Earnings of Undocumented Immigrants

I have a new paper that looks at how undocumented workers perform in the U.S. labor market. Here are some of the main findings:

First, the age-earnings profile of undocumented workers lies far below that of legal immigrants and of native workers, and is almost perfectly flat during the prime working years. Second, the unadjusted gap in the log hourly wage between undocumented workers and natives is very large (around 40 percent), but half of this gap disappears once the calculation adjusts for differences in observable socioeconomic characteristics, particularly educational attainment. Finally, the adjusted wage of undocumented workers rose rapidly in the past decade. As a result, there was a large decline in the wage penalty associated with undocumented status.

It is this last result that I find particularly intriguing. Define the “wage penalty” to undocumented status as the difference in wages between observationally equivalent legal and undocumented immigrants. Here’s the graph that illustrates just how noticeable the decline in the wage penalty has been:

Wage Penalty

As I conclude in the paper, as long as we take these trends at face value, it seems that “a regularization program may only have a modest impact on the wage of undocumented workers.”

This paper is a follow-up to my earlier work on the labor supply of undocumented immigrants, which showed that undocumented men have very high labor force participation rates and inelastic labor supply. That paper is now finished and forthcoming in Labour Economics. Click here if you’d like to access the code that I used to conduct the calculations reported in that paper, including the code that imputes undocumented status in the post-1994 Current Population Surveys. As soon as I have a little extra time (we’re in the midst of downsizing and moving), I’ll clean up and post the code for the new paper as well.

 

 

Immigration And Poverty: Updated Facts

Last year, I published this paper discussing the link between immigrant poverty and the 1996 welfare reform legislation. It showed that although the legislation cut the number of immigrants receiving assistance, their poverty rate actually fell. Many of the affected immigrants resorted to good, old-fashioned employment as a means of support.

There have been some rumblings recently about how those results translate in today’s immigration debate. Although the paper was published last year, I actually wrote it years ago, focusing on the period around welfare reform and examining data through 2001. But then I got sidetracked into various other things. (FYI: there are two or three other papers in my computer hard drive awaiting resurrection in the same way).

The current discussion sparked my curiosity: What do immigrant poverty rates look like now?

poverty-rate

So I took out the Current Population Survey (CPS) data from 1994 to 2016, the period over which this exercise can actually be done, and proceeded to calculate the poverty rate of immigrants aged 20+. I dropped the children to avoid the complication of whether the US-born children of immigrants should be counted as “immigrants” or “natives.” In any case, a few minutes later I ended up with the graph above.

It is easy to see the post-1996 decline in poverty rates that motivated my paper. But it is also easy to see the very adverse impact that the Great Recession seems to have had on immigrant poverty. Their poverty rates rose substantially, from 14.1 percent in 2007 to 18.7 percent in 2011. The increase was much smaller for natives, from 9.7 to 11.5 percent. It is also interesting that the economic recovery reduced poverty rates much more for immigrants than for natives. I am sure there’s a paper waiting to be written that explains the “excess sensitivity” of immigrant poverty rates to outside shocks.

A number of readers have indicated they like these types of fact-based blog posts, where I use available data to easily compute relevant statistics. So I’m creating a new tag for this type of post simply called “Factoids,” and I’ll try to go back in the archives and recategorize past posts. And for the true geeks, the STATA code that creates the graph is, as they used to say, below the fold.

Continue reading “Immigration And Poverty: Updated Facts”

Op-Ed In New York Times

Today’s New York Times published my op-ed on “The Immigration Debate We Need.” Having worked on this for far too many years, I’m not holding my breath that this is, in fact, the immigration debate we’ll have.

Who Is A Public Charge?

According to the Washington Post, the Trump administration is considering a number of changes in current immigration policy, focusing more on the economic side of things this time around. That WP article is already cluttered with half-truths (spouted by the usual suspects at Cato and the like), so I thought it’d be a good idea to clarify the muddied waters regarding one particular proposal that is being considered to reduce welfare use in the immigrant population.

Since 1882, the United States has banned the entry of anyone who has the potential of becoming a “public charge.” This is how current law reads:

Any alien who, in the opinion of the consular officer at the time of application for a visa, or in the opinion of the Attorney General at the time of application for admission or adjustment of status, is likely at any time to become a public charge is inadmissible.

Since 1903, the United States has allowed for the deportation of immigrants who became a public charge after they entered the country, and this is how the law now reads:

Any alien who, within five years after the date of entry, has become a public charge from causes not affirmatively shown to have arisen since entry is deportable.

Given these very straightforward–and very old–restrictions, it seems puzzling that we would find many immigrants on welfare. But, as always, the devil is in the details. The law is often not enforced, and the common-sense definition of a public charge that we carry in our heads has little to do with how the immigration regulators have defined it. This is how that definition now reads:

For purposes of determining inadmissibility, “public charge” means an individual who is likely to become primarily dependent on the government for subsistence, as demonstrated by either the receipt of public cash assistance for income maintenance or institutionalization for long-term care at government expense.

Note the big elephant in the room. Immigrants who receive non-cash benefits–including the most expensive benefit of all, Medicaid–are not considered to be public charges. In the words of DHS: “Non-cash benefits (other than institutionalization for long-term care) are generally not taken into account for purposes of a public charge determination.”

If we began to actually enforce the law with a common-sense interpretation of the century-old statutes, the policy shift will affect an awful lot of people. I took data from the March Current Population Surveys (CPS) from 1994 through 2016 to calculate the fraction of immigrant-headed households who receive some type of assistance (either cash, food stamps, or Medicaid). I then divided the foreign-born households into 2 categories–those where the household head is naturalized, and those where the household head is not. Any proposed shift in policy would affect the non-naturalized households. And this is what the trend in the fraction of households receiving assistance looks like:

welfare-use-non-citizens

In 2016, there were 8.9 million households headed by a non-citizen. Almost 42 percent of those households received some type of assistance. Put bluntly, taking the public charge provisions of immigration law seriously could potentially affect 3.7 million households, making the recent kerfuffle over a relatively small number of refugees look like small potatoes.

The policy challenge is obvious, and the economic and social ramifications will be dramatic. Before we start envisioning deportations by the hundreds of thousands, however, let’s remember that we all respond to incentives. Few economists would be surprised if some of the affected households begin to find other ways of providing for their needs.

Some additional information:

  1. No need to take my word for the graph. The trends are very easy to reproduce by anyone who is willing to spend a little time looking at the publicly available CPS data. Here is the program, the data can be downloaded here; and click here if you are really geeky and want to see the computer output and detailed statistics.
  2. The recent immigration report of the National Academy of Sciences (NAS) has similar statistics on the number of immigrant households on welfare. Table 3-15 shows the fraction of households with children receiving some type of assistance (here’s a screenshot of the table). According to the NAS, 41.8 percent of native households and 55.8 percent of immigrant households receive assistance (but they do not break up the immigrant households according to citizenship status).
  3. The NAS report also calculated the size of the fiscal burden implied by these numbers; that discussion is in Chapters 8 and 9 of the report. See here and here for a User’s Guide to the NAS fiscal impact discussion.
  4. The CPS data are notorious for understating the extent of welfare participation in the population. The Survey of Income and Program Participation (SIPP) is supposed to provide much better measures of welfare use, but it is a much harder data set to manipulate. As I note in We Wanted Workers (Table 9.1), the welfare participation rate of immigrant households implied by the SIPP is far higher than what the CPS suggests (at least 10 percentage points higher).

We Wanted Workers On EconTalk

Russ Roberts and I talked about immigration and We Wanted Workers for over an hour back on December 20. Obviously, there’s no discussion of the various immigration-related brouhahas from the past week, but I think many people will still find it to be an interesting conversation. Russ and I have known each other since 1977, dating back to our University of Chicago days. Immigration was not something that I (or many other people) gave much thought to back then. Funny how times change.

Extreme Vetting

Not surprisingly, over-the-top and often erroneous reactions to President Trump’s executive order tightening refugee admissions are flooding the web today. So I thought it’d be useful to repost what I wrote about extreme vetting last summer when then-candidate Trump first floated the idea. Here is the article I wrote for Politico. And here’s a short excerpt that helps put the president’s actions in context:

Immigrant vetting, and even extreme immigrant vetting, has a very long tradition in American history. Since before the founding even, U.S. policies about whom the country chooses to welcome and reject have changed in response to changing conditions.

Shaking Up The Narrative

Some people have asked me what I thought of the actions against illegal immigration that President Trump announced yesterday. As far as I can tell, he did exactly what he promised he was going to do, so there were few surprises in terms of what was going to happen.

But along the way, the President did something else that really struck me: he forced a much-needed late-course correction in the media narrative. Practically every story about illegal immigration in the MSM tells of immigrants who overcome incredible hardships and make an amazing contribution to American life (how many times have we read about the illegal children who end up going to Ivy League colleges), or they describe the suffering that immigrant families endure when immigration enforcement breaks up the family unit.

These stories are real, and are definitely part of what we should be considering when we think about illegal immigration. But there are other stories to be told, stories that don’t fit in with the narrative. Some illegal immigrants commit crimes, and natives have been harmed; some drive cars under the influence and natives sometimes end up getting hurt; and some native families have suffered a great personal loss, a different type of family separation due to (the lack of) immigration enforcement. For the most part, the MSM has made sure that these stories are hidden away, never to be acknowledged or discussed in polite discussions of illegal immigration. I’ve seldom learned about these cases from CNN, the Washington Post, or the New York Times.

President Trump specifically emphasized that other side of illegal immigration yesterday. Not only did he personally call out some of those families that have suffered irreparable harm from illegal immigration, but it seems that there will now be a weekly report of criminal acts by illegal immigrants. Needless to say, that listing would never have been prepared under the old regime. Regardless of where one stands on illegal immigration, it is hard to argue against the fact that more information about the issue is far better than the one-sided-stories the MSM has been feeding us for years.