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Chapter 23
Immigration
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
23-2
Number of Immigrants
• Economic immigrants• Legal immigrants• Migration averaged 1 million per year• Quotas, refugees, and H1-B provision• One-third of population growth• One-half of labor force growth
LO1
23-3
Number of Immigrants
LO1
23-4
Number of Immigrants
LO1
Family-Sponsored
Immigrants, 65.0%
Employment-Based , 13.0%
Refugees, 16.0%
Diversity Immigrants,
4.7%
Others, 1.3%
Legal Immigration by major category of admission, 2011
23-5
Number of Immigrants
• Illegal immigrants• Estimated from Census data• 250,000 per year on average• High proportion from Mexico and Central
America• Total of 11.1 million residing in the U.S. in
2012; 58% from Mexico
LO1
23-6
Number of Immigrants
Total 1,062,040
1. Mexico 143,4462. China 87,0163. India 69,0134. Philippines 57,0115. Dominican Republic 46,1096. Cuba 36,4527. Vietnam 34,1578. South Korea 22,8249. Columbia 22,63510. Haiti 22,111
LO1
23-7
Decision to Migrate
• Take advantage of superior economic opportunities
• Escape political or religious oppression• Reunite with family members
LO2
23-8
Decision to Migrate
• Earnings opportunities• Increase value of human capital
• Moving costs• Distance• Follow beaten path
• Age • Other factors
LO2
23-9
Global Perspective
LO2
23-10
Economic Effects
• Personal gains• Economic benefits exceed costs
• Other issues• Uncertainty and imperfect information• Backflows• Skill transferability• Self-selection
LO3
23-11
Impacts on Wages, Efficiency, Output
• Understand economic outcomes• Assumptions• U.S. and Mexico• Labor demand greater in U.S.• No long-term unemployment• Labor quality the same• Migration is legal and has no cost• Wage differentials key factor
LO3
23-12
Impacts on Wages, Efficiency, Output
Wag
e Ra
te
United States Mexico
Quantity of Labor(Millions)
Quantity of Labor(Millions)
Du Dm
aA
bd D
B
We
Wag
e R
ate
We
c f F C
Wu
0 0
Wm
Immigration impacts wages, employment, and output
g
G
LO3
23-13
Impacts on Wages, Efficiency, Output
• Wage rates will equalize• In the U.S.:
• Wage rate falls• Employment and output rise
• In Mexico:• Wage rate rises• Employment and output fall
LO3
23-14
Global Perspective
LO3
Emigrant Remittances, Selected Developing Countries, 2011
23-15
Impacts on Wages, Efficiency, Output
• Overall effects:• World output rises• Efficiency gains
• Other effects• Brain drains• U.S. natives lose wage income• U.S. businesses gain income
LO3
23-16
Complications and Modifications
• Migration costs not zero• Remittances redistribute income• Backflows: temporary migration• Immigrant workers as complementary
resources vs. substitute resources• Expansion of capital in some industries• Full employment vs. unemployment• Negative self-selection
LO3
23-17
Fiscal Impacts
• Fiscal burden > taxes paid• Wages will not equalize• Research findings are mixed
LO3
23-18
Illegal Immigration
• Employment effects• Two extreme views• Fixed number of jobs in economy• Immigrant employment decreases domestic
employment 1-for-1• Immigrant work undesirable• No domestic workers displaced• Compensating wage differential
LO4
23-19
Optimal Immigration
• Immigration can either benefit or harm a nation, depending on several factors
• Immigration should be expanded until its MB = MC
• The level of immigration is set through quotas, special provisions, border enforcement and immigration laws
LO5
23-20
Startling Slowdown in Illegal Immigration
• Number of illegal immigrants in the U.S. tripled between 1990 and 2007
• That number fell 8% in 2009 because of deceased job prospects during the recession
• Illegal immigration population leveled off 2010 and 2011 at 11.1 million• Falling birthrates• Better local job opportunities• Government policies• Stronger border enforcement