Immigration Economics

Immigration Economics

George J. Borjas
Copyright Date: 2014
Published by: Harvard University Press
  • Cite this Item
  • Book Info
    Immigration Economics
    Book Description:

    Nearly 3% of the world's population no longer live in the country where they were born. George Borjas synthesizes the theories, models, and econometric methods used to identify the causes and consequences of international labor flows, and lays out with clarity a full spectrum of topics with crucial implications for framing debates over immigration.

    eISBN: 978-0-674-36990-0
    Subjects: Economics, Business, Sociology

Table of Contents

  1. Front Matter
    (pp. [i]-[vi])
  2. Table of Contents
    (pp. [vii]-[x])
  3. Introduction
    (pp. 1-7)

    National borders seem increasingly porous. Nearly 215 million persons now live in a country where they were not born, so immigrants account for about 3 percent of the world’s population. It is not surprising that the surge in large-scale international migration increased the foreign-born share of the population in a traditional immigrant-receiving country like the United States—from 6 to 13 percent in the past 30 years. What is surprising is that the foreign-born share now stands at record levels in countries that have little historical experience with immigration: 9 percent in Portugal, 10 percent in Norway and the United...

  4. 1 The Selection of Immigrants
    (pp. 8-37)

    The economic impact of immigration ultimately depends on the differences between the skill distributions of immigrants and natives. At any point in time, the human capital stock of the foreign-born population in a host country consists of the skills that the immigrants acquired prior to migration and of the skills acquired in the post-migration period.

    This chapter examines the determinants of the volume of preexisting skills. It starts my exploration of immigration economics by asking a simple question: Who moves? Immigrants are not a randomly selected sample of the population of the source countries; some people choose to migrate and...

  5. 2 Economic Assimilation
    (pp. 38-62)

    Decades of social science research establish an indisputable link between a worker’s human capital stock and a wide array of social and economic outcomes. Chapter 1 examined the selection process that determines the preexisting skills of the subset of persons who become international migrants. The incentives to invest in human capital, however, do not end on the day the move takes place. In fact, because some of the preexisting skills may not be transferable across countries, and because the immigrant now has to compete in a labor market where he may lack even basic tools (such as fluency in the...

  6. 3 Immigration and the Wage Structure: Theory
    (pp. 63-78)

    The surge in international migration inspired a large literature examining what happens to labor markets in both receiving and sending countries as a result of immigration-induced supply shifts. The textbook model of a competitive labor market has clear implications about how wages should respond to immigration: Higher levels of immigration should lower the relative wage of competing workers and increase the relative wage of complementary workers. Despite the commonsense intuition behind these predictions, the empirical literature is full of contradictory results. Some studies claim that immigration has a substantial adverse impact on the wages of competing workers in receiving countries,...

  7. 4 The Wage Effects of Immigration: Descriptive Evidence
    (pp. 79-104)

    How does international migration affect the labor market opportunities of workers in receiving and sending countries? Remarkably, there was no empirical study of this central question in immigration economics prior to the 1980s. Greenwood and McDowell’s (1986) survey of the literature concludes that “substantive empirical evidence regarding the effects of immigration is generally scarce…. Little direct evidence is available on immigration’s impact on the employment opportunities and wages of domestic workers” (p. 1750). The situation has changed dramatically since, as the conceptual and methodological issues involved in measuring the labor market impact of immigration became a central question in labor...

  8. 5 The Wage Effects of Immigration: Structural Estimates
    (pp. 105-129)

    The structural approach to estimating the labor market impact of immigration has an interesting intellectual history. As noted earlier, the initial empirical studies actually imposed a structure on the technology of the local labor market, such as the translog production function, and used the resulting estimates to predict the various wage effects. The obvious problem was one of dimensionality: for a reasonably detailed specification of the skill groups that populate the labor market, the methodology quickly strained the available data. Even if there were only 10 skill groups in the workforce, for example, the researcher needed to estimate over 50...

  9. 6 Labor Market Adjustments to Immigration
    (pp. 130-148)

    As shown in chapter 4, the magnitude of the correlation between immigration and wages depends on the geographic scope of the labor market where the correlation is estimated. The correlation is negative and small when calculated across cities, and becomes stronger when calculated at the state or national levels. One important reason may be that the various economic agents—specifically, native workers and firms—respond to the economic opportunities (or challenges) created by the supply shock, and these responses may diffuse the impact of immigration into markets that were not directly penetrated by immigrants in the first place.

    This chapter...

  10. 7 The Economic Benefits from Immigration
    (pp. 149-169)

    This chapter uses a simple theoretical framework to describe how and why natives benefit from immigration and to provide a back-of-the-envelope calculation of these gains. A central lesson of economic theory is that the net gains from immigration depend directly on its distributional impact: the greater the loss in wages suffered by native workers, the greater the net gains to the receiving country.

    The discussion also reveals an important insight: the canonical model of a competitive labor market cannot be manipulated into generating numerically sizable estimates of the net benefits for a country like the United States. At most, an...

  11. 8 High-Skill Immigration
    (pp. 170-191)

    The canonical model of a competitive labor market predicts that the net economic benefits from immigration to the receiving country are relatively small. In the U.S. context, for example, it is unlikely that the gains from a supply shock that increases the number of workers by 15 percent would generate net gains far exceeding 0.3 percent of GDP in the short run, and those gains would be even smaller in the long run.

    Even an influx composed exclusively of high-skill workers would not dramatically increase the gains as long as we maintain the typical set of assumptions of the canonical...

  12. 9 The Second Generation
    (pp. 192-211)

    The ultimate impact of immigration on a host economy depends not only on what happens during the life cycle of the immigrant population, but also on the rate of assimilation across generations. Because of the surge in international migration, the population share of second-generation persons (that is, of persons born in the host country with at least one foreign-born parent) will grow rapidly in the next few decades. In the United States, for example, the fraction of second-generation persons in the population is predicted to rise from 9.7 percent in 1990 to over 15 percent by 2050, with the third-generation...

  13. Conclusion
    (pp. 212-216)

    The economic literature on immigration came of age in the past three decades and now features a set of models and econometric methods that provide a solid foundation for future work. It is also clear, however, that there remain many questions in immigration economics—even putting aside the increasingly important policy challenges faced by both sending and receiving countries—that will continue to advance the literature. Perhaps the best way to conclude the journey of this book is to briefly summarize some of the key issues that remain to be resolved, rather than just provide a listing of what we...

  14. APPENDIX A: Mathematical Notes
    (pp. 217-224)
  15. APPENDIX B: Construction of Data Extracts
    (pp. 225-230)
  16. Notes
    (pp. 231-256)
  17. References
    (pp. 257-276)
  18. Acknowledgments
    (pp. 277-280)
  19. Index
    (pp. 281-284)