Chapter 23

Immigration

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23-2

Number of Immigrants

• Economic immigrants• Legal immigrants• Migration averaged 1 million per year• Quotas, refugees, and H1-B provision• One-third of population growth• One-half of labor force growth

LO1

23-3

Number of Immigrants

LO1

23-4

Number of Immigrants

LO1

Family-Sponsored

Immigrants, 65.0%

Employment-Based , 13.0%

Refugees, 16.0%

Diversity Immigrants,

4.7%

Others, 1.3%

Legal Immigration by major category of admission, 2011

23-5

Number of Immigrants

• Illegal immigrants• Estimated from Census data• 250,000 per year on average• High proportion from Mexico and Central

America• Total of 11.1 million residing in the U.S. in

2012; 58% from Mexico

LO1

23-6

Number of Immigrants

Total 1,062,040

1. Mexico 143,4462. China 87,0163. India 69,0134. Philippines 57,0115. Dominican Republic 46,1096. Cuba 36,4527. Vietnam 34,1578. South Korea 22,8249. Columbia 22,63510. Haiti 22,111

LO1

23-7

Decision to Migrate

• Take advantage of superior economic opportunities

• Escape political or religious oppression• Reunite with family members

LO2

23-8

Decision to Migrate

• Earnings opportunities• Increase value of human capital

• Moving costs• Distance• Follow beaten path

• Age • Other factors

LO2

23-9

Global Perspective

LO2

23-10

Economic Effects

• Personal gains• Economic benefits exceed costs

• Other issues• Uncertainty and imperfect information• Backflows• Skill transferability• Self-selection

LO3

23-11

Impacts on Wages, Efficiency, Output

• Understand economic outcomes• Assumptions• U.S. and Mexico• Labor demand greater in U.S.• No long-term unemployment• Labor quality the same• Migration is legal and has no cost• Wage differentials key factor

LO3

23-12

Impacts on Wages, Efficiency, Output

Wag

e Ra

te

United States Mexico

Quantity of Labor(Millions)

Quantity of Labor(Millions)

Du Dm

aA

bd D

B

We

Wag

e R

ate

We

c f F C

Wu

0 0

Wm

Immigration impacts wages, employment, and output

g

G

LO3

23-13

Impacts on Wages, Efficiency, Output

• Wage rates will equalize• In the U.S.:

• Wage rate falls• Employment and output rise

• In Mexico:• Wage rate rises• Employment and output fall

LO3

23-14

Global Perspective

LO3

Emigrant Remittances, Selected Developing Countries, 2011

23-15

Impacts on Wages, Efficiency, Output

• Overall effects:• World output rises• Efficiency gains

• Other effects• Brain drains• U.S. natives lose wage income• U.S. businesses gain income

LO3

23-16

Complications and Modifications

• Migration costs not zero• Remittances redistribute income• Backflows: temporary migration• Immigrant workers as complementary

resources vs. substitute resources• Expansion of capital in some industries• Full employment vs. unemployment• Negative self-selection

LO3

23-17

Fiscal Impacts

• Fiscal burden > taxes paid• Wages will not equalize• Research findings are mixed

LO3

23-18

Illegal Immigration

• Employment effects• Two extreme views• Fixed number of jobs in economy• Immigrant employment decreases domestic

employment 1-for-1• Immigrant work undesirable• No domestic workers displaced• Compensating wage differential

LO4

23-19

Optimal Immigration

• Immigration can either benefit or harm a nation, depending on several factors

• Immigration should be expanded until its MB = MC

• The level of immigration is set through quotas, special provisions, border enforcement and immigration laws

LO5

23-20

Startling Slowdown in Illegal Immigration

• Number of illegal immigrants in the U.S. tripled between 1990 and 2007

• That number fell 8% in 2009 because of deceased job prospects during the recession

• Illegal immigration population leveled off 2010 and 2011 at 11.1 million• Falling birthrates• Better local job opportunities• Government policies• Stronger border enforcement