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.

Step 1. Download the relevant variables from the CPS archived at IPUMS.

Step 2: These are the STATA commands:

generate poor=(poverty==10)
generate imm=(citizen==2 | citizen==3)
keep if age>=20
collapse (mean) poor [aw=wtsupp], by(year imm)
reshape wide poor, i(year) j(imm)
scatter poor* year, connect(l l)

 

Author: George Borjas

I am a Professor of Economics and Social Policy at the Harvard Kennedy School.