Friday, January 11, 2008

Immigration: The Demographic and Economic Facts

Immigration: The Demographic and Economic Facts

1. Summary of Important Facts about Immigration

Published by the Cato Institute and the National Immigration Forum

These are the most important demographic and economic facts pertaining to policy decisions about the numbers of immigrants that will be admitted by law into the United States:

The Quantities of Immigration

o The total number of immigrants per year (including
illegal immigrants and refugees) nowadays is somewhat less than
it was in the peak years at the beginning of the 20th century
when U.S. population was less than half as large as it now is.

o The rate of immigration relative to population size now
is low rather than high. Immigration as a proportion of
population is about a third of what it was in the peak years.

o The foreign-born population of the United States is 8.5
percent of the total population (as of 1990). The proportions in
the United States during the period from before 1850 to 1940 were
higher--always above 13 percent during the entire period from
1860 to 1930--and the proportions since the 1940s were lower. The
present proportion--8.5 percent--also may be compared to the
1990s' proportions of 22.7 percent in Australia; 16 percent in
Canada; 6.3 percent in France; 7.3 percent in Germany; 3.9
percent in Great Britain; and 5.7 percent in Sweden.

o Though the volume of illegal immigration is inherently
difficult to estimate, a solid body of research, using a variety
of ingenious methods, has now arrived at a consensus: the number
of illegals in the United States is perhaps 3.2 million, pushed
downward by the amnesty of 1987-1988, not very different from a
decade before. Many of these persons are transitory. The
million-plus persons who registered for the amnesty verify that
the total was and is nowhere near the estimates that often have
been given in public discussion.

o The rate of illegal immigration is agreed by all
experts to be about 250,000 to 300,000 per year.

o More than half of illegal aliens enter legally and
overstay their visas and permits. "Less than half of illegal
immigrants cross the nation's borders clandestinely. The majority
enter legally and overstay their visas" (Fix and Passel 1994, 4).

The Economic Characteristics of Immigrants

o New immigrants are more concentrated than are natives
in the youthful labor-force ages when people contribute more to
the public coffer than they draw from it; natives are more
concentrated in the childhood and elderly periods of economic
dependence when the net flows are from the public to the
individual. Of all the facts about immigration relevant to its
economic effects, this is the most important, and the one which
is most consistent in all countries, in all decades and

o Taken altogether, immigrants on average have perhaps a
year less education than natives--much the same relationship as
has been observed back to the 19th century.

o The average education of new immigrants has been
increasing with each successive cohort. The proportion of adult
immigrants with 8 or fewer years of education has been trending
downward, and the proportion of adult immigrants with 16 or more
years of education has been trending upward.

o The proportion of adult new immigrants with eight or
fewer years of education is much higher than the proportion of
adult natives.

o The proportion of immigrants with bachelor's or
postgraduate degrees is higher than the proportion of the native
labor force.

o Immigrants have increased markedly as a proportion of
members of the scientific and engineering labor force (especially
at the highest level of education). Immigrants also have
increased rapidly as proportions of the pools of U.S. scientists
and engineers. Scientific professionals are especially valuable
for promoting the increased productivity and growth of the

o Immigrants, even those from countries that are much
poorer and have lower average life expectancies than the United
States, are healthier than U.S. natives of the same age and sex.
New immigrants have better records with respect to infant
mortality and health than do U.S. natives and immigrants who have
been in the United States longer.

o New immigrants are unusually mobile geographically and
occupationally, in large part because of their youth. Such
mobility increases the flexibility of the economy and mitigates
tight labor markets.

o First- and second-generation immigrant children do
unusually well in school. They win an astonishingly high
proportion of scholastic prizes.

The Effects of Immigrants in the Labor Market

o Immigrants do not cause native unemployment, even among
low-paid or minority groups. A spate of respected recent studies,
using a variety of methods, agrees that "there is no empirical
evidence documenting that the displacement effect [of natives
from jobs] is numerically important" (Borjas 1990, 92). The
explanation is that new entrants not only take jobs, they make
jobs. The jobs they create with their purchasing power, and with
the new businesses which they start, are at least as numerous as
the jobs which immigrants fill.

o Re wage effects, one recent summary concludes,
"Immigration has no discernible effect on wages overall...
Wage growth and decline appear to be unrelated to immigration--a
finding that holds for both unskilled and skilled workers" (Fix
and Passel 1994, 48). My interpretation of the literature is
slightly different: a minor negative effect.

Welfare Use and Taxes Paid

o Immigrants who enter legally through regular quotas are
not permitted to receive public assistance for three years, and
they may be deported if they obtain such assistance (though few
are). Refugees, however, are entitled to such assistance
immediately upon entry, which (together with their needy
circumstances) accounts for their high rate of welfare use soon
after arrival.

o Re the use by immigrants of welfare services including
food stamps, Aid to Families with Dependent Children (AFDC),
Supplemental Security Income (SSI), and Medicaid: these
expenditures are the tail that wags the dog in policy
discussions. Expenditures called "welfare" now comprise about
$404 per person annually for immigrants and about $260 for
natives. Total government social outlays are roughly $3,800 for

Because of the public interest in the set of welfare
services that includes food stamps, AFDC, SSI, and Medicaid, the
data on this cluster of welfare programs are presented here, but
only for completeness. By themselves they do not provide the
basis for any conclusions about overall transfer-payment receipt
by various cohorts of immigrants and natives, because these
calculations do not include most payments to the native elderly.

o Foreign-born persons taken altogether have perhaps a 10
to 20 percent higher probability of obtaining these welfare
services than do natives. They average perhaps 30 percent higher
average receipts per capita than do natives.

o There may have been a small increase in the use of
these programs from pre-1970 to post-1970 entrants and from
immigrants arriving between 1970 and 1986 to those entering
between 1987 and 1990, but the evidence is mixed.

o If refugees are excluded from the assessment, and only
nonrefugees are considered, the rate of welfare use for new
immigrants who entered between 1980 and 1990 is considerably
below the rate for natives ages 15 and above.

o Among foreign-born persons 65 years of age or more, a
greater (and growing) proportion receive welfare (mainly SSI)
than among natives. This is due to the arrival of many immigrants
too late to accumulate enough work time to earn Social Security
benefits; the welfare is a substitute for Social Security.

Social Security and Medicare are by far the most expensive
transfer payments made by the government. These payments go
almost completely to natives. This is because immigrants
typically arrive when they are young and healthy, and also
because older recent immigrants do not qualify for Social
Security for many years after their arrival.

Social Security and Medicare are by far the most expensive
transfer payments by the government. The cost of supporting
elderly natives is vastly greater than for immigrants. This is
because immigrants typically arrive when they are young and
healthy, and the appropriate lifetime analysis shows that this
provides a large windfall to the national treasury. (Current data
alone also show a similar effect because of the contemporary age
distribution of the immigrant population.) Also, older recent
immigrants do not qualify for Social Security for many years
after arrival.

As of the 1970s, immigrant families in all cohorts within
several decades clearly paid more taxes on average than native
families. However, the mean earnings of all new immigrant men
were smaller relative to adult natives 25 to 64 in the 1980s than
in the previous decade. The mean earnings of immigrant men who
entered in the 1970s were smaller relative to adult natives 25 to
64 in the 1980s than the similar comparison for the previous
decade. This continues a trend from men who entered in the 1960s.
This implies that the size of tax contributions by recent cohorts
of immigrants relative to those of natives has diminished in
recent decades.

o When immigrants are subclassified by legal category of
entrance, the picture is quite different from that for immigrants
taken altogether. In an analysis of the 1990 census, where the
average household income (different from the earnings concept
referred to in the paragraph above) for natives was $37,300,
1980-1990 immigrants from countries from which most of the
immigration is legal received $34,800 (that is, 91 percent of
natives' household income), the average for those from countries
sending mostly refugees to the United States was $27,700, and for
those from countries sending illegals $23,900. (No information is
now available on whether the picture was the same or different in
earlier decades.) These data on recent legal immigrants are the
relevant data for policymaking in legal immigration.

o As of the 1970s, immigrants contributed more to the
public coffers in taxes than they drew out in welfare services.
The most recent available data (for 1975) show that each year, an
average immigrant family put about $2,500 (1995 dollars) into the
pockets of natives from this excess of taxes over public costs.

o The possible changes over time in earnings in the
various immigrant cohorts cast some doubt on the present-value
calculation for earlier years concluding that immigrants make net
contributions to the public coffers; a different sort of
calculation may be needed for which data are not available.

o Illegal aliens contribute about as much to the public
coffers in taxes as they receive in benefits. New data suggest
that the undocumented pay about 46 percent as much in taxes as do
natives, but use about 45 percent as much in services.

Immigrants, the Environment, and Natural Resources

o Natural resources and the environment are not at risk
from immigration; rather, in the long run, resources increase and
the environment improves due to immigration. The long-term trends
show that U.S. air and water are getting cleaner rather than
dirtier, and world supplies of natural resources are becoming
more available rather than exhausted. Immigration increases the
technical knowledge that speeds these benign trends.

Public Opinion about Immigrants and Immigration

o The most recent polls of U.S. residents' opinions show
that most persons want less immigration. This is consistent with
the consensus of all polls since the first such surveys in the
1940s. There does not seem to be a long-run trend in public
opinion opposing immigration.

o A poll of the most respected economists found a
consensus that both legal and illegal immigrants are beneficial

* * *

No data are presented in this pamphlet concerning racial or ethnic composition or the country of origin of immigrants because these characteristics are not relevant for any policy decisions that are related to the economic consequences of immigration.

(The above post is from the Cato Institute. Webpage link)

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