Chapter 23. Immigration

Chapter 23ImmigrationCopyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Number of ImmigrantsEconomic immigrantsLegal immigrantsMigration averaged 1 million per yearQuotas, refugees, and H1-B provisionOne-third of population growthOne-half of labor force growthLO1Number of ImmigrantsLO1Number of ImmigrantsIllegal immigrantsEstimated from Census data250,000 per year on averageHigh proportion from Mexico and Central AmericaTotal of 11.1 million residing in the U.S. in 2012; 58% from MexicoLO1Decision to MigrateTake advantage of superior economic opportunitiesEscape political or religious oppressionReunite with family members LO2Decision to MigrateEarnings opportunitiesIncrease value of human capitalMoving costsDistanceFollow beaten path Age Other factorsLO2Economic EffectsPersonal gainsEconomic benefits exceed costsOther issuesUncertainty and imperfect informationBackflowsSkill transferabilitySelf-selectionLO3Impacts on Wages, Efficiency, OutputUnderstand economic outcomesAssumptionsU.S. and MexicoLabor demand greater in U.S.No long-term unemploymentLabor quality the sameMigration is legal and has no costWage differentials key factorLO3Impacts on Wages, Efficiency, OutputWage rates will equalizeIn the U.S.:Wage rate fallsEmployment and output riseIn Mexico:Wage rate risesEmployment and output fallLO3Impacts on Wages, Efficiency, OutputOverall effects:World output risesEfficiency gainsOther effectsBrain drainsU.S. natives lose wage incomeU.S. businesses gain incomeLO3Complications and ModificationsMigration costs not zeroRemittances redistribute incomeBackflows: temporary migrationImmigrant workers as complementary resources vs. substitute resourcesExpansion of capital in some industriesFull employment vs. unemploymentNegative self-selectionLO3Fiscal ImpactsFiscal burden > taxes paidWages will not equalizeResearch findings are mixedLO3Illegal ImmigrationEmployment effectsTwo extreme viewsFixed number of jobs in economyImmigrant employment decreases domestic employment 1-for-1Immigrant work undesirableNo domestic workers displacedCompensating wage differentialLO4Startling Slowdown in Illegal ImmigrationNumber 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 recessionIllegal immigration population leveled off 2010 and 2011 at 11.1 millionFalling birthratesBetter local job opportunitiesGovernment policiesStronger border enforcementOptimal ImmigrationImmigration can either benefit or harm a nation, depending on several factorsImmigration should be expanded until its MB = MCThe level of immigration is set through quotas, special provisions, border enforcement and immigration lawsLO5