rate over the period 1900-1989, or
for just the postwar era (1947-89)" (p. A12). They also compared
rates across states. In Vedder's words,
Messrs. Gallaway, Moore and I took the 10 states with the highest
average percentage of immigrant population in the 1960-90 period
and compared them with the 10 states with the smallest relative
immigrant presence. In the 10 high-immigrant states, the median
unemployment rate in the 1960-91 period was about 5.9%, compared
with 6.6% in the 10 low-immigrant states.
Classifying the states according to unemployment rates and
confining our analysis to the 1980s leads to even more startling
results, as shown in the accompanying chart. We compared the 10
states with the lowest average annual unemployment rates in the
years 1980-90 with the 10 states with the highest average annual
unemployment rates. The median proportion of the population that
was foreign-born was 1.56% in the high-unemployment states,
compared with 3.84% in the low-unemployment states. More
immigrants, lower unemployment (Vedder et al. 1994, A12).
The movement of immigrants to areas of low unemployment
could contribute to the negative observed relationship. Indeed,
the historical data show that immigration is affected by the rate
of unemployment (see also Easterlin 1968, described below). But
this cross-sectional study certainly provides no basis for
believing that there is a positive relationship.
Morgan-Gardner Study of the Bracero Program's Effects
Morgan and Gardner studied the bracero program of
guestworkers from Mexico that operated from 1942 to 1964. They
estimated the number of native workers who lost jobs and the
extent of the fall in wages.
They calculated that a 35 percent increase in the supply of
labor (210,000 workers) due to the program (the approximate
number between 1953 and 1964) caused a reduction of 51,000 jobs
filled by natives. They also estimated a fall in wages of 9
percent, and they estimated a total increase of 120,000 jobs due
to the decline in the wage rate. Morgan and Gardner are impressed
by the relatively high responsiveness in the number of jobs to
the changes in wages, and they also are impressed by the
relatively small decline in the wage rate induced by an increase
in the supply of labor of the magnitude of 35% (1982, 398-399).
This study is particularly relevant for understanding the
effect of illegal immigrants who work in agriculture.
Easterlin's Study of U.S. Cyclical Unemployment
In earlier decades of this century, when immigration to the
United States was quite free, the waves of immigration coincided
with the waves of business activity in the United States.
Immigration increased when the demand for labor was great, and
decreased (or even became net out-migration, as in the l930s)
when demand for labor fell and unemployment rose. About
immigration in the free-entry period before World War I,
Easterlin concluded,
[T]he swings in immigration were a response to corresponding
swings in the demand for labor in the United States. The evidence
is as follows:
In the United States, turning points of long swings in
output growth typically preceded those in the rate of
immigration, suggesting that immigration was responding to
changed conditions in the United States rather than abroad. . . .
During long swings in the U.S., a rising immigration rate
was typically preceded by a rising rate of growth in hourly wages
and, as far as the limited evidence goes, a declining
unemployment rate; a falling immigration rate tended to follow a
decline in the growth rate of hourly wages and a rising
unemployment rate. . . . Since the growth of the U.S. labor force
from domestic sources, whether from demographic factors or
participation-rate change, showed but slight evidence of long
swings before World War I . . . the implication is that
immigration waves were one of several symptoms of common origin,
namely, alternating tightness and slack in the labor market
associated with swings in the growth of labor demand. The
immediate stimulus to migration was probably changes in
unemployment conditions. There is a substantial similarity in the
timing of out-migration waves from diverse areas of
origin--different parts of Europe, Canada, Latin America, Asia,
and even the rural sector within the United States. This
observation is consistent with the view that these areas were
responding to a common external stimulus such as swings in labor
demand at destination (l968, 30-31).
The linkage between employment conditions and immigration
had the beneficial effect upon the native labor force of reducing
competition for jobs in bad times, while increasing the demand
for labor in both good times and bad. There is no reason to doubt
that future immigration would also respond to employment
conditions in the United States and thereby reduce the severity
of unemployment cycles, if it were unconstrained by quotas.
The picture with respect to flows of immigrants from various
countries of origin into various countries in Europe since World
War II fits very nicely with the last paragraph cited above from
Easterlin (Zimmerman 1994).
Cyclical Effects in Australia
Withers and Pope (1985) studied quarterly Australian
unemployment and immigration data from 1948 to 1982. They found
no increase in the rate of unemployment due to immigration. They
did find that unemployment influences later immigration, which
accounts for the correlation between the series. Summarizing this
study as well as several earlier studies of the topic, Chapman,
Withers, and Pope (1985) concluded that "immigration has not
increased unemployment within the range of Australian post-war
experience."
Huddle's Writings
Professor Huddle's work would not even be mentioned in this
review of scientific work if his writings had not been so widely
disseminated, quoted, and relied on in public policymaking.
Huddle and 27 of his students in a labor seminar, juniors
and seniors, mostly, conducted several field studies during a
two-year period, 1981-1982. Their objectives were to determine
what industries hire illegal aliens and to what extent illegals
displace U.S. workers or shut them out of the labor market in the
booming Houston-Galveston metropolitan area (Huddle, Corwin, and
MacDonald 1985, introductory note). Huddle concluded that
[t]he social and economic implications of the penetration of the
economy by undocumented workers is dramatic. If the sample
proportion of illegal worker participation is projected onto
city, state, and national construction programs alone, we find
that all male youths and minority youths, aged 16-24, could, in
principle, have been removed from the rolls of the unemployed as
of the time of our study, and that adds up to more than one
million U.S. workers who have been displaced. (press release
"FEDERAL GOVERNMENT . . . ," 1983, 3).
Huddle asserts that "[s]ome $18 billion per year are `being
siphoned off into the pockets of greedy employers' of illegal
aliens" (press release, March 6, 1984, 1). And he recommends that
"[a]rrest and deportation of illegal alien workers is currently
the cheapest and fastest way of securing additional jobs for
unemployed U.S. citizens" (press release "RAIDS ON. . .," 1983,
1).
According to Mr. Huddle's press releases and informal
publications--he has never published his data or methods in a
scholarly journal so that they can be checked by the reader, nor
has he met other basic scientific criteria--he sent students to
construction sites in the Houston-Galveston area. Wherever they
observed illegal immigrants, Mr. Huddle simply assumed that
natives would be working if there were no immigrants. He then
projected that assumption onto the United States as a whole,
arriving at an estimate of 1 million natives thereby caused to be
permanently unemployed, translating this into one native
remaining unemployed for every four immigrants employed.
Mr. Huddle's method of estimating the unemployment effect
does not take into account the processes of adjustment; few
workers remain permanently unemployed even if they lose jobs, and
as some workers move up the job ladder, they leave behind
opportunities for the less skilled. And his method counts only
the jobs immigrants work at, disregarding the other side of the
basic equation: Additional people, whether immigrants or youths
entering the labor force, not only take jobs but also make new
jobs by spending their earnings on the output of other workers,
thereby supporting additional employment. This equation explains
why the rate of unemployment is not greater in populous states
than in sparsely populated states, and why the unemployment rate
is not greater now than a century or two centuries ago, even
though there are many more residents (and immigrants) now than
then.
I think it fair to say that no reputable economist would
consider the writings of Huddle to prove anything whatsoever
about the supposed permanent loss of jobs by natives due to
immigration. Again, I mention Huddle's reports here only because
they have been publicized heavily by the INS and discussed
extensively in the press.
Effects on Employment of the Less Skilled, Minorities, and Women
Muller and Espenshade: Cross Section of Metropolitan Areas
Muller and Espenshade examined black unemployment in 247
metropolitan areas in the United States and 51 metropolitan areas
in California, New Mexico, and Arizona (states with large
proportions of persons from Mexico). They related the rate of
unemployment among blacks to the percentage of Hispanics in the
population, holding constant the percentage change in population
between 1970 and 1980, the percentage of income from construction
and durable goods industries, the percentage of blacks with a
high school education, and the rate of unemployment for whites.
They found as follows:
Black unemployment rates are not increased--if anything, they are
lowered--by a rise in the proportion of Mexican immigrants in a
local labor market. In the U.S. sample regression, signs of the
remaining coefficients are as one would expect. Thus, after
accounting for general labor market conditions, most of the
variation in black unemployment rates among metropolitan areas
can be attributed to differences in black educational attainment,
in the rate of population growth, and in the degree of durable
goods manufacturing and construction. In the regression based on
the Southwest sample, only the level of white unemployment stands
out as statistically significant (1985, 99-100).
Muller and Espenshade also made a special study of the
effect of Hispanic immigration upon blacks, the group which they
adjudged to be the Hispanics' closest competition in the labor
market. They first examined the rates of labor force
participation and unemployment for the years 1970, 1980, and
1982, covering a period of heavy immigration within Los Angeles
County, with these results:
Blacks generally, and black teenagers especially, do not appear
to have been harmed by immigration in the period from 1970 to
1981.
During the 1970s and into the 1980s, adult labor force
participation rates increased in the Los Angeles metropolitan
area and in California, reflecting a national pattern of rising
labor force participation. Throughout the period, participation
rates in Los Angeles continued to exceed the national average,
maintaining a fairly constant lead. Teenage labor force
participation rates also increased over the period, and the rates
for black teenagers in Los Angeles and in the state showed gains
relative to the rate for black teenagers in the nation. By
contrast, participation rates for all teenagers in Los Angeles
declined relative to the national average, dropping below the
national labor force participation rate for teenagers by 1982.
An examination of labor force participation data for Los
Angeles by sex and race from the 1970 and 1980 censuses indicates
that black women had gains that were above the average for them
nationwide, while black men experienced a decline that was
somewhat lower than the decline for them nationwide. And in 1982,
when unemployment in California reached its highest rate in four
decades, nonwhite labor force participation rates for both
teenagers and adults in the Los Angeles area continued to exceed
national rates.
Native workers who find their jobs jeopardized by immigrants
may experience higher rates of unemployment, if they do not drop
out of the labor force altogether. . . . The period from 1970 to
1982 was marked by rising rates of unemployment, both nationwide
and in California. For all groups in the United States,
unemployment rates more than doubled. The smallest increases were
for blacks in Los Angeles--27 percent for adults and 35 percent
for teenagers--followed by black teenagers in California. In sum,
trends in unemployment rates do not provide evidence of sharp job
competition between immigrants and blacks (1985, 96-97).
Muller and Espenshade also tackled the difficult problem of
estimating the number of new low-skill jobs created by Mexican
immigrants. They compare the total labor force in the nation's twelve
largest metropolitan areas--areas that, with the exception of Dallas,
Houston, and Los Angeles, have relatively few Mexicans in the labor
force--and use this average as a guide to what might be expected in
Los Angeles in the absence of Mexican immigration. The actual
number of operatives and laborers in Los Angeles in 1980 was
60,000 larger than the number predicted using this procedure
(1985, 149).
This estimate jibes well with their estimate of the relevant
number of Mexicans in various manufacturing jobs in Los Angeles.
This "direct" effect may be compared with the estimate of 210,000
recent immigrants from Mexico.
Muller's Study of Los Angeles
Even the job prospects for black teenagers do not appear to
be adversely affected by the influx of immigrants. Total teenage
unemployment in Southern California is close to the national
average, but unemployment among black teenagers is substantially
lower than average (1984, 14).
McCarthy and Valdez Study of California
McCarthy and Valdez use methods similar to Muller and
Espenshade (described above)--analysis of census and Department
of Labor data on employment, unemployment, wages, and population
for Los Angeles and California compared with the United States as
a whole in 1970 and 1980. They arrived at results similar to
those of Muller and Espenshade.
Immigrants appear to have provided a net benefit to the
California economy by supporting industrial and manufacturing
growth.
Their negative labor market effects have been minor and
concentrated among the native-born Latino population (McCarthy
and Valdez 1985, 24).
This lack of effect is particularly striking because the
growth in employment was large: While between 1970 and 1980
low-wage employment fell by 5.2% in the United States as a whole,
it grew by 46.1% in California and by 52.7% in Los Angeles; the
corresponding figures for moderate wage industry were increases
of 4.3%, 20.6%, and 6.9%, and in high-wage industry were 7.8%,
27.6%, and 11.4% (McCarthy and Valdez 1986, 40).
DeFreitas's Study of the Effects of Hispanics
DeFreitas used a sample from the 1980 census to investigate
the effects of Hispanics--"the majority illegal," in his
words--upon male and female groups of Anglos, blacks, and
Hispanics, separated into native and foreign born, who immigrated
between 1975 and 1980.
DeFreitas examined the effect on the number of weeks worked
per year and on the amount of unemployment. He found that "[f]or
no racial/ethnic group, male or female, is there a discernible
negative effect of illegal immigration on employment. In fact,
most of the estimated coefficients are positive" (1986, 24).
Borjas's Study of the Survey of Income and Education Data
Borjas (1983) studied the substitutability of black, Hispanic, and white workers in the 1976 Survey of Income and Education and found Hispanics to be compliments rather than substitutes for blacks, and perhaps for whites as well. No distinction was made between native and immigrant Hispanics. Nevertheless, this evidence provides strong confirmation for DeFreita's finding. Sorensen-Bean-Ku-Zimmerman Study across Metropolitan Areas Sorensen et al. studied the effects in 33 metro-politan areas of the extent of foreign-born popu-lation upon the weeks worked of white males, black males, and Hispanic males. "We find that immigration has a very small negative effect." None of the groups suffered a loss of employ-ment that was significant statistically, though the effect on Hispanics came close, an elasticity of .07 with respect to the proportion of foreign born (1992, 95). Card on the Effects in Miami of the Mariel Boatlift Card (1990) studied the effect of the immigration into Miami that resulted from the Mariel boatlift in 1980. He found that blacks and women did not suffer displacement from jobs despite the huge influx (in proportional terms) of Cuban immigrants in that area. Altonji and Card: Effects on Unemployment of the Less Skilled Joseph G. Altonji and Card studied the effects of immigrants on less-skilled natives in 1970 and 1980 data on cities. "We find little evidence that inflows of immigrants are associated with large or systematic effects on the employment or unemployment rates of less skilled natives" (1991, 226). * * * Please do not worry that the older studies cited Borjas (1983) studied the substitutability of in this and the following chapters are obsolete. It takes years to carry out a valid study, and the relevant economic conditions change little from decade to decade. Rest assured that there are no brand new studies that contradict the older ones. EFFECTS OF IMMIGRATION ON NATIVE' EARNINGS | CONTENTS
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