The Economics of Immigration

Transcription

1 The Economics of Immigration

2

3 Örn B. Bodvarsson Hendrik Van den Berg The Economics of Immigration Theory and Policy 2nd ed. 2013

4 Örn B. Bodvarsson Department Economics St. Cloud State University St. Cloud, MN, USA Hendrik Van den Berg Department Economics University of Nebraska Lincoln, NE, USA ISBN ISBN (ebook) DOI / Springer New York Heidelberg Dordrecht London Library of Congress Control Number: # Springer Science+Business Media New York 2013 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein. Printed on acid-free paper Springer is part of Springer Science+Business Media (

5 1 Introduction to Immigration Economics The Late Twentieth-Century Immigration Explosion The Complexity of Immigration Not Everyone Likes Immigrants Economists Perspective The Determinants of Immigration Many Factors Discourage Immigration Considering the Full Set of Push, Pull, Stay, and Stay Away Factors Shifts in Economic Forces Influence Immigration Immigration Is a Complex Phenomenon A Brief History of Immigration Early Migrations Recent Immigration There Are Many Types of Immigrants Not All Immigrants Are Permanent Settlers Forced Immigration Some Immigrants Are Difficult to Classify The Purpose and Organization of this Book References Part I Immigration Theory and Evidence 2 The Determinants of International Migration: Theory Chapter Overview Early Migration Theory Pre-1960 Theory Ravenstein and Zipf The Standard Modern Theory of Migration Further Influences on Migration v

6 vi 2.2 The Modern Model of Immigration The First Borjas Model Borjas 1991 Model Recent Extensions of the Borjas Model The Family or Household as the Decision-Making Unit Conflicting Interests and the Family Migration Decision Mincer s Model Family Migration as a Portfolio Decision Summary and Conclusions References Why People Immigrate: The Evidence Chapter Overview Regression Models of Immigration Empirical Models of Regional Migration The Gravity Model of International Migration Some Econometric Problems Related to the Gravity Model The Choice of Variables in Statistical Models of Immigration Three Examples Representing Income Differences Representing Migration Costs Representing Source Country Development Representing Immigration Restrictions The Empirical Evidence on the Determinants of Migration Evidence on Worldwide Migration Evidence on Migration to Groups of OECD Countries Evidence on US Immigration Immigration to Other Countries Summarizing the Results Summary and Concluding Remarks The Power of Statistical Models The Way Forward References Who Immigrates? Theory and Evidence Chapter Overview Immigrant Selection: The Chiswick vs. Borjas Debate Some Unfortunate Terminology The Chiswick View The Borjas Model A More Detailed Look at the Borjas Model Selection by Observed Characteristics

7 vii 4.2 Extensions of the Borjas Model Variable Migration Costs and Migrant Selection Credit Constraints and Immigrant Selection Family Migration and Selection Bias The Empirical Evidence on Immigrant Selectivity Borjas Empirical Results Further Tests of Borjas Model Tests Based on Counterfactual Density Functions The Asymmetric Information Model Kwok and Leland s Model Restoring Symmetric Information The Theory of Immigrant Assimilation The Chiswick Study of Assimilation Potential Bias in Chiswick s Results Borjas Empirical Results Addressing Borjas Critique Conclusions References The Effects of Immigration on the Destination Economy: The Theory Chapter Overview The Macro Effects of Immigration Homogeneous Labor with Fixed Capital Homogeneous Labor with Variable Capital Heterogeneous Labor Heterogeneous Labor with Constant Capital Heterogeneous Labor and Perfectly Elastic Capital Supply How Big Is the US Immigrant Surplus? Detailing the Distributional Effects of Immigration The Johnson Model (1980) The Altonji and Card Model (1991) The Ottaviano and Peri Model Long-Run Adjustment Processes Internal Migration Responses Multiple Goods Choice of Technology The Demand Effect of Immigration The Demand Effect of Immigration Say s Law of Immigration Regional Migration and Local Demand A Few Models of Immigrant Demand Effects Bodvarsson and Van den Berg s Lexington Model

8 viii The More General Case Further Models of Immigrant Demand Effects Concluding Remarks References How Immigration Impacts the Destination Economy: The Evidence Introduction The Spatial Correlation Method Cross Section Applications Dealing with Simultaneity and Spurious Correlation Recent Applications of the Spatial Correlation Method Applications of the Unexpected Exogenous Supply Shock Method The Mariel Boatlift Russian Immigrants in Israel Assessing the Spatial Correlation Method The Production Function Method Grossman s Pioneering Production Study Gang and Rivera-Batiz Assessing the Production Function Method The Skill Cell Approach Borjas Use of National Data Versus Regional Data Ottaviano and Peri s Extension of Borjas Skill Cell Model Other Types of Labor Market Cells Concluding Remarks References Estimating Immigration s Impact: Accounting for All Adjustments Introduction Does Immigration Trigger Internal Migration? Evidence That Immigrants Induce Native Out-Migration Evidence That Immigration Has Little Effect on Native Out-Migration Migration Biases Estimates of Immigration s Wage Effect Does Immigration Change Industry Structure? Measuring the Demand Effects of Immigration Hercowitz and Yashiv s Estimates Bodvarsson and Van den Berg s Lexington, Nebraska, Study

9 ix Estimating the Demand Effect of the Mariel Boatlift Additional Estimates of the Demand Effects of Immigration The Costs of Government Services for Immigrants Recent Studies for the USA Are US Immigrants More Costly Today than in the Past? Estimates of Fiscal Costs for Other Countries Immigration s External Effects Economies of Scale Are There Negative Externalities Associated with Immigration? Concluding Remarks References Immigration and the Source Country Remittances and Demand Effects in the Source Country Supply and Demand Effects Immigrants and Remittances A Two-Country View of Remittances What We Know About Immigrant Remittances The Growth of Immigrant Remittances Remittances as a Percentage of Source Country GDP The Reliability of Remittance Data The Recent Data on the Growth of Immigrant Remittances Policies to Encourage Remittances How Remittances Are Used in the Source Countries Remittances: Tentative Conclusions The Brain Drain Human Capital of Immigrants The Brain Drain as a Development Issue How Big Is the Brain Drain? Why Human Capital Flees Capital-Scarce Countries Brain Drain and Brain Waste A Reassessment of the Brain Drain Remittances Again The Brain Drain as an Incentive to Seek Education

10 x A Simple Case A More Realistic Case Conclusions References Economic Growth and Immigration The Early Models of Economic Growth Adam Smith s Broad View of Growth The Classicals and Diminishing Returns The Role of Immigration in the Classical Model Was the Classical Model a Failure? Forgetting the Classicals and Marx: The Neoclassical School Keynes and the Harrod Domar Model The Solow Growth Model A Graphic Representation of the Solow Model Immigration Similarly Has No Long-Run Effects How an Economy Achieves Permanent Growth Immigration and Technological Progress: A First Examination Immigration and Technological Progress Joseph Schumpeter s Theory of Creative Destruction The Opportunity Costs of Innovation The Gains from Innovation Immigration in the Schumpeterian Model: A More General Discussion Immigrants as an Innovative Resource Immigrants, Population Size, and the Returns to Innovation Immigrants and Technology Transfers Growth Effects of Immigration in the Source Country The Overall Growth Effect of Out-Migration How Remittances Are Used in Source Countries The Brain Drain Again Summary and Tentative Observations References Immigration and Economic Growth: More Fundamental Issues Technology A Broader Definition of Human Technology The Diversity of Technological Change The S-Curve of Technology Diffusion Technological Change Is Not Always Technological Progress

11 xi Technological Change Is a Combinatorial Process Technology Is a Nonrival Good Paradigm Shifts Immigration and the Agglomeration of Economic Activity The Causes of Agglomeration The Agglomeration of Innovative Activity The Changing Patterns of Economic Activity Immigration and the Social and Natural Environments Nature as a Source of Diminishing Returns The Natural Environment An Ecological Solow Model Adding a Third Sector: Human Society Bourdieu s Forms of Capital Modeling the Social Sector Institutions and Social Capital The Study of Institutions Conflicts Between Formal and Informal Institutions Chapter Conclusions and Some Further Thoughts on the Solow Model References Part II Immigration Issues and Cases 11 Temporary Immigration, Involuntary Immigration, and Other Variations on the Standard Model Chapter Overview Return Immigration Return Immigration as a Response to Changing Circumstances Correcting Mistakes in Judgement Source Country Policies to Encourage Immigrants to Return Temporary Immigration The Multinational Corporation and Temporary Immigration Temporary Immigration as a Destination Country Policy The Diversity of Temporary Immigration Analyzing Temporary Migration A Simple Model: Culture Clash Versus Higher Income Other Determinants of Temporary Immigration

12 xii The Role of International Trade Further Issues Related to Temporary Immigration Temporary Immigration as a Form of Labor Market Discrimination Growth Implications of Temporary Immigration Temporary Immigration and the Ageing Problem Asylum Seekers and Refugees Refugees The UNHCR Asylum Seekers Involuntary Immigration A Model of International Slavery Other Oppressive Forms of Immigration Summary and Conclusions References Unauthorized Immigration Introduction Estimating Unauthorized Immigration The Residual Method Other Methods for Estimating Unauthorized Immigration What Do the Estimates Tell Us? Some Characteristics of Unauthorized Immigrants The Economic Analysis of Unauthorized Immigration The Supply and Demand for Unauthorized Workers Unauthorized Immigration as a Form of Labor Market Discrimination Oppression of Unauthorized Workers Discussion of the Labor Segmentation Hypothesis Temporary Work Visas: Just a Variation on Illegality? Unauthorized Immigration Can Be Deadly The Fiscal Costs and Benefits of Unauthorized Immigration Unauthorized Immigration: Policy Options Border Controls Employer Sanctions Conclusions References

13 xiii 13 Hispanic Immigration to the USA A Brief Description of Recent Hispanic Immigration to the USA Assimilation Hispanics Slow Assimilation Further Reasons Why Hispanic Assimilation Is Slow Is It All Just a Data Problem? Geographic Diffusion Networks and Herding Toward the South and the Midwest The Dispersal of Manufacturing Jobs and Immigrant Dispersal Explaining Hispanic Immigration The Welfare Effects on the Source Hispanic Countries The Demand Effects of Hispanic Immigration Future Hispanic Immigration Will Hispanic Immigration Continue? Temporary Immigration Programs Conclusions References Part III Immigration Policy: Introduction 14 Immigration Policy in the USA Chapter Overview Early Immigration Policy The Borders Were Not Entirely Open Assessing the Early Policies The Latter Half of the Nineteenth Century Religion and Immigration Growing Opposition to Immigration Spurs New Legislation The Chinese Exclusion Act Controlling the Border Immigration Remained Mostly Open Assessing the Early Policies The Shift in Policy in the Early Twentieth Century The First General Restrictions of Immigration The Post-World War I Shift in Policy Immigration During the Great Depression Immigration Policy During the War

14 xiv 14.4 Post World War II Immigration Policy Policy Immediately After the War A New Immigration Law in The Economic Effects of the 1965 Act The Growth of Unauthorized Immigration Recent USA Immigration Policy IRCA After IRCA Summarizing Recent US Policy Post 9/11 Immigration Policy Reform of the Immigration Bureaucracy and Enforcement Employment-Based Permanent Residency Temporary Work Visas Diversity Immigrant Visas Immigration Reform Stalls in 2006 and Summary and Conclusions References Immigration Policy in Canada Chapter Overview Overview of Immigration Policy in Canada Immigration and Population Growth in Canada The Early Years Late Nineteenth Century Immigration Summary of Nineteenth Century Canadian Immigration Policy Canadian Immigration Policy in the Twentieth Century The First Half of the Twentieth Century After World War II Comparing Immigration Legislation Canada s Immigration Policy Today The 2002 Reform The Canadian Point System Should Policy Discriminate in Favor of Highly Educated Immigrants? The Seven Questions in the Early Twenty-First Century Immigrant Performance and Recent Shifts in Policy Some Final Observations References

15 xv 16 Immigration Policy in Europe Chapter Overview European Migration During the Colonial Era Colonial Regimes and Immigration The Nineteenth Century The Emigration Life Cycle European Emigration After World War I The Post-World War II Period Guest Workers The Post-Soviet Era Recent EU Immigration Policy The Interesting Case of Ireland Recent Immigration Policy in Spain Can Immigration Solve Europe s Demographic Burden? Conclusions References Conclusions and Final Observations Chapter Overview Immigration: A Fundamental Economic Phenomenon We Must Think Outside Our Little Boxes An Appeal to Holism Defining Holism The Economics of Immigration Must Embrace Holism The Holistic Approach to the Study of Immigration: An Example Developing International Institutions for an International Phenomenon The Global Commission on International Migration What Is the Optimal Flow of Immigrants? Small Steps Towards Global Governance Final Comment References Index