The Economics of Immigrants
Although both in the past and present most natives express concerns that immigrants decrease standard wages and fail to assimilate into the United States society substantially, the county has extended conception as a land of opportunities, a land where prospective immigrants can quickly obtain prosperity as well as upwards mobility (Abramitzky & Boustan, 2017). Consequently, such fears have led to historical immigration policies and echoed in contemporary debates. This essay aims to address important questions on the economics of immigration, including factors that determine the county of destination of immigrants, the cost and benefits of immigration to destination countries, as well as the welfare and impacts of immigration on both immigrants and destination countries.
Additionally, the paper will analyze the historical evidence based on the crucial issues of concerns to the contemporary economic issues of concern and extensively review the literature including immigrant assimilation and selection and the effects of immigrants on the native workforce, adding in each case the insights accompanying its comparison with the historical evidence. Based on Ferrie and Hatton (2014) complimentary reviews, on the role of immigration on the global economic history, it will focus on labor and applied research on microeconomics rather than on macroeconomics. While immigration impact on the natives’ earnings may be weak, factors such as wage differentiation between the country of origin and the destination country, investment on human capital and educational attainment as well as language proficiency are essential economic determinants of the magnitude of immigrants’ assimilation and integration in the destination country.
Reasons for Immigration
Although the economic theory mostly highlights the international labor mobility ascending from wage differences among various countries, individuals move across countries for many reasons. For example, according to Kerr S. and Kerr, W (2011), students from most of the developing countries move to developed countries for both long and short durations to study in institutions from these developed countries. Additionally, some of the immigrants result from oppression and hardships, such as the growth of refugees in northern Europe. The migration nature impacts tenures of immigrants, education levels, ages, as well as their probable assimilation. Frequently, immigrants cite better personal safety, higher income levels, and short distances from the county of origin as well as established immigrant networks as the primary reasons for choosing their country of destination.
Immigration Selection
International immigration is a selection criterion whereby some residents decide to leave their countries of origin while others choose to stay. According to Abramitzky and Boustan (2017), those who decide to migrate depends on the benefits and the cost of the migration, which can extensively vary among the individuals depending on both personal and systematic reasons. Based on the simple Roy model where immigration cost is assumed to be equal for everyone, the expected immigrants that possess skills highly valued in the destination country are more likely to get high returns upon migration, and thus they are more likely to move than those who do not possess such skills.
Moreover, Abramitzky and Boustan (2017) claim that if the destination country offers more labor market rewards for skills that the country of origin, the immigration flow will be affirmatively selected based on the skills needed. However, if the destination country offers fewer labor markets rewards for skills as compared to the country of origin, then the immigrant flow will be negatively selected based on the skills needed. The affirmative and negative selection means that the migrants have more or less productive skills than the individuals who stay behind in the country of origin. Such skills can be indexed by observing attributes such as education levels or pre-migration wages, which can serve as a measure of unobservable skills rewarded in the labor market.
Immigration pathways
Kerr, S. and Kerr, W (2011) claim that immigrants arrive at the country of destination in three main ways. First, they get a legal permanent residency through extended family ties, marriage, or a political refugee. In the United States, legal permanent residents using Visas, commonly referred to as green cards, can live and work anywhere in the country. Out of the 35 million immigrants in the United States, approximately two-thirds are legal permanent residents as individuals who hold green cards can apply for American citizenship after a period of five years and become naturalized citizens packed with all rights such as eligibility for social service benefits and voting rights.
The second path is through tourism or temporary work visas, short term visas for government, or educational exchange. These include the individuals who come to the country of destination for a limited time visit, attend academic or government events, work, or attend educational institutions. Among the United States immigrant population, an estimation of three percent enters the country through any one of these paths. Out of the three percent, approximately 65,000 come through the H-1B visa program which is for the highly skilled labor force, and approximately arrive through either H-2A or H-2B program designed for the seasonal labor force in tourism, construction, and culture where they are permitted to work in the American market for three years.
The last and highly controversial pathway is illegal immigration. In the United States only, approximately about 11.9 million people live in the country illegally, with most of them coming from Mexico. According to a United States border patrol report, most of the illegal immigrants enter the country through the southern Mexican border. However, due to the beefed-up security, the wall builds to enhance enforcement, and lousy economy discouraged most of the potential immigrants since 2006.
Economic Costs and Benefits of Immigrant
Over the recent past, a number of studies attempted to estimate immigration economic costs and benefits to the United States. Most of these studies are founded on perceptional analysis, which relies on public opinion polls that show people’s impression of the benefits versus costs. For example, most of the studies conclude that immigrant takes jobs away from the native workers while others reported that most of the immigrants were hardworking, created jobs and started businesses (Abramitzky & Boustan, 2017). Other studies use wages, employment, and other types of economic factors tailored to check on the objectivity of immigration reality through the ramification of immigrants in use of government services, payment of tax, participation in the labor market forces, social security contributions, health care utilization, gross domestic product as well as wage levels.
The exact fiscal effects of immigration tend to shift tremendously with assumptions concerning health, tax pension contribution as well as education. According to Braun (2018), young migrants with school-aged kids or the older migrants with pensions and healthcare cost the most whilst young immigrants without children and the middle-aged immigrants with past education age children but with individuals who do not need considerable pension or health services incur the least cost just as the native-born residents. However, there is a need for the family status, the number of children, health requirements, and age, pension contributions the individual in question has made in Medicare, social security, and tax payments.
In most cases, immigrants, whether legal or illegal, are not permitted to participate in supplementary security income, Medicaid, temporary assistance to the needy families, food stamps, or the States children’s health insurance program. Additionally, illegal immigrants cannot receive any form of welfare, retirement benefits as well as public healthcare except emergency services. For the legal permanent residents, they must contribute to social security funds and Medicare for not less than ten years before they can receive any benefit from these governmental programs. However, the new 2009 of the States Children’s health insurance program provisions allows legal immigrant children born in the United States to access health coverage immediately as opposed to the previous cases where they had to wait for five years.
Participation in the labor market force and payments of taxes represents another area of impact from immigrants. Various studies conclude that immigrants pay Medicare, social security, and income taxes as reported by the national immigration forum, and Cato institute reports that estimates immigrants pay up to $162 billion local, States and federal taxes (Braun, 2018). Moreover, the National Research Council reports claims that every individual immigrant pays an average of $1,800 more in taxes than their costs in benefits. Although there are widespread rumors that illegal immigrants do not pay taxes, they pay more taxes because they are ineligible to access social service benefits. Besides, these undocumented aliens pay sales tax on any purchase they make like any other consumer would.
Impacts of Immigrants on the Natives
The impacts of immigrants on the natives’ wages are always among the most proficient factors to consider on possible determinants of immigrations on the natives of the host country from any economic point of view (Sharpe, 2015). Numerous studies point out that individuals will choose to move in countries where there exists differences between earnings in the country of destination and the country of origin are more than the cost of living in the two sectors. The economic theory states that individuals that have a higher ability to and are more motivated by economic incentives will earn more benefits. Consequently, the theory can be used to explain migration implementation that immigrants in the country of destination are highly able and more motivated than the natives even though earnings, education, and some others are unchanged.
The education attainment among immigrants is also a crucial consideration when determining the economic impacts of immigrants on the natives. According to Sharpe (2015), various studies point out that the natives have higher educational returns compared to immigrants as schooling is, to some extend crucial aspect of required in labor force experience, and it is country-specific. Therefore, the education acquired before immigration will have a small impact on the earnings than the education of the natives. However, in some cases, education has a partial on individuals’ earnings as the self-selection immigration model explains the weak effects of high education standards. Highly motivated and able individuals but with little education may gain more space than individuals with high education level but with little motivation and ability in labor markets.
Some of the studies connect migration issues with employment and labor market participation and claim that employment as a factor is even more crucial than education and earnings when determining the economic impacts of immigrants on the natives. They argue that if the immigration rate is increased, the unemployment rate among the natives will increase at the same rate. Clemens, M. A. (2011) claims that the positive impact on this is that the estimated elasticity present a positive relationship between the labor market force participation rate and migration on the natives. Moreover, such a relation posit a negative economic impact as immigration affects the employment rate among the less-skilled natives.
Lastly, language also determines the impacts of immigration on the economic conditions of the natives. For example, increasing the use of the English language is crucial among immigrants in the United States as English is associated with the skills needed in the labor force no matter how experienced an individual is or their living requirements. Braun (2018) claims that the contextual speaking of English among United States immigrants suggests shifting is crucial in the first immigrant’s generation. Therefore, the ability of immigrants to speak the native language should also be included in individuals’ impacts on the natives to materialize as the natives use these languages in their daily life.
Immigrants Assimilation
Immigrants are expected to earn less than the native-born in the labor markets if they start with less productive skills compared to the natives or if they are discriminated in favor of the natives in workplaces (Abramitzky & Boustan, 2017). Immigrants with fewer skills than the natives in their countries of destination can close the earning gap with the natives through investing in the skills necessary to succeed in their country of destination. Those immigrants facing discrimination in the labor force may be able to catch up with the natives if they bypass the natives by losing their accents or changing their names. However, it is not easy for the migrants to experience a complete catch up within one generation with the natives in their country of destination.
Conclusion
Conclusively, factors such as the differences in wages between the country of origin and the country of destination, human capital investments and education attainment, and native language proficiency are the crucial factors to consider when determining the economic impacts of immigration, immigrant assimilation, and integration into the country of host. Additionally, most of the contemporary works of literature concerning the economics of immigrants, which include assimilation, migration selection as well as immigrants’ impacts upon arrival on natives workers, were also relevant in the past, and comparing findings across those periods culminate into contemporary debates. Specifically, this essay posits that immigrant selection, currently active, was decided by the past immigration norms with some negative impacts on immigration selection over European sending countries. Moreover, the economic convergence pace between the natives and immigrants is relatively slow, with notable dissimilarities that the average immigrant stats with a substantial earning gap to fulfill. However, there is a need for an empirical review to compare the magnitude of economic impacts on immigration and labor markets.
References
Abramitzky, R., & Boustan, L. (2017). Immigration in American economic history. Journal of economic literature, 55(4), 1311-45.
Braun, S. T. (2018). Immigration and Labour Markets. In An Economist’s Guide to Economic History (pp. 79-86). Palgrave Macmillan, Cham.
Clemens, M. A. (2011). Economics and emigration: Trillion-dollar bills on the sidewalk?. Journal of Economic Perspectives, 25(3), 83-106.
Dadush, U., & Niebuhr, M. (2016). The economic impact of forced migration.
Kerr, S. P., & Kerr, W. R. (2011). Economic impacts of immigration: A survey (No. w16736). National Bureau of Economic Research.
Sharpe, J. (2015). Three Essays on the Economic Impact of Immigration.