Question

essay outline on US Immigration and economic

economic principles and Immigration

Answer 1

The topic of US immigration and economic is crucial importance for both academics and policymakers. The foreign-born population share in the U.S. has risen steadily since 1970 and the current share stands at roughly 15% of the total population (levels not seen since the early 19th century). immigrants entering the U.S. and their descendants will account for 82% of total U.S. population growth. This projection is staggering compared to recent decades. From 1960-2005, immigrants and their descendants only accounted for 51% of overall population growth. As a result of this increased growth due to immigration, projected immigration will also have important implications for the overall demographic landscape of the U.S. Due to the projected immigration discussed above, the non-
Hispanic white population share will fall from 67% to 47% while the Hispanic population share will more than double from 14% to 29%.2. As such, the high current level of immigration and the projected rise in immigrant population shares makes understanding the effects of immigration all the more important to policymakers. This dissertation works to reexamine and challenge commonly used methodologies in estimating the effects of immigration on the U.S. economy.
The effects of immigration on both housing prices and the wages of native workers have motivated much of the discourse regarding immigration reform. Why should we care about the impact of immigration on rents? From an equity standpoint, any immigrant-induced rent increase would be concentrated on the poorest Americans. The most recent data from the American Community Survey suggests that nearly half of all renter households are “house poor”, as defined by the Federal government. That is, these households spend more than 30% of their income on housing. Furthermore, nearly a quarter of all renter households spend more than 50% of their income on rents. While this may seem to have merit, from a social welfare point-of-view, whether immigrants raise prices should not matter. I would argue that there are two sides to every market and while rising prices may cause some tenants to lose welfare upon an immigrant inflow, the owners of these properties surely gain from these increases in prices. Put bluntly, there are no losses of efficiency when prices increase. As such, the policy relevance of this topic may not be immediately clear. The problem is that policymakers do not seem to consider total social welfare when discussing immigration reform. Policymakers in the U.S. and abroad have used scholarly evidence that immigrant inflows cause higher housing prices to argue against immigration. In a speech to discuss the economic costs of immigration, Theresa May, the Home Secretary in the U.K., said “One area in which we can be certain mass immigration has an effect is housing...More than one third of all new housing demand in Britain his caused by immigration. And there is evidence that without the demand caused by mass immigration, house prices could be 10% lower over a 20 year period.” Similar statistics and research have been used by the Labour Leader in New Zealand and many other national news outlets in the U.S. to argue against immigration. On the other side of the aisle, many proponents of immigration reform have argued the economic benefit of immigration via the housing market. With homeownership rates and housing values in decline, immigrant inflows can “bring back” the housing market through demand shocks. This point-of-view is shared by many U.S. politicians like former New York Mayor Michael Bloomberg and former Governor of Utah and presidential nominee Jon Huntsman, among many others.As both proponents and opponents of immigration reform use the same general result to argue both sides of immigration policy, identifying the true effect of immigration on housing is important for the national dialogue on immigration reform.

The economic impact of immigration on the United States and on other host countries grew rapidly in the past decade.This explosion of research substantially sharpened our understanding of the economics of immigration. The stylized facts that long dominated the discussion over the costs and benefits of immigration were radically altered during the 1980s, and a number of new questions, issues,and perceptions replaced them.To appreciate the magnitude of this upheaval, consider the perceived wisdom as of ten years ago. The available studies suggested that even though immigrants generally arrived with an economic disadvantage, their economic opportunities improved rapidly over time. Within a decade or two after arrival, immigrant earnings would approach, reach parity with, and overtake the earnings of na-
tives of comparable socioeconomic back ground. Moreover, there was little evi dence to suggest that immigrants had an
adverse impact on native employment opportunities. Overall, the empirical evidence painted a very optimistic picture of the contribution of immigrants to the American economy.In the past ten years, many more brushstrokes were applied to the canvas, and the theme and shape of the picture changed. The new research established a number of new stylized facts: The relative skills of successive immigrant waves declined over much of the postwar period; it is unlikely that recent immigrants will reach parity with the earnings of natives during their working lives; although there is only a weak negative correlation between the presence of immigrants in a
local labor market and the earnings of natives in that labor market, immigration may have been partly responsible for the
decline in the earnings of unskilled native workers that occurred during the 1980s; the new immigration may have an
adverse fiscal impact because recent waves participate in welfare programs more intensively than earlier waves; immigration policy matters, so that host countries which filter applicants in terms of observable skills “attract” immigrants who are more skilled, have higher earnings, and are less likely to participate in public assistance programs; and, finally, there exists a strong correlation between the skills of immigrants and the skills of second-generation Americans, so that the huge skill differentials observed among today’s foreign-born groups become tomorrow’s differences among.American-born ethnic groups.An important lesson of the recent research is that immigration has a farreaching and long-lasting impact. In asense, we are only beginning to observe the economic consequences of the historic changes in the size, national originmix, and skill composition of immigrants admitted to the United States during the past three decades. The Second Great Migration surely will alter the skill endowment of the labor force, the employment opportunities of native workers,
and the costs of social insurance programs not only in our generation, but for our children and grandchildren as well.In addition, current immigration in the United States and in many other host countries is setting the stage for the ethnic differences in economic outcomes that are likely to be a dominant feature of labor markets in these countries throughout the next century. In view of the economic, cultural, and political significance of the issues raised by immigration, it is not surprising that immigration policy is now a central in-
gredient in the debate over social policy in many countries. For the most part, this debate focuses on economic issues and uses the evidence provided by economic research to frame and formulate the discussion. Because the economic impact of current immigration will befelt for many decades to come and because the immigrant flow to many host countries continues unabated, the explosion of research that we witnessed in thepast decade is sure to continue.