Monday, March 8, 2010

The Effect of Immigration on Productivity

Immigration during the 1990s and the 2000s significantly increased the presence of foreign-born workers in the United States, but the increase was very unequal across states. In The Effect of Immigration on Productivity: Evidence from US States (NBER Working Paper No. 15507), NBER Research Associate Giovanni Peri analyzes state-by-state data to determine the impact of immigration on a variety of labor market outcomes, including employment, average hours worked, and average skill intensity, and on productivity and income per worker.

Peri reports a number of distinct findings. First, immigrants do not crowd-out employment of (or hours worked by) natives; they add to total employment and reduce the share of highly educated workers, because of their larger share of islow-skilled relative to native workers. Second, immigrants increase total factor productivity. These productivity gains may arise because of the more efficient allocation of skills to tasks, as immigrants are allocated to manual-intensive jobs, promoting competition and pushing natives to perform communication-intensive tasks more efficiently. Indeed, a measure of task-specialization of native workers induced by immigrants explains half to two thirds of the positive effect on productivity.

Third, Peri finds that inflows of immigrants decrease capital intensity and the skill-bias of production technologies. The decrease in capital intensity comes from an increase in total factor productivity; the capital-to-labor ratio remains unchanged because investment rises coincident with the inflow of immigrants. The reduction in the skill-intensity of production occurs as immigrants influence the choice of production techniques toward those that more efficiently use less educated workers and are less capital intensive.

Finally, Peri finds that for less educated natives, higher immigration has very little effect on wages, while for highly educated natives, the wage effect of higher immigration is positive. In summary, he finds that a one percent increase in employment in a US state, attributable only to immigration, is associated with a 0.4 to 0.5 percent increase in income per worker in that state.

A central challenge in establishing a causal link between immigration and economic outcomes is the fact that immigrants may be disproportionately attracted to states with strong economic performance. Peri recognizes this problem, and uses information on state characteristics, such as the location of a state relative to the Mexican border, the number of ports of entry, as well as the existence of communities of immigrants there before 1960 to predict immigrant inflows. He then studies how these predicted inflows, rather than actual inflows, are related to labor market outcomes. He argues that the state characteristics that underlie his predictions are not likely to be associated with either labor market outcomes or productivity. He also controls for several other determinants of productivity that may vary with geography such as R and D spending, computer adoption, international competition in the form of exports, and sector composition.


LH said...

Thanks for this post!

I don't understand the angry anti-immigrant rhetoric that I hear far too often.

I think we should allow far more immigrants into the country. I think it would help reduce illegal immigration. Can you really blame people from coming here when there's no work in their country, and no prospects? I know what I would do in that situation.

My great grandfather was an Irish immigrant. We're a national of immigrants. Germans and Czechs were foreign language speaking immigrants in Texas once too, and they assimilated just fine.

We should especially allow as many graduate students into the country as want to come, and we should make it easy for them to stay and start businesses here when they finish. Everyone benefits.

Brittanicus said...

Politicians have a habit of bypassing the law that is firmly in-place, if its not beneficial to those who insure their large campaign contributions or some other method of secret payment. Rep. Gabrielle Gifford (D-AZ) is obviously trying to uproot E-Verify with yet another program called NEVA. We must not get distracted by some other illegal alien enforcement, as in the future it to will be impaired by another program and another. Then--NOTHING--gets done. Homeland Security and ICE should work with what has progressed and that is E-verify. Critics are brought and paid for, by the opponents of any enforcement project. Likewise an example will be pharmaceutical companies who pay specialists to offer astounding testament of some wonderful drug, only to find later its has terrible side effects. Everything has its price specially in this capitalist society, where the ordinary working man and womens interests come last. That's why states like California that refuses to immunize itself against the invasion and need budgetary stewards like Steve Poizner, as a new governor who promises to fight back against supporting illegal alien families public entitlements

You only have to look at the wilting Health Care reform? Bombarded as we are by negative advertising. France, a socialist republic has a wonderful health care system and relatives of mine who live there will heartily agree of it great benefits. In America GIANT INSURANCE COMPANIES, AND WALL STREET ARE KING. Anybody can be brought in many cases, just as companies who have been intimidated or the psychological approach of imprinting regular people with some form of indoctrinations. Far as many bloggers are concerned, hundreds of rural and independent newspapers acknowledge E-Verify works? WE THE PATRIOTIC AMERICAN PEOPLE MUST NOT LET THE CRITICS OR THE WIDE OPEN BORDER ORGANIZATIONS, TRY TO ADJUST YOUR OPINION OF E-VERIFY. SOON DOCUMENT FRAUD WILL BE A THING OF THE PAST. DO YOU REALLY THINK THAT E-VERIFY IS GOING TO REMAIN IN STASIS? MANY NEW TOOLS ARE GOING TO BE ADDED AND ILLEGAL WORKERS WILL BE REMOVED BY ATTRITION.

A comment from a business human resources states:

"I have used E-Verify for several years, and only once have I encountered this event, and it was quickly resolved due to the person whose identity was stolen stepping forward to correct earnings report errors. E-Verify works better than any other mechanism available. Opponents are still striving to discredit its value and accuracy. For identity theft to get past E-Verify, it has to involve a complete theft. (Name, DOB and SSN) Just getting a name and SSN will not suffice. I would gladly welcome a requirement for photo match,(which is being introduced shortly) which already happens for non-citizens using an immigration card or passport as their submitted documents. As an employer, if E-Verify has no other value, it provides the presumption of not "knowingly" employing an illegal, which is a priceless protection for employers."

Brittanicus said...

Illegal immigration is--EVERY AMERICAN WORKERS--responsibility and we should keep up a repetitious bombardment on every state and federal Senator and Representative at 202-224-3121 to enforce every law. IT IS OUR DUTY TO REPORT SUSPICIOUS ACTIVITY AT YOUR WORK PLACE OR ANYTHING YOU SEE AND HEAR. 15 million US citizens and legal residents are jobless, with low income workers mainly at risk. The Internet is convinced their are 8 million illegal workers who have taken the the jobs of the legitimate workforce. EVEN SO THESE PEOPLE BROKE THE LAW AND ITS OUR OBLIGATION AND RIGHT TO REMOVE THEM.Other statistics indicate Washington is still importing a million plus semi-skilled workers yearly.

In addition Border patrol has chillingly estimated that only 1 in 10 illegal entrants gets caught at the border. THIS CONCLUSION OF 20 TO 30 MILLION ILLEGAL IMMIGRANT FAMILIES HAVE SETTLED HERE AND IT IS AN ONGOING RISK TO OUR WELFARE ENTITLEMENT SYSTEM. We cannot afford to regress on E-Verify or any other enforcement program such as 287 (g) local police alien detainment, ICE raids and the REAL ID and SAVE ACT. We must also impose restrictions on this demented Birthright citizen law?

Don't be sidetracked by Sen.Harry Reid, Speaker Pelosi, Sen. Chuck Schumer, Sen LINDSEY GRAHAM or Sen. John mcCain and other equally insistent on another Comprehensive Immigration reform. ITS JUST ANOTHER WAY OF UNDERHANDINGLY SANITIZING ANOTHER AMNESTY, WHERE AMERICANS WILL BE EVEN MORE EXPECTED TO SUPPORT UNCOUNTABLE NUMBERS OF NEWLY LEGITIMIZED IMMIGRANTS. It's almost unobtainable now with all states, but border states like Sanctuary California and even Texas and Arizona in a wretched financial positions pandering to illegal immigrants in hundreds of billions of dollars in welfare. E-Verify must be guaranteed to be improved, permanent and completely funded. Years of neglect by politicians has caused this terrible situation, with a poorly built border fence, easy movement of people who have overstayed US entry visas.

Our nation is being invaded and colonized. As is our duty, We the People will resist.

The cost to the American people WOULD BUY A COUNTRY, just as the Overpopulation growth we will inherit in 2040.. Read the truth about corruption and the illegal immigration occupation of our country at NUMBERSUSA, JUDICIALWATCH, IMMIGRATIONBUZZ, RIGHTSIDENEWS & DIRECTORBLUE. THEAMERICANRESISTANCE Copy and Paste No Copyright. Get the truth to THE PEOPLE! ONE FLAG, ONE LANGUAGE. LEARN WHO YOUR ENEMY IS IN WASHINGTON?

Anonymous said...

This Brittanicus copies and posts this racist BS everywhere. He's a Son of a Lou Dobbs. He didn't get anything from this excellent report because Lou Dobbs fixed his mind in a locked position. Good you don't moderate him out so we can see what these bloggers are writing to the legislators.