On the inside

Kevin Lewis

February 24, 2017

Immigration Restrictions as Active Labor Market Policy: Evidence from the Mexican Bracero Exclusion

Michael Clemens, Ethan Lewis & Hannah Postel

NBER Working Paper, February 2017

An important class of active labor market policy has received little rigorous impact evaluation: immigration barriers intended to improve the terms of employment for domestic workers by deliberately shrinking the workforce. Recent advances in the theory of endogenous technical change suggest that such policies could have limited or even perverse labor-market effects, but empirical tests are scarce. We study a natural experiment that excluded almost half a million Mexican ‘bracero’ seasonal agricultural workers from the United States, with the stated goal of raising wages and employment for domestic farm workers. We build a simple model to clarify how the labor-market effects of bracero exclusion depend on assumptions about production technology, and test it by collecting novel archival data on the bracero program that allow us to measure state-level exposure to exclusion for the first time. We cannot reject the hypothesis that bracero exclusion had no effect on U.S. agricultural wages or employment, and find that important mechanisms for this result include both adoption of less labor-intensive technologies and shifts in crop mix.


Open Borders in the European Union and Beyond: Migration Flows and Labor Market Implications

John Kennan

NBER Working Paper, January 2017

In 2004, the European Union admitted 10 new countries, and wages in these countries were generally well below the levels in the existing member countries. Citizens of these newly-admitted countries were subsequently free to take jobs anywhere in the EU, and many did so. In 2015, a large number of refugees from Syria and other broken countries sought to migrate to EU countries (along very dangerous routes), and these refugees were met with fierce resistance, at least in some places. This paper seeks to understand the labor market implications of allowing free migration across borders, with particular reference to the EU. The aim is to quantify the migration flows associated with EU enlargement, and to analyze the extent to which these flows affected equilibrium wages. The main conclusion is that the real wage effects are small, and the gains from open borders are large.


Understanding the Economic Impact of the H-1B Program on the U.S.

John Bound, Gaurav Khanna & Nicolas Morales

NBER Working Paper, February 2017

Over the 1990s, the share of foreigners entering the US high-skill workforce grew rapidly. This migration potentially had a significant effect on US workers, consumers and firms. To study these effects, we construct a general equilibrium model of the US economy and calibrate it using data from 1994 to 2001. Built into the model are positive effects high skilled immigrants have on innovation. Counterfactual simulations based on our model suggest that immigration increased the overall welfare of US natives, and had significant distributional consequences. In the absence of immigration, wages for US computer scientists would have been 2.6% to 5.1% higher and employment in computer science for US workers would have been 6.1% to 10.8% higher in 2001. On the other hand, complements in production benefited substantially from immigration, and immigration also lowered prices and raised the output of IT goods by between 1.9% and 2.5%, thus benefiting consumers. Finally, firms in the IT sector also earned substantially higher profits due to immigration.


Inter-firm mobility and return migration patterns of skilled guest workers

Briggs Depew, Peter Norlander & Todd Sørensen

Journal of Population Economics, February 2017, Pages 681–721

Two concerns central to the debate over skilled guest worker programs in the USA are that (1) guest workers are restricted from inter-firm mobility and are “effectively tied” to their firms, and (2) guest workers provide cheap and immobile labor that crowds out natives, especially during times of heightened unemployment. We address these concerns by using a unique dataset of employee records from six large Indian IT firms operating in the USA. We find that the guest workers in our sample exhibit a significant amount of inter-firm mobility that varies over both the earnings distribution and the business cycle. We also find that these workers exit the USA during periods of heightened unemployment. These findings provide new evidence on the implications of the institutional features and debate surrounding guest worker programs.


Urban crime rates and the changing face of immigration: Evidence across four decades

Robert Adelman et al.

Journal of Ethnicity in Criminal Justice, Winter 2017, Pages 52-77

Research has shown little support for the enduring proposition that increases in immigration are associated with increases in crime. Although classical criminological and neoclassical economic theories would predict immigration to increase crime, most empirical research shows quite the opposite. We investigate the immigration-crime relationship among metropolitan areas over a 40 year period from 1970 to 2010. Our goal is to describe the ongoing and changing association between immigration and a broad range of violent and property crimes. Our results indicate that immigration is consistently linked to decreases in violent (e.g., murder) and property (e.g., burglary) crime throughout the time period.


The Hidden Educational Costs of Intensified Immigration Enforcement

Catalina Amuedo-Dorantes & Mary Lopez

Southern Economic Journal, forthcoming

The past two decades have witnessed an unprecedented increase in interior immigration enforcement that may have adversely impacted the children of unauthorized migrants—the vast majority of whom are U.S.-born citizens. Using 2000 through 2013 data from the Current Population Survey, we gauge the impact that intensified interior immigration enforcement in the United States is having on the schooling progression of Hispanic youth with likely unauthorized parents. Intensified enforcement raises the probability of repeating a grade for children ages 6–13 by 14%, and the likelihood of dropping out of school for youth ages 14–17 by 18%. Furthermore, younger children are more responsive to police-based enforcement, whereas older youth are more responsive to employment-based enforcement. Awareness of the impacts that current immigration policies have on the children of immigrants is critical in informing the policy debate and in protecting the well-being of children.


“We Only Speak English Here”: English Dominance in Language Diverse, Immigrant After-School Programs

Melanie Jones Gast, Dina Okamoto & Valerie Feldman

Journal of Adolescent Research, January 2017, Pages 94-121

Past research suggests that community after-school programs (ASPs) are crucial sites for culturally relevant programming for minority and immigrant youth; yet, we know little about how ASPs address language in their programming. Using an ethnographic fieldwork approach, we examine the goals and practices of ASP workers serving immigrant youth with diverse ethnic and language backgrounds in San Francisco, California. We find that, despite the best intentions regarding culturally relevant programming, ASP workers faced funding mandates, capacity issues, and increasingly diverse youth populations, and they adopted English-only policies or simply placed little priority on native-language usage. Ultimately, we observed competing processes related to English dominance: a lack of support for English language learners (ELLs) and bilingual youth, and the use of English as a bridge language across racial and ethnic lines. While staff sought to support and empower immigrant youth, ELL youth were often left on the sidelines and had limited opportunities to develop social capital in ASPs. Without reworking funding and institutional systems for language programming, English dominance may continue as a normalized method of practice in city youth programs.


Change in birth outcomes among infants born to Latina mothers after a major immigration raid

Nicole Novak, Arline Geronimus & Aresha Martinez-Cardoso

International Journal of Epidemiology, forthcoming

Background: Growing evidence indicates that immigration policy and enforcement adversely affect the well-being of Latino immigrants, but fewer studies examine ‘spillover effects’ on USA-born Latinos. Immigration enforcement is often diffuse, covert and difficult to measure. By contrast, the federal immigration raid in Postville, Iowa, in 2008 was, at the time, the largest single-site federal immigration raid in US history.

Methods: We employed a quasi-experimental design, examining ethnicity-specific patterns in birth outcomes before and after the Postville raid. We analysed Iowa birth-certificate data to compare risk of term and preterm low birthweight (LBW), by ethnicity and nativity, in the 37 weeks following the raid to the same 37-week period the previous year (n = 52 344). We model risk of adverse birth outcomes using modified Poisson regression and model distribution of birthweight using quantile regression.

Results: Infants born to Latina mothers had a 24% greater risk of LBW after the raid when compared with the same period 1 year earlier [risk ratio (95% confidence interval) = 1.24 (0.98, 1.57)]. No such change was observed among infants born to non-Latina White mothers. Increased risk of LBW was observed for USA-born and immigrant Latina mothers. The association between raid timing and LBW was stronger among term than preterm births. Changes in birthweight after the raid primarily reflected decreased birthweight below the 5th percentile of the distribution, not a shift in mean birthweight.

Conclusions: Our findings highlight the implications of racialized stressors not only for the health of Latino immigrants, but also for USA-born co-ethnics.


Career Duration in the NBA: Do Foreign Players Exit Early?

Peter Groothuis & James Richard Hill

Journal of Sports Economics, forthcoming

Using a panel of National Basketball Association players from 1990 through 2013, we analyze the determinants of career length in the league. We find that foreign-born players who did not play college basketball in the United States have shorter careers than do American-born players holding performance constant. Foreign-born players who played college basketball in the United States do not have shorter careers. We suggest that both push and pull immigration factors might cause this early exit.


Earnings distribution of Cuban immigrants in the USA: Evidence from quantile regression with sample selection

Aleida Cobas-Valdés, Javier Fernández-Macho & Ana Fernández-Sainz

Applied Economics, forthcoming

This article analyses the conditional earnings distribution for Cuban immigrants in the USA considering Buchinsky sample selection in a quantile regression model. The test proposed by Huber and Melly to test the independence between error terms and regressors (conditional on the selection probability) is also considered. This is the first attempt in the migration literature to use quantile regression with sample selection. The data used come from the US American Community Survey. The results show that the hypothesis of conditional independence is not rejected, and increments in earnings associated with the usual socioeconomic characteristics in labour studies vary between the cohorts considered. The main conclusions are that a decline in returns from education may be a sign that a high level of education no longer provides a competitive advantage and that being a black person is associated with substantially lower earnings regardless of the individuals’ position in the earnings distribution. This may explain why, historically, comparatively fewer black Cubans have made the decision to emigrate to the USA because of a lack of economic incentives.


Immigration and the Rise of American Ingenuity

Ufuk Akcigit, John Grigsby & Tom Nicholas

NBER Working Paper, February 2017

This paper builds on the analysis in Akcigit, Grigsby, and Nicholas (2017) by using U.S. patent and Census data to examine macro and micro-level aspects of the relationship between immigration and innovation. We construct a measure of "foreign born expertise" and show that technology areas where immigrant inventors were prevalent between 1880 and 1940 experienced more patenting and citations between 1940 and 2000. We also show that immigrant inventors were more productive during their life cycle than native born inventors, although they received significantly lower levels of labor income than their native born counterparts. Overall, the contribution of foreign born inventors to US innovation was substantial, but we also find evidence of an immigrant inventor wage-gap that cannot be explained by differentials in productivity.


Green Cards, Patents, and Firm Value

Rahmi Erdem Aktug

Federal Reserve Working Paper, January 2017

This is the first study to use the approved Green Card Applications (or Certified Permanent Residency Applications) from the Program Electronic Review Management (PERM) database, and the first to link the PERM database to patents database kept by the US Patent and Trademark Office (USPTO). We find that the number of approved permanent residency applications (perms, as a percentage of total employment) has a positive impact on firms’ value and growth opportunities proxied by Tobin’s Q (TQ). Specifically, a 1% increase in perms lead to a 15-20% increase in firm value. Although we were not able to confirm that more green cards lead to more innovation, we discover that more innovation gets firms more Green Cards. We find that a 1% increase in the patent variable (patents as a percentage of total employment) lead to a 0.03% increase in Green Card Approvals. Our findings carry importance for US policy makers, firms, investors, and academics.


Immigration and housing: A spatial econometric analysis

Abeba Mussa, Uwaoma Nwaogu & Susan Pozo

Journal of Housing Economics, March 2017, Pages 13–25

In this paper we examine the effect of immigration into the U.S. on the U.S. housing market, both in terms of rents and single family house prices. We model the housing market in a spatial econometrics context using the spatial Durbin model. This approach helps us exploit and capture both the direct and indirect effects of immigration inflows on the U.S. housing market. We find that an increase in immigration inflows into a particular MSA is associated with increases in rents and with house prices in that MSA while also seeming to drive up rents and prices in neighboring MSAs. The patterns observed in the rental and house price markets, along with the larger spillover effects, are consistent with native-flight from immigrant receiving areas.


Moving to the Right Place at the Right Time: Economic Effects on Migrants of the Manchuria Plague of 1910-11

Dan Li & Nan Li

Explorations in Economic History, January 2017, Pages 91–106

How do initial arrival conditions in a host locality affect migrants’ subsequent economic welfare? Manchuria (Northeast China), which attracted millions of migrants from North China during the first half of the twentieth century, experienced a devastating pneumonic plague outbreak in 1910-11. Using data from a rural household survey in the mid-1930s, we explore how the post-plague conditions in various villages affected migrant cohorts’ long-term wealth accumulation. We find that the migrant households that moved to plague-hit villages soon after the plague ended prospered the most: they owned at least 112% more land than migrant households that either moved elsewhere or migrated to the same village before or long after the plague outbreak. Our results are robust after controlling for factors that influence the long-term wealth accumulation of migrants and are not caused by selection.


How does the internet affect migration decisions?

Hernan Winkler

Applied Economics Letters, forthcoming

This article provides new evidence on the impact of the internet on migration decisions. I find that an increase in internet adoption among migrant-sending countries reduces the stock of migrants from these locations. The results are robust to a number of specifications, including an instrumental variable approach that addresses the endogeneity of internet adoption. The findings suggest that the internet may weaken the importance of push factors in the decision to migrate, and that these effects outweigh declines in mobility costs.


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