09 immigration

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1 POLICY MEMO | SEPTEMBER 2010 Ten Economic Facts About Immigration Michael Greenstone and Adam Looney www.HAMILTONPROJECT.ORG

2 MISSION STATEMENT The Hamilton Project seeks to advance America’s promise of opportunity, prosperity, and growth. The Project’s economic strategy reflects a judgment that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments. w e believe that today’s increasingly competitive global economy requires public policy ideas commensurate with the challenges of the 21st century. Our strategy calls for combining increased public investments in key growth-enhancing areas, a secure social safety net, and fiscal discipline. In that framework, the Project puts forward innovative proposals from leading economic thinkers — based on credible evidence and experience, not ideology or doctrine — to introduce new and effective policy options into the national debate. The Project is named after Alexander Hamilton, the nation’s first treasury secretary, who laid the foundation for the modern American economy. Consistent with the guiding principles of the Project, Hamilton stood for sound fiscal policy, believed that broad-based opportunity for advancement would drive American economic growth, and recognized that “prudent aids and encouragements on the part of government” are necessary to enhance and guide market forces.

3 Ten Economic Facts About Immigration Michael Greenstone and Adam Looney Introduction The Hamilton Project believes it is important to ground the current immigration debate in an objective economic framework based on the best available evidence. In this policy memo, we explore some of the questions frequently raised around immigration in the United States and provide facts drawn from publicly available data sets and the academic literature. Most Americans agree that the current U.S. immigration system is flawed. Less clear, however, are the economic facts about immigration—the real effects that new immigrants have on wages, jobs, budgets, and the U.S. economy—facts that are essential to a constructive national debate. These facts paint a more nuanced portrait of American immigration than is portrayed in today’s debate. Recent immigrants hail from many more countries than prior immigrants; they carry with them a wide range of skills from new PhDs graduating from American universities to laborers without a high school degree. Most recent immigrants have entered the United States legally, but around 11 million unauthorized immigrants currently live and work in America; the majority of these unauthorized workers settled here more than a decade ago. Each of these immigrant groups affects the U.S. economy in varied ways that should be considered in the current debate around immigration reform. Immigrants now comprise more than 12 percent of the American population, according to recent estimates, approaching levels not seen since the early 20th century. Today’s controversies over immigration echo arguments made a century ago during the last immigration peak. While the demographics of U.S. immigrants have shifted dramatically, the concerns voiced about the social and economic impacts of immigration strike a familiar chord. The Hamilton Project • Brookings I

4 Introduction continued from page 1 A major economic concern is how immigrants influence these unauthorized immigrants are from Mexico. (However, the wages and employment prospects of U.S. workers. The unauthorized immigrants make up only about 21 percent of economic impacts of immigration vary tremendously, U.S. residents of Mexican heritage.) When possible, we try depending on whether immigrants are unskilled agricultural to differentiate the figures to more closely understand the laborers, for example, or highly skilled PhD computer different effects—positive or negative—that unauthorized scientists. Although their consequences are often conflated, workers may have on the economy. it is constructive to examine the impacts of low-skilled and Of course, there are many factors at play and the economic high-skilled immigrants independently. evidence is only one piece of the puzzle. These facts are Another point of controversy in today’s debate involves designed to provide a common ground that all participants in the impact of unauthorized immigrants on our economic the policy debate can agree on. In the months and years ahead, wellbeing. The best estimates suggest that 28 percent of The Hamilton Project will return to the issue of immigration the total foreign-born population could be unauthorized. as we offer policy recommendations on the economic issues According to the Pew Hispanic Center, roughly 60 percent of facing the United States. F I gur E 1. 2. E gur I F U.S. Foreign-Born Population Foreign-Born Population by Legal Status 45 16% Unauthorized immigrants 40 14% Naturalized citizen s 35 s Legal permanent resident alien 12% 28% .S. Population u 30 s Legal temporary migrant 10% 25 8% 37% 20 illions of People 6% M 15 Millions of People 4% Foreign Born as a percent of U.S. Population 10 2% 31% 5 Foreign Born as a percent of 0% 00 1920 02 00 8 1910 1930 1940 195 01 96 01 97 01 98 01 1900 99 02 4% Year 0 Year 45 Unauthorized immigrants Source: US Bureau of the Census 40 s Naturalized citizen 35 Legal permanent resident alien s 28% 30 Legal temporary migrant s 25 Source: Passel and Cohn Table 3(2010, p. 2). Estimates from Pew Hispanic Center, based on tabulations from the augmented March 2009 Current Population Survey. 37% 20 illions of People M Note: This memo draws on the latest information available including data from the Census, Current Population Survey, Department of Homeland Security, United States 15 Budget, research from the Pew Hispanic Center, and peer reviewed economic studies. Often, these sources do not provide direct, definitive evidence of the legal status of immigrants, making it difficult to distinguish the foreign born population (immigrants) into naturalized citizens, permanent residents, and unauthorized immigrants. 10 In the instances where the data distinguish among the foreign born we refer to naturalized citizens and permanent residents as “legal immigrants” and other immigrants 31% as “unauthorized immigrants.” 5 4% 0 Ten Economic Facts About Immigration 2

5 Today’s Immigrants Hail From More Diverse 1. Backgrounds Than They Did A Century Ago America’s immigrants are more diverse than they were a American and Asia. Not surprisingly, the single largest home century ago. In 1910, immigrants from Europe and Canada country of today’s immigrants is Mexico. All told, immigrants from Latin American and the Caribbean make up 53 percent comprised 95 percent of the foreign-born population in the of the U.S. foreign-born population. United States. Today’s immigrants hail from a much broader array of countries, including large populations from Latin gur E 3. I F Foreign Born by Place of Origin: 1910 Africa (0%) Asia (2%) Other (9%) ) 7% (2 Other Europe Italy (10%) Ireland (10%) Germany (18%) Source: IPUMS-USA - Census 1910 1% Extract Scandinavia (10%) Other USSR/ Russia (11%) F 4. E gur I Foreign Born by Place of Origin: 2008-2009 Other (3%) Africa (4%) and the Caribbean (15%) Central Europe (13% ) A merica (7% ) Asia (28%) Mexico (31%) Source: IPUMS-CPS - 2008-2009 March CPS. The Hamilton Project • Brookings 3

6 Immigrants Bring A Diverse Set Of Skills 2. And Educational Backgrounds Immigrants are both better and worse educated than U.S.-born At the other end of the spectrum, however, immigrants are citizens. At one end of the spectrum, more than 11 percent much more likely than U.S.-born citizens to have less than a of foreign-born workers have advanced degrees—slightly high school education. Roughly 30 percent of immigrants lack above the fraction of Americans with post-college degrees. a high school diploma, nearly four times the figure for U.S.- born citizens. Even more striking, more than 1.9 percent of immigrants have PhDs, almost twice the share of U.S.-born citizens with doctorates (1.1 percent). gur 5. F I E Education of U.S. Born and Foreign Born 35% 30% 25% 20% 15% Percentage of Ages 25 to 64 Percentage of Ages 25 to 64 10% 5% U.S. Born Foreign Born 0% Less Than Bachelor’s Master’s or High School PhD Some Degree Degree College Professional High School 1% 27% 11% 10% 21% 30% Share of Workforce Highest Level of Education Attained Highest Level of Education Attained Source: IPUMS-CPS - 2008-2009 March CPS. Ages 25 to 64. Foreign Born Arriving After 1980. Ten Economic Facts About Immigration 4

7 On Average, Immigrants Improve The Living 3. Standards Of Americans But while immigration improves living standards on average, The most recent academic research suggests that, on average, immigrants raise the overall standard of living of American the economic literature is divided about whether immigration reduces wages for some groups of American workers. In workers by boosting wages and lowering prices. One reason is that immigrants and U.S.-born workers generally do particular, some estimates suggest that immigration has not compete for the same jobs; instead many immigrants reduced the wages of low-skilled workers and college complement the work of U.S. employees and increase their graduates. This research, exemplified by the purple bars in the chart below, implies that immigrant workers may have productivity. For example, low-skill immigrant laborers allow U.S.-born farmers, contractors, or craftsmen to expand lowered the wages of low-skilled workers by 4.7 percent and agricultural production or to build more homes—thereby college graduates by 1.7 percent. However, other estimates that expanding employment possibilities and incomes for U.S. examine immigration within a different economic framework (the light blue bars in the chart) find that immigration raises workers. Another reason is that businesses adjust to new immigrants by opening stores, restaurants, or production the wages of all U.S. workers—regardless of their level of education. facilities to take advantage of the added supply of workers; more workers translate into more business. Immigrants also affect the well-being of U.S. workers by affecting the prices of the goods and services that they Because of these factors, economists have found that immigrants raise average wages slightly for the United States purchase. Recent research suggests that immigrant workers enhance the purchasing power of Americans by lowering as a whole. As illustrated in the chart below, estimates from prices of “immigrant-intensive” services like child care, opposite ends of the academic literature arrive at this same gardening, and cleaning services. By making these services conclusion, and point to small but positive wage gains of between 0.1 and 0.6 percent for American workers. more affordable and more widely available, immigrant workers benefit U.S. consumers who purchase these services. 6. F I gur E Effect of Immigration on Wages of U.S.-Born Workers 3 2 1 s 0 −1 −2 −3 Percent Change in Wage −4 Percent Change in Wages −5 −6 College Some All U.S.−Born Less than HS HS Graduates Graduates College Workers 8% 31% 30% 32% Share of workforce Ottaviano-Peri (2008) Borjas-Katz (2007) Style Estimate Note: Ottaviano and Peri (2008), Table 7; March 2008-2009 CPS, U.S. Born Ages 25-64, numbers may not sum to 100 due to rounding The Hamilton Project • Brookings 5

8 Immigrants Are Not A Net Drain On The 4. Federal Government Budget citizens are expensive when they are young because of the Taxes paid by immigrants and their children—both legal and costs of investing in children’s education and health. Those unauthorized—exceed the costs of the services they use. In expenses, however, are paid back through taxes received over fact, a 2007 cost estimate by the Congressional Budget Office a lifetime of work. The consensus of the economics literature found that a path to legalization for unauthorized immigrants would increase federal revenues by $48 billion but would is that the taxes paid by immigrants and their descendants exceed the benefits they receive—that on balance they are a only incur $23 billion of increased costs from public services, net positive for the federal budget. producing a surplus of $25 billion for government coffers. According to the Social Security Administration Trustees’ However, it is important to recognize that some of these report, increases in immigration have also improved Social budgetary costs are unequally shared across state and local Security’s finances. governments. Education and health services for immigrant Many government expenses related to immigrants are children are generally state liabilities and are concentrated associated with their children. From a budgetary perspective, in immigrant-heavy states like California, Nevada, Texas, however, the children of immigrants are just like other Florida, New Mexico, and Arizona. While the federal American children. The chart below compares the taxes paid government is a winner in terms of tax revenues, these states and expenditures consumed by the children of immigrants may be burdened with costs that will only be recouped over and by the children of U.S.-born citizens over their lifetimes. a number of years, or, if children move elsewhere within the United States, may never fully be recovered. Both the immigrant children and children of U.S.-born gur E 7. I F Net Taxpayer Cost or Benefit by Age $20 $15 $10 $5 $0 52 02 53 03 54 04 55 05 56 06 57 07 5 51 01 ($5,) ($10) ($15) Net Taxpayer Benefit or Cost (Thousands of Dollars) ($20) Net Taxpayer Benefit or Cost (Thousands of Dollars) Age Age Immigrant Parent U.S.-Born Parent Mexican or Central American Immigrant Parent Source: IPUMS-CPS - 2005-2009 March CPS; U.S. Census Bureau. Ten Economic Facts About Immigration 6

9 Both Immigration Enforcement Funding And 5. The Number Of Unauthorized Immigrants Have Increased Since 2003 decrease in unauthorized immigration since 2007 is likely due The United States has dramatically raised immigration border to the Great Recession. security and enforcement funding to $17 billion over the past decade in an effort to improve national security, as well as One reason that increases in border patrol have had modest to stem the flow of unauthorized immigrants entering the impacts on the number of unauthorized immigrants is that country. A secure border is required for national security most arrived before the enhanced security measures were and to enforce legal and customs requirements. As a tool of implemented after 2001; according to estimates from the Pew immigration policy, however, the available evidence suggests Hispanic Center, more than half of unauthorized immigrants that this increased spending is unlikely to have had a major arrived here before 2000. In addition, some research effect on the number of unauthorized immigrants living suggests that increased security has resulted in unauthorized in the United States. Indeed, the number of unauthorized immigrants staying in the United States longer rather than immigrants continued to rise between 2003 and 2007. The risking detection by visiting home. I gur E 8. F Immigration Enforcement $18 5 12. $17 ng 12 on di ti $16 la en Sp 5 11. t $15 Popu t an $14 emen gr 11 rc mi fo $13 Im En 5 10. ed of $12 iz s or on th $11 illi 10 au B ve mb er 2007 No : $ Un $10 gi ce Be ni ng of Re ssi on nauthorized Immigrant Population 5 9. $ Billions of Enforcement Spending u $9 9 $8 2004 2003 2006 2007 2008 2009 2005 Year ar Ye ) at io n En fo rc emen t Sp en di ng ( 2009 Do lla rs mi n io at Popul t an gr mmi I ed iz or th au Un Im gr Sources: Passel and Cohn, Pew Hispanic Center 2010; Hinojosa-Ojeda, CAP (2010) The Hamilton Project • Brookings 7

10 Immigrants Do Not Disproportionately Burden 6. U.S. Correctional Facilities And Institutions 70 percent of the institutionalized population are housed Immigrants are institutionalized at substantially lower rates than U.S.-born citizens. Looking at Census data covering in correctional facilities). This evidence suggests that correctional facilities and mental hospitals, U.S.-born citizens immigrants impose fewer costs on taxpayers from crime and institutionalization than do U.S.-born citizens. are more than five times more likely than immigrants to be institutionalized. (One study estimated that as many as 9. E gur I F Institutionalization by Place of Birth 2.5% 2% 1.5% 1.0% Percentage Institutionalized 0.5% Percentage Institutionalized 0% U.S. Born Foreign Born Place of Origin Source: IPUMS-USA - Census 2000 5% Extract. Ages 18 to 40. Ten Economic Facts About Immigration 8

11 Recent Immigrants Reflect America’s Melting Pot 7. in the chart below, the children of these immigrants engage Some groups are concerned that recent immigrants choose not in occupations more closely resembling those of U.S.-born to integrate and assimilate into American social and economic citizens than the occupations of their parents. life, in contrast to previous generations of immigrants. The data suggest this is not true. Recent waves of immigrants Not only do immigrants assimilate into U.S. economic life, but and their children are integrating into the U.S. economy, they also integrate in other ways. In addition to being vital to just as previous immigrant families did. This is true also for gaining employment, speaking English is a measure of social immigrants from Mexico and Central America, where first- assimilation into the United States. More than 90 percent of generation immigrants have tended to concentrate in sectors the children of recent immigrants speak English, regardless of like construction, food preparation, and agriculture. As seen their country of origin, according to the U.S. Census. gur E 10. F I Occupations of U.S. Born, First, and Second-Generation Immigrants Construction and Extraction Occupations Building and Grounds Cleaning and Maintenance Occupations Food Preparation and Serving Related Occupations Production Occupations Farming, Fishing and Forestry Occupations Healthcare Practitioners and Technical Occupations Occupation Education, Training and Percentage of Labor Force Library Occupations Sales and Related Occupations Management Occupations Source: IPUMS-CPS - 2003-2009 March CPS. Office and Administrative Ages 25-64 Participating in Support Occupations Labor Force 5% 20 %1 %2 5% 30 % 10 5% 0% Percentage of Labor Force Occupation Mexico or Central American Born U.S. Born U.S. Born; Parents from Mexico or Central American E 11. F I gur English Proficiency Among U.S.-Born Children of Immigrants 100% 90% ll or Better 80% We 70% 60% 50% 40% 30% 20% Source: IPUMS-USA - Census 2000 5% Extract. 10% Sample: Children Ages 6-15 Percent of Children Speaking English 0% Europe or Asia or Latin America Africa English Well or Better Percent of Children Speaking Russia Middle East Region of Origin r egion of Origin The Hamilton Project • Brookings 9

12 The Skill Composition Of U.S. Immigrants Differs 8. From That Of Other Countries Countries like Canada attract a greater influx of immigrants Compared to countries like Canada, New Zealand, and with higher education levels and specialized skills through Australia, the United States has a greater proportion of low- skilled immigrants. About 30 percent of immigrants in the immigration policies that specifically favor visa applicants with advanced degrees or work experience. The composition United States possess a low level of education and only 35 percent possess a high level of education. In Canada, only 22 of U.S. immigrants is the result of our immigration policies, percent have a low level of education (equivalent to less than which place more emphasis on family relationships and less consideration on skill or education than many other countries high school in the United States) while more than 46 percent when granting permanent residence. have a high level of education (roughly equivalent to an associate’s degree or higher in the United States). I gur E 12. F Educational Attainment of Immigrants Across Countries 50 45 40 35 30 25 20 15 Percentage of Immigrants Percentage of Immigrants 10 5 0 ustrali aU A nited States Canada New Zealand m United Kingdo High Education (Associate’s Degree or Higher ) Low Education (Less than High School ) Note: See technical appendix. Source: OECD (2007), Table II.1 Ten Economic Facts About Immigration 10

13 Immigrants Start New Businesses And File Patents At Higher Rates Than U.S.-Born Citizens 9. advanced degrees, immigrants are three times more likely to Today’s immigrants possess a strong entrepreneurial spirit. file patents than U.S.-born citizens. Such investments in new In fact, immigrants are 30 percent more likely to form new businesses and in research may provide spillover benefits to businesses than U.S.-born citizens. Furthermore, evidence U.S.-born workers by enhancing job creation and by increasing shows that foreign-born university graduates are important innovation among their U.S.-born peers. contributors to U.S. innovation—among people with F gur E 13. I 14. E gur F I Monthly Business Formation by Number of Patents Granted per 10,000 Immigrants and U.S. Born Post-College Graduates 1200 400 350 1000 300 ate (per 100,000) 800 250 ranted 600 200 Patents Granted 150 400 Patents g 100 200 50 Monthly Business Formation Rate (per 100,000) 0 0 Immigrants U.S. Born Immigrants U.S. Born Monthly Business Formation r Source: Fairlie, R.W., “Estimating the Contribution of Immigrant Business Owners to the U.S. Source: Patents granted over the period 1998-2003. Hunt and Gauthier-Loiselle (2003), Economy,” Small Business Administration, Office of Advocacy (Nov 2008) Table 1 The Hamilton Project • Brookings 11

14 America Is Issuing A Declining Number Of Visas 10. For High-Skill Workers With its top-level universities, dynamic business environment, reverse brain‐drain of the skilled workers who contribute to and wide-ranging economic opportunities, the United States U.S. global competitiveness. has a history of attracting high-skill workers. However, a recent As seen in the graph below, the number of high-skill visas has study suggests that this trend may be waning; many of today’s also declined somewhat since 2000. In 2009, 270,326 visas for international students either plan to leave the United States high-skill workers were available, down from 301,328 in 2000. or are uncertain about remaining, raising the potential for a 15. F I gur E High-Skill Immigration Nu mb 450 40% s er te 400 35% of ua raduates High ad 350 30% Gr ly 300 ge 25% Skille lle 250 20% Co d 200 nt Immi ce 15% ecent College g 150 Re gr 10% of an 100 t ts en 5% 50 (1 rc , 000 Pe 0 0% Percent of r 82 00 9 2000 2001 2002 200 32 00 42 00 52 00 62 00 72 00 s) To ta l H-1B Visa s Number of Highly Skilled Immigrants (1,000s) Em pl oy me n s as ed Pr ef er en ce Visas + H-1B Visa t-B ge lle Co nt ce s of te dua a Gr Re To ta l Hi gh Sk ill Visas as a % Note: Includes workers seeking legal permanent residence under Employment First (Eb-1), Second (Eb-2) and Third (Eb-3) Preference, new arrivals and adjustments, and H-1B Initial and Continuing Applications. College graduates refers to bachelors degrees, and excludes bachelors conferred to non-resident aliens; Source: DHS (2000-2009), NCES (2009) Most high-skilled immigrants to the United States come through two programs: Highly-skilled immigrants and their families can obtain permanent legal residence in Employment-Based Immigrant Visas: the United States by qualifying for one of five “preference categories” that include professionals with advanced degrees or exceptional abilities; professors or researchers; skilled workers, professionals, and needed unskilled workers; immigrant investors; and certain other groups. This program allows skilled workers in “specialty occupations” to work in the H-1B Specialty Occupation Visa Program: United States temporarily (up to six years if renewed). The H-1B visa requires the worker to have a bachelor’s degree or higher in a specific field. In 2009, approximately 86,000 new H-1B applications were approved and 128,000 H-1Bs were renewed. Ten Economic Facts About Immigration 12

15 Technical Appendix r CES: ur Y DATA SO IMA r P Michael Hoefer, Nancy Rytina and Bryan Baker, Source: “Estimates of the Unauthorized Immigrant Population The primary data sources include the United States Census Residing in the United States: January 2009,” Office of (U.S. Census), the American Community Survey (ACS) Immigration Statistics, Department of Homeland Security produced by the U.S. Bureau of the Census, and the Current (DHS). Population Survey (CPS) which is a survey conducted by the U.S. Bureau of the Census for the Bureau of Labor Statistics. Data on the number of people of Mexican origin who were Datasets were accessed through the Minnesota Population granted LPR and asylum and the number of people of Center’s Integrated Public Use Microdata Series (IPUMS). Mexican origin who came to the U.S. with non-immigrant Yearbook of status in 2009 are provided in the DHS’ United States Census (U.S. Census) And American , Table 3, p. 12; Table 17, p. 45; Table 26, Immigration Statistics Community Survey (ACS): p. 69. Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek. United States Department of Homeland Security, Source: Integrated Public Use Microdata Series: Version 5.0 , Washington, D.C.: U.S. Yearbook of Immigration Statistics [Machine-readable database]. Minneapolis: University of Department of Homeland Security, Office of Immigration Minnesota, 2010. Statistics (2010). : Miriam King, Steven Current Population Survey (CPS) To find the denominator, an estimate of the number of Ruggles, J. Trent Alexander, Sarah Flood, Katie Genadek, total U.S. residents of Mexican heritage was derived from Matthew B. Schroeder, Brandon Trampe, and Rebecca the ACS (2008). The shares of people of Mexican origin for Vick. Integrated Public Use Microdata Series, Current each of these categories were compiled from DHS (2010) Population Survey: Version 3.0. [Machine-readable database]. and multiplied by the share of undercounting given in DHS Minneapolis, MN: Minnesota Population Center [producer (2009) to get an ACS undercount estimate for first-generation and distributor], 2010. Mexican immigrants. This was added to estimates from the ACS on Mexicans and American citizens of Mexican origin. INT CTION r u OD The DHS estimate of unauthorized Mexicans was divided by There are an estimated 11.1 million unauthorized the adjusted ACS count of U.S. residents of Mexican origin immigrants in the U.S, constituting 28 percent of total and heritage. immigration to the U.S. Of these unauthorized immigrants, 60 percent originate from Mexico. Figure 1: U.S. Foreign-Born Population Sources: “Historical Census Statistics on the Foreign Born Source: Jeffrey S. Passel and D’Vera Cohn, “U.S. Population of the United States 1850-1990,” U.S. Bureau of Unauthorized Immigration Flows Are Down Sharply Since the Census (Feb 1999). Mid-Decade,” Pew Hispanic Center (Sep 2010). “QT-P14: Nativity, Citizenship, Year of Entry and Region of Birth,” Census 2000, U.S. Bureau of the Census. 21 Percent of U.S. residents of Mexican heritage are “S0501-Selected Characteristics of the Native and Foreign unauthorized. Born Populations,” 2008 American Community Survey 1 The DHS estimates 6,650,000 unauthorized Mexican Year Estimates, U.S. Bureau of the Census. immigrants lived in the U.S. in 2009 (table 3, p. 4). The DHS estimates that the ACS underreports non-immigrants by Figure 2: Foreign-Born Population by Legal Status 10 percent, unauthorized immigrants by 10 percent, and Jeffrey S. Passel and D’Vera Cohn, “U.S. Source: legal permanent residents (LPRs) by 2.5 percent (Appendix Unauthorized Immigration Flows Are Down Sharply Since 1). Total estimates of undercounting of the foreign born are Mid-Decade,” Pew Hispanic Center (Sep 2010), Table 3, p. 2. provided in Table 2, p. 3. The Hamilton Project • Brookings 13

16 r ANTS HAIL F OM MO gr 1. TODAY’S IMMI E DIVE r r SE Increases in immigration have improved Social Security’s NDS THAN THEY DID A CENT g Y A ur BACK u O gr O finances. The Board of Trustees, Federal Old-Age and Source: Figure 3 and Figure 4: Foreign Born by Place of Origin, 1910 Survivors Insurance and Federal Disability Insurance Trust and 2008-2009 The 2010 Annual Report of the Board of Trustees of Funds. Sources: U.S. Census (1910); March CPS (2008 and 2009). the Federal Old-Age And Survivors Insurance and Federal Foreign born U.S. residents excludes individuals born abroad , U.S. Government Printing Disability Insurance Trust Funds to U.S.-born parents. U.S. born includes all individuals born Office (2010). in the U.S. plus those born abroad to U.S.-born parents. “Europe” includes Western, Northern, and Eastern Europe Figure 7: Net Taxpayer Cost or Benefit by Age as well as the former USSR. “Asia” category includes East, Sources: March CPS (2005-2009); and U.S. Census Bureau South and Southeast Asia and the Middle East. “Other” “Public Education Finances” (2008). includes Canada, Oceania and other outlying countries. Sample includes U.S. born-individuals whose parents r A DIVE g ANTS B r gr 2. IMMI SE SET OF SKILLS AND IN are either U.S. born, foreign born, or born in Mexico or NDS ED u CATIONAL BACK gr O u Central America. A person is counted as a 2nd Generation Figure 5: Education of U.S. Born and Foreign Born immigrant from Mexico or Central America if at least one Sources: 2008 and 2009 March CPS. The sample includes of their parents is from Central America or Mexico. State individuals ages 25 to 64. U.S. born includes all those born and federal expenditures recorded in the CPS and included in the U.S. (or a U.S. territory). Foreign born includes all in the analysis include welfare, SSI, Social Security, the individuals born outside the U.S. and who arrived in the U.S. cash value of Medicaid and Medicare, food stamps, home in 1980 or later, regardless of legal status. The workforce energy assistance, survivors’ benefits, disability benefits, is defined as the population of non-institutionalized U.S. and education benefits. Children ages 6 to 18 are assumed residents ages 25-64. to attend public schools at a cost of the average state per pupil expenditure on public schooling. Taxes paid include 3. ON AVE r A g E, IMMI ANTS IMP OVE THE LIVIN r gr g federal income and payroll taxes, property taxes, and state STANDA r DS OF AME r ICANS income taxes as estimated in the CPS. For the purposes of estimating sales taxes, individuals are assumed to spend half Figure 6: Effect of Immigration on Wages of U.S.-Born of their after-tax income on purchases subject to the state Workers sales tax rate. Certain taxes and government expenditures Source: Estimates from Gianmarco Ottaviano and Giovanni are unavailable in the CPS data and are excluded from the Peri, “Immigration and National Wages: Clarifying the analysis. Theory and the Empirics,” NBER Working Paper No. 14188 (July 2008), Table 7, p. 58. u g AND CEMENT F r ATION ENFO gr 5. BOTH IMMI NDIN THO u NA u OF u THE N r MBE ANTS HAVE gr IZED IMMI r The U.S. born workforce refers to the share of all non- INC r EASED SINCE 2003 institutionalized U.S.-born residents ages 25-64 from the 2008 and 2009 March CPS. Figure 8: Immigration Enforcement Source: Jeffrey S. Passel and D’Vera Cohn, “U.S. Evidence on the effects of immigration on prices is from Unauthorized Immigration Flows Are Down Sharply Since Patricia Cortes, “The Effect of Low-Skilled Immigration on Mid-Decade,” Pew Hispanic Center (Sep 2010). U.S. Prices: Evidence from CPI Data,” Journal of Political Economy, 116: 3 (2008). Expenditures for immigration enforcement were compiled from the Department of Homeland Security Budgets in Brief gr AIN ON THE FEDE r E NOT A NET D r 4. IMMI r AL ANTS A from 2003 and 2009, as quoted in Raúl Hinojosa-Ojeda, u D g ET g OVE r NMENT B “Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform,” Center for A path to legalization for unauthorized immigrants would American Progress, American Immigration Council (Jan increase federal revenues by $48 billion but would only 2010), Figure 4, p. 5. incur $23 billion of increased costs from public services, producing a surplus of $25 billion for government coffers. “Senate Amendment 1150 to S. 1348, the Source: Comprehensive Immigration Reform Act of 2007,” Congressional Budget Office (CBO) Cost Estimate (June 2007). Ten Economic Facts About Immigration 14

17 OPO ur DEN r ANTS DO NOT DISP gr r 6. IMMI TIONATELY B and New Zealand, and 2003-2004 for other countries. Low TIONS u ECTIONAL FACILITIES AND INSTIT rr u .S. CO education and college education levels are defined based upon UNESCO’s International Standard Classification Figure 9: Institutionalization by Place of Birth of Education (ISCED). Low education corresponds to Census 2000. The sample was restricted to Source: individuals having completed ISCED 0/1/2 and high individuals ages 18 to 40 living in group quarters to focus education corresponds to individuals having completed on individuals living in correctional facilities (rather than ISCED 5/6. institutions housing the elderly and disabled). Although these data do not allow us to differentiate the incarcerated u T NEW B r ANTS STA gr 9. IMMI SINESSES AND FILE from those housed in other institutions (e.g. institutions for PATENTS AT HI r .S.-BO u ATES THAN r N CITIZENS r HE g the physically or mentally disabled), we follow Butcher and Piehl (2008) in assuming that most of the institutionalized Figure 13: Monthly Business Formation by Immigrants population is housed in correctional institutions. See and U.S. Born Butcher, Kristin F. and Piehl, Ann Morrison, “Why Are Source: Robert Fairlie, “Estimating the Contribution of Immigrants’ Incarceration Rates So Low? Evidence on Small Immigrant Business Owners to the U.S. Economy,” Selective Immigration, Deterrence, and Deportation,” NBER (Nov 2008), Business Administration, Office of Advocacy Working Paper 13229 (July 2007). Table 7, p. 19. Figure 14: Number of Patents Granted per 10,000 Post- r EFLECT AME r ICA’S MELTIN g ANTS r ECENT IMMI gr 7. College Graduates POT Source: Hunt, J. and M. Gauthier-Loiselle, “How Much Does Figure 10: Occupations of U.S. Born, First and Second- Immigration Boost Innovation,” Institute for the Study of Generation Immigrants Labor (IZA), Discussion Paper No 3921 (2009), Table 1, p. March CPS (2003-2009). Sample includes all Source: 33. Patent data come from the National Survey of College individuals ages 25 to 64 in the labor force. U.S. born Graduates and refer to patents granted in the period from includes all individuals born in the U.S. or to U.S.-born October 1998 to 2003. parents living abroad. First generation immigrants from Mexican or Central American refers to all those born in 10. AME OF VISAS r A DECLININ ICA IS ISS u IN g g N u MBE r Mexico, Guatemala, Honduras, Belize, Nicaragua, Costa r H-SKILL WO g HI r FO S r KE Rica, or El Salvador to non-U.S. born-parents in the labor Many of today’s international students either plan to leave force. Second generation immigrants from Mexico and the United States or are uncertain about remaining Central American refers to all U.S.-born individuals with Source: Vivek Wadhwa, Guillermina Jasso, Ben Rissing, at least one parent from Mexico or Central America. Gary Gereffi and Richard Freeman, “Intellectual Property, Occupational categories were derived from the IPUMS the Immigration Backlog, and a Reverse Brain-Drain: Standard Occupational Classification (SOC). America’s New Immigrant Entrepreneurs, Part III,” Pratt School of Engineering, Duke University, New York Figure 11: English Proficiency Among U.S.-Born Children of University, Harvard Law School, Kauffman Foundation Immigrants (August 2007). According to the New Immigrant Survey Census 2000. Sample includes individuals ages 6 Source: 21.7 percent of new legal immigrants and 34.5 percent of and 15 with at least one parent born abroad. When the child employment principals either plan to leave the United States had two parents born abroad from different regions, the or are uncertain about remaining. mother’s country of birth was used. The fraction speaking English includes individuals who report that they “only speak Figure 15: High-Skill Immigration English,” “speak English very well,” or “speak English well.” Yearbook of U.S. Department of Homeland Security, Source: . Washington, D.C.: U.S. Department Immigration Statistics 8. THE SKILL COMPOSITION OF S r ANTS DIFFE gr .S. IMMI u of Homeland Security, Office of Immigration Statistics r IES F r NT u CO r OM THAT OF OTHE (2010), Table 6, pp. 18-19. “Employment Based preference Figure 12: Educational Attainment of Immigrants Across immigration” refers to individuals granted LPR under First Countries (EB-1), Second (EB-2) and Third (EB-3) preferences. Data International Migration Outlook: Annual Report Source: on H-1B visas include initial and continuing applications , Organization for Economic Cooperation 2007 Edition as reported in “Report on Characteristics of Specialty and Development (OECD) (2007), Table II.1, p. 133. Data Occupation Workers (H-1B),” U.S. Citizenship and refer to population ages 15-64 for Australia, and 25-64 for Immigration Services (USCIS), Fiscal Years 2000-2009. all other countries. Reference years are 2001 for Canada The Hamilton Project • Brookings 15

18 The number of recent college graduates is the total number of bachelor’s degrees awarded in the reference year minus bachelor’s degrees awarded to non-resident aliens. Source: U.S. Department of Education, National Center for Education Statistics, Higher Education General Information Survey (HEGIS), “Degrees and Other Formal Awards Conferred” surveys, 1976-77 and 1980-81; and 1989-90 through 2007-08 Integrated Postsecondary Education Data System, “Completions Survey” (IPEDS-C:90-99), and Fall 2000 through Fall 2008 (Table prepared June 2009), Table 285, “Bachelor’s degrees conferred by degree-granting institutions, by race/ethnicity and sex of student: Selected years, 1976-77 through 2007-08.” Ten Economic Facts About Immigration 16

19 il C Advisory Coun GEORGE A. AkERLOf ROLANd fRYER PETER ORSzAG koshland Professor of Economics Robert M. Beren Professor of Economics distinguished Visiting fellow Harvard University and CEO, EdLabs Council on foreign Relations University of California at Berkeley MARk GALLOGLY ROGER C. ALTMAN RICHARd PERRY Managing Principal founder & Chairman Chief Executive Officer Centerbridge Partners Evercore Partners Perry Capital ARd P. BERkOwITz TEd GAYER PENNY PRITzkER HOw Senior fellow & Co-director Chairman of the Board Managing director TransUnion of Economic Studies BlackRock The Brookings Institution ROBERT REISCHAUER ALAN S. BLINdER Gordon S. Rentschler Memorial Professor President RICHARd GEPHARdT President & Chief Executive Officer The Urban Institute of Economics & Public Affairs Gephardt Government Affairs Princeton University ALICE RIVLIN MICHAEL d. GRANOff Senior fellow & director TIMOTHY C. COLLINS Senior Managing director Chief Executive Officer ashington Research at Brookings Greater w Professor of Public Policy & Chief Executive Officer Pomona Capital Georgetown University Ripplewood Holding, LLC ROBERT GREENSTEIN ROBERT E. RUBIN ROBERT CUMBY Executive director Center on Budget and Policy Priorities Professor of Economics Co-Chair, Council on foreign Relations former U.S. Treasury Secretary Georgetown University CHUCk HAGEL distinguished Professor JOHN dEUTCH dAVId RUBENSTEIN Co-founder & Managing director Georgetown University Institute Professor former U.S. Senator The Carlyle Group Massachusetts Institute of Technology kAREN dYNAN GLENN H. HUTCHINS LESLIE B. SAMUELS Partner Co-founder and Co-Chief Executive Vice President & Co-director Silver Lake Cleary Gottlieb Steen & Hamilton LLP of Economic Studies Senior fellow, The Brookings Institution RALPH L. SCHLOSSTEIN JIM JOHNSON CHRISTOPHER EdLEY Vice Chairman President & Chief Executive Officer , JR. Evercore Partners dean and Professor, Boalt School of Law Perseus LLC University of California, Berkeley wRENCE kATz LA ERIC SCHMIdT Elisabeth Allen Professor of Economics MEEGHAN PRUNTY EdELSTEIN Chairman & CEO Google Inc. Harvard University Senior Advisor The Hamilton Project ARTz ERIC SCHw MARk MCkINNON BLAIR w 76 w . EffRON Vice Chairman est Holdings Public Strategies, Inc. founding Partner THOMAS f . STEYER Centerview Partners LLC ERIC MINdICH Co-Senior Managing Member JUdY fEdER farallon Capital Management Chief Executive Officer Eton Park Capital Management Professor of Public Policy LAURA d’ANdREA TYSON Georgetown University S.k. and Angela Chan Professor of SUzANNE NORA JOHNSON Senior fellow, Center for American Progress former Vice Chairman Global Management, Haas School of Goldman Sachs Group, Inc. Business University of California, Berkeley MICHAEL GREENSTONE director

20 1. fIGURE U.S. Foreign-Born Population 16% 14% 12% 10% 8% 6% 4% Foreign Born as a percent of U.S. Population oreign Born as a percent of U.S. Population 2% f Source: US Bureau of the Census 0% 00 8 1900 1930 1940 195 01 1920 96 01 97 01 98 01 99 02 00 02 1910 Year Year Economic Facts: Immigrants Do Not Disproportionately Today’s Immigrants Hail From More 6. 1. Burden U.S. Correctional Facilities And Diverse Backgrounds Than They Did Institutions A Century Ago Recent Immigrants Reflect America’s Immigrants Bring A Diverse Set Of Skills 7. 2. Melting Pot And Educational Backgrounds The Skill Composition Of U.S. Immigrants On Average, Immigrants Improve 8. 3. Differs From That Of Other Countries The Living Standards Of Americans Immigrants Start New Businesses Immigrants Are Not A Net Drain On 9. 4. And File Patents At Higher Rates The Federal Government Budget Than U.S.-Born Citizens Both Immigration Enforcement Funding 5. America Is Issuing A Declining And The Number Of Unauthorized 10. Number Of Visas For High-Skill Workers Immigrants Have Increased Since 2003 1775 Massachusetts Ave., NW Washington, DC 20036 (202) 797-6279 www.HAMILTONPROJECT.ORG Printed on recycled paper. www.HAMILTONPROJECT.ORG

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