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Economic Consequences of Immigration Policy

Paper Session

Sunday, Jan. 5, 2020 10:15 AM - 12:15 PM (PST)

Marriott Marquis, Santa Rosa
Hosted By: American Economic Association
  • Chair: Andrea Velasquez, University of Colorado-Denver

Opening the Door: Migration and Self-Selection in a Restrictive Legal Immigration Regime

Elizabeth U. Cascio
,
Dartmouth College
Ethan G. Lewis
,
Dartmouth College

Abstract

We estimate the impacts of expanding the set of countries with access to a legal immigration system that favors family reunification. The Immigration Reform and Control Act of 1986 (IRCA) led to 2.7 million “excess” Green Cards being awarded in the U.S. over 1989 and 1991. Exploiting cross-country variation in the magnitude of this legalization shock, we find that “opening the door” has increased immigration through legal channels, but effects have been small: each IRCA admission was responsible for the admission of only 1 to 2 family members, mainly spouses and children, over the following 25 years. We also find evidence that the legalization shock did not increase unauthorized inflows and slightly increased dependency ratios among recent arrivals, but only counting U.S. born children. At the same time, it raised the educational attainment of recent arrivals, implying an improvement in migrant self-selection. These findings suggest that expanding legal entry pathways to countries historically denied them may reduce challenges associated with unauthorized immigration. They are also inconsistent with popular claims that family-based immigration systems lead to run-away “chain” migration, large fiscal burdens, and poor migrant selection.

The Rise and Fall of the Know-Nothing Party

Marcella Alsan
,
Stanford University
Katherine Eriksson
,
University of California-Davis
Gregory Niemesh
,
Miami University

Abstract

The Know-Nothing Party was the first major populist political party in U.S. History. It swept to power in 1854, running on a staunchly anti-immigrant and anti-Catholic platform; the party lost power in 1857 following the establishment of the new Republican party. In this paper, we examine economic factors which led to the rise and fall of the Know-Nothings in Massachusetts, separating the role of Irish labor market crowd- out, the movement of production into factories, and the effect of the general economic downturn of 1853-1854. Evidence suggests that labor market competition and industrialization positively predict the rise of the party; by the time the party lost power, other factors are more important in predicting electoral outcomes.

How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program

Britta Glennon
,
University of Pennsylvania

Abstract

The decision to encourage or restrict high-skilled immigration has long been controversial. Advocates argue that high-skilled immigration is critical for firm competitiveness and innovation; critics argue that skilled immigrants displace native workers and drive down wages. The debate, however, has largely overlooked the secondary consequences of restrictions on high-skilled hiring of immigrants: multinational firms faced with decreased access to visas for skilled workers have an offshoring option, namely, hiring the foreign labor they need at their foreign affiliates. This paper documents the impact of restrictive high-skilled immigration policies on the globalization of high-skilled activity by US MNCs. I use a unique matched firm-level dataset of H-1B visas and multinational firm activity and two different identification strategies to examine three key questions about that impact. First, do restrictions on H-1B visas result in increased foreign affiliate activity? Second, how does any impact differ across firms, industries, and countries? Finally, do these restrictions also affect the location of innovative activity? Both strategies yield the same result: that restrictions on H-1B immigration caused increases in foreign affiliate activity at both the intensive (US multinationals employed more people at their foreign affiliates) and the extensive (US multinationals opened more foreign affiliates conducting R&D) margins. The effects are concentrated among highly H-1B-dependent firms and R&D-intensive firms operating in offshorable services sectors. Restrictions also caused increases in foreign R&D and foreign patenting, suggesting that there was also a change in the location of innovative activity.

The Labor Market Effects of Immigration Enforcement

Chloe N. East
,
University of Colorado-Denver
Annie Hines
,
University of California-Davis
Philip Luck
,
University of Colorado-Denver
Hani Mansour
,
University of Colorado-Denver
Andrea Velasquez
,
University of Colorado-Denver

Abstract

We examine the labor market effects of Secure Communities (SC)--an immigration enforcement policy which led to over 454,000 deportations between 2008-2015. Using a difference-in-differences model that takes advantage of the staggered rollout of SC, we find that SC significantly decreased the employment share of likely undocumented male immigrants. Importantly, the policy also led to a decrease in the employment rate of citizens. The employment effects are concentrated among male citizens working in higher-skilled occupations, particularly in sectors that traditionally rely on likely undocumented workers. This is consistent with complementarities in production between low-skilled immigrants and higher-skilled citizens.
Discussant(s)
Rebecca Lessem
,
Carnegie Mellon University
José A. Tessada
,
Pontifical Catholic University of Chile and Jameel Poverty Action Lab
Giovanni Peri
,
University of California-Davis
Michael Clemens
,
Center for Global Development
JEL Classifications
  • J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers
  • J2 - Demand and Supply of Labor