Immigration and Poverty in the United States by bsx20897

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									Immigration and Poverty in the
        United States
    Steven Raphael and Eugene Smolensky
       Goldman School of Public Policy
       University of California, Berkeley
Chapter outline
 Document poverty trends among the
  native and foreign born
 Examine the relationship between
  immigrant poverty and time in the U.S.
 The compositional effect of immigration
  on U.S. poverty rates
 The effect of immigration on native
  poverty via labor market competition
Basic Poverty Trends
 Overall poverty declines between 1970
  and 2000, with a slight increase between
  2000 and 2005
 Native poverty at the end of the study
  period lies below the poverty rate at the
  beginning.
    ◦ Declines observed among all racial/ethnic
      groups with largest declines among Hispanics
      and African-Americans
                           Proportion in Poverty, All U.S. Residents, Native-Born Residents, and Immigrants, 1970 to
                                                                      2005

                   0.2


                  0.18


                  0.16


                  0.14


                  0.12
Proportion Poor




                                                                                                                   All U.S. Residents
                   0.1                                                                                             Native Born
                                                                                                                   Immigrants

                  0.08


                  0.06


                  0.04


                  0.02


                    0
                    1965     1970      1975     1980     1985      1990     1995      2000     2005      2010
Table 1
Poverty Rates Among   the Native Born by Race/Ethnicity, 1970 to
2006
          1970        1980      1990       2000       2005
Non-
Hispanics
  White   0.103       0.088     0.091      0.079      0.093
  Black   0.362       0.301     0.306      0.252      0.267
  Asian   0.094       0.084     0.112      0.123      0.125
  Other   0.371       0.270     0.308      0.221      0.243

Hispanic   0.270      0.239     0.254      0.221      0.235
Immigrant poverty trends
 Poverty among immigrants increases
  between 1970 and 2005 with largest
  increases for recent immigrants
 Within country-of-origin groupings,
  poverty is stable or declines
 Previous two patterns suggest that the
  composition of new immigrants has
  shifted decisively towards higher poverty
  source countries
                           Poverty Rates Among Recent Immigrants (Arrived Within Past Five Years) and Non-Recent
                                              Immigrants (Arrived More than Five Years Ago)

                  0.35




                   0.3




                  0.25
Proportion Poor




                   0.2
                                                                                                           Recent Immigrants
                                                                                                           Non-recent Immigrants
                  0.15




                   0.1




                  0.05




                    0
                    1965     1970    1975     1980     1985    1990     1995    2000     2005    2010
Table 2
Poverty Rates Among Immigrants by Region of Origin, 1970 to 2005
                 1970          1980           1990            2000    2005
North America    0.090         0.080          0.081           0.076   0.080

Latin America
 Mexico            0.292         0.264         0.294          0.265   0.261
 Central America   0.159         0.206         0.224          0.199   0.179
 Caribbean         0.147         0.164         0.186          0.175   0.179
 South America     0.145         0.153         0.146          0.155   0.122

Europe
 Westerna          0.126         0.085         0.081          0.078   0.082
 Easternb          0.143         0.089         0.092          0.117   0.109

Russian Empire     0.161         0.149         0.197          0.196   0.169

Asia
 East              0.134         0.127         0.156          0.151   0.150
 Southeast         0.162         0.198         0.184          0.122   0.114
 India/SW          0.146         0.172         0.124          0.110   0.098

Middle East        0.143         0.201         0.195          0.183   0.193
Africa             0.125         0.204         0.149          0.176   0.204
Oceania            0.119         0.159         0.161          0.121   0.105
Other              0.208         0.231         0.247          -       0.174
The Distribution of the immigrant population has
shifted to higher poverty groups
                                                                  Distribution of Immigrants by Region of Origin, 1970 and 2005

                                             45.0
                                                                                                     40.9
                                             40.0
  Percent of Resident Immigrant Population




                                             35.0


                                             30.0
                                                                    27.5

                                             25.0
                                                                                                                                                    1970
                                                                                                                                                    2005
                                             20.0


                                             15.0
                                                                                                              11.4
                                                                                                        9.8                  9.8     10.4
                                                    9.6
                                             10.0                 8.2                 8.3
                                                                                   7.1        6.6                                             6.6
                                                                             6.1
                                                                                                                           4.3
                                              5.0     3.0                                                        3.5
                                                                                            2.7
                                                                           1.2                                                     1.7
                                                                                                                                            0.9
                                                            0.0
                                              0.0
Immigrant poverty and time in the
U.S.: constructing synthetic cohorts
   Calculate poverty rates for specific arrival
    cohorts across census years
    ◦ e.g. poverty among those arriving in 65 to 70
      in 1970, 1980, 1990 and 2000
   Compare poverty rates across years
Table 5
Synthetic Cohort Analysis of Immigrant Poverty Rates by Census
Year and by Year of Arrival

                                 Census Year
Year    of 1970         1980       1990      2000       2005
First
Arrival
Immigrants 18 to 34 in Census Year Immediately Following Arrival
1965-1970   0.168      0.104      0.095        0.095    0.086
1975-1980   -          0.270      0.148        0.120    0.093
1985-1990   -          -          0.296        0.175    0.136
1995-2000   -          -          -            0.285    0.168
Mexican Immigrants


                             Census Year
Year       of 1970   1980    1990          2000    2005
First Arrival


1965-1970    0.292   0.209   0.222         0.163   0.142
1975-1980    -       0.298   0.272         0.264   0.153
1985-1990    -       -       0.350         0.264   0.222
1995-2000    -       -       -             0.325   0.273
Central American Immigrants


                              Census Year
Year       of 1970    1980    1990          2000    2005
First Arrival


1965-1970    0.220    0.147   0.094         0.125   0.113
1975-1980    -        0.303   0.161         0.126   0.105
1985-1990    -        -       0.303         0.193   0.153
1995-2000    -        -       -             0.267   0.181
South American Immigrants


                             Census Year
Year       of 1970   1980    1990          2000    2005
First Arrival


 1970        0.200   0.089   0.087         0.073   0.087
 1980        -       0.259   0.112         0.098   0.065
 1990        -       -       0.223         0.103   0.074
 2000        -       -       -             0.257   0.102
East Asian Immigrants


                                Census Year
Year       of 1970      1980    1990          2000    2005
First Arrival


 1970        0.213      0.046   0.048         0.057   0.079
 1980        -          0.229   0.054         0.057   0.068
 1990        -          -       0.317         0.098   0.071
 2000        -          -       -             0.357   0.132
Southeast Asian Immigrants


                              Census Year
Year       of 1970    1980    1990          2000    2005
First Arrival


 1970        0.157    0.037   0.024         0.056   0.039
 1980        -        0.284   0.078         0.075   0.058
 1990        -        -       0.264         0.106   0.076
 2000        -        -       -             0.215   0.079
                                    Immigrant Poverty Rate Minus Native Poverty Rate by Arrival Cohort, Immigrants 18 to 34 at
                                                                 First Census Year Post Arrival

                             0.18



                             0.16



                             0.14



                             0.12
Immigrant - Native Poverty




                              0.1                                                                                                1965 to1970
                                                                                                                                 1975 to 1980
                                                                                                                                 1985 to 1990
                             0.08                                                                                                1995 to 2000


                             0.06



                             0.04



                             0.02



                               0
                                      1970              1980               1990              2000              2005
Qualifications to these synthetic
cohort results (Lubotsky 2007)

 Selective return migration
 Measurement error pertaining to year of
  arrival
Contribution of immigration to
poverty: compositional impact
 wit – proportion of the U.S. population at
  time t accounted for by group i
 povertyit – poverty rate for group i in
  time t
    poverty1970   wi1970 povertyi1970
                    i

    poverty2005   wi 2005 povertyi 2005
                    i
    Decomposing the change in the
    national poverty rate

Poverty   wi 2005 povertyi 2005   wi1970 povertyi1970
               i                        i



Poverty   ( wi 2005  wi1970 ) povertyi 2005   wi1970 ( povertyi 2005  povertyi1970 )
               i                                   i
                                       Decomposition of the Change in Poverty Rates, 1970 to 2005, Into the Component due to
                                     Shifts in Population Shares and the Component Due to Shifts in Group-Specific Poverty Rates

                            0.006

                                                                                        0.005


                            0.004




                            0.002
Change in proportion poor




                            0.000
                                         Change poverty 1970 to 2005   Change due to change in population shares   Change due to change in group-specific
                                                                                                                               poverty rates

                            -0.002

                                                   -0.002


                            -0.004




                            -0.006



                                                                                                                                  -0.007
                            -0.008
Contribution of immigration to
poverty: labor market competition with
natives

Assume
 Immigrants and natives are perfect
  substitutes
 Capital is fixed
Wages                       S0



                                  S1




        W0


        W1



                                 D0




                                       Employment
             E2   E0   E3
Are immigrants and natives perfect
substitutes?
 Discussion of substitutability and
  complementarity among factors of
  production
 Language and cultural differences
 Differences in formal educational
  attainment
 Differences in position in the earnings
  distribution
Table 8
Distribution of Educational Attainment by Immigration States and by Race/Ethnicity for Adults, 18 to 64 Years of
Age, 2000
                Foreign-Born                            Native-Born American Citizens
                                  Non-Hispanic      Non-Hispanic Black Non-Hispanic Asian          Hispanic
                                      White
Education     Men      Women      Men     Women        Men     Women       Men      Women       Men     Women
level

< 9 year      21.61%   19.57%     2.315    1.63%      4.18%     2.93%     2.09%     1.63%      8.15%     7.22%
9 to 12, no    17.48    15.70     10.02     8.47      23.14     18.73      7.72      6.00      23.29     19.56
diploma
High           19.02    20.76     29.04     28.99     33.90     30.18      18.67     17.43     29.80     28.70
school
grad
Some           18.43    22.05     31.37     34.66     28.16     33.81      36.60     36.94     28.10     32.37
college
Bachelors      12.62    14.09     17.80     17.81      7.60      9.89      24.18     27.04      7.45      8.78
degree
Masters or     10.84    7.83      9.45      8.43       3.02      4.47      10.74     10.96      3.21      3.37
higher
            Distribution of Immigrant and Native Born Men Across Earnings Groups Based on Native
                                               Population Quartiles

70%


                      62%

60%




50%                                                                                         48%

      42%
                                                                            41%
40%                                                                                                           Q1
                                                           35%                                                Q2
                                                             32%                                              Q3
                                                     29%                                                      Q4
30%
                                                                                      26%      26%
                                              25%25%
                          22%              23%
        22%     21%                                              21%              20%
20%
                                                                                                   17%
            15%
                                                                              14%
                                                                      12%
                                                                                                       10%
                                9%
10%
                                     7%



0%
        Immigrant     Hispanic immigrant    Native White    Native Black     Native Asian   Native Hispanic
Is capital fixed?
 Immigration decreases the capital-labor
  ratio, increasing the return to capital.
 Capital stock should grow due to
  domestic savings and foreign investment
Wages                       S0



                                           S1




        W0
        W2
        W1




                                 D0   D1



                                                Employment
             E2   E0   E3
Simulating the effects of immigration between
1970 and 2005 on native poverty rates

   Using PUMS data for 1960 through 2005, estimate a CES
    production function that permits
    ◦ Imperfect substitution between capital and labor
    ◦ Imperfect substitution between labor of different education
       levels
    ◦ Imperfect substitution between labor of different experience
       levels within the same education group
    ◦ Imperfect substitution between immigrant and native labor
       within the same education-experience groupings.
    ◦ Endogenous capital accumulation
   Use the estimated own-factor and cross-factor price elasticities to
    simulate the effect of immigration shock on the national wage
    distribution
   Simulate the impact on household income and construct
    counterfactual poverty rates
Relationships between substitution
elasticities and poverty rates
The effect of immigration on native poverty will be higher
  …
 the higher the degree of substitutability between
  immigrants and natives in similar skill groups
 the lower the degree of substitutability between
  workers of difference educational attainment levels
 the lower the degree of substitutability between
  workers of different experience levels within
  educational group.
 The more sluggish the response of capital supply to
  immigration-induced changes in the return to capital
Figure 1A: Scatter Plot of the Native-Immigrant Log Wage Differential
Measured by Year (1960 through 2005), Education, and Skill Groups Against
the Corresponding Log Supply Differentials
      .2
            0
      -.2
      -.4




                0                  1                  2                 3                4
                                 log supply differential: native-immigrant

                    log weekly wage differential: native-immigrant           Fitted values
Appendix Table 2A
Estimated Results from IV Regressions of the Natural Log of Weekly Wages Among Full-
Time-Male Workers on Log Annual Hours Supplied Using Log Annual Hours Supplied by
Immigrants as an Instrument
                           Estimates of -1/  x           Estimates of -1/  E and -1/  x
                  Using 1960         Using 1970       Using 1960          Using 1970
                  through 2005       through 2005     through 2005        through 2005
Log(Ltkj)         -0.218             -0.109           -0.227              -0.095
                  (0.072)            (0.043)          (0.117)             (0.046)
Log(Ltkj) –       -                  -                -0.631              -0.125
Log(Ltk)                                              (0.095)             (0.057)
N                 192                160              192                 160
Appendix Table 3A
Simulated Proportional Effects of Immigration-Induced Labor Supply Shocks Between 1970 and
2005 on Native-Born Weekly Earnings by Education and Experience Level
                     immig  33       immig           immig           immig  
Native Education-    exp  9.14       exp  9.14        exp  9.14        exp  5
Experience group     educ  8         educ  8          educ  2.5        educ  2.5
Less than high
school
  0–4                      -0.00             -0.01              -0.07             -0.05
  5–9                      -0.02             -0.03              -0.09             -0.09
  10 – 14                  -0.02             -0.04              -0.09             -0.10
  15 – 19                  -0.02             -0.04              -0.09             -0.10
  20 – 24                  -0.02             -0.03              -0.09             -0.09
  25 – 29                  -0.01             -0.02              -0.08             -0.08
  30 – 34                  -0.01             -0.02              -0.08             -0.07
  35 – 40                  -0.00             -0.01              -0.07             -0.06
High school
graduates
  0–4                      0.01              0.00               0.01               0.01
  5–9                      0.00              0.00               0.00               0.00
  10 – 14                  0.00              0.00               0.00               0.00
  15 – 19                  0.00              0.00               0.00               0.00
  20 – 24                  0.01              0.00               0.01               0.01
  25 – 29                  0.01              0.01               0.01               0.01
  30 – 34                  0.01              0.01               0.01               0.01
  35 – 40                  0.01              0.01               0.01               0.02
Appendix Table 4A
Simulated Proportional Effects of Immigration-Induced Labor Supply Shocks Between 1970 and
2005 on Native-Born Weekly Earnings by Education and Experience Level, Assuming Fixed
Education and Experience Group Elasticities and Alternative Values of the Elasticity of
Substitution Between Immigrants and Natives
Native            immig         immig  33    immig  20      immig  10        immig  5
Education-
Experience        exp  9.14      exp  9.14    exp  9.14      exp  9.14        exp  9.14
group             educ  2.5      educ  2.5    educ  2.5      educ  2.5        educ  2.5
Less than high
school
  0–4                -0.07             -0.05            -0.05            -0.04            -0.02
  5–9                -0.09             -0.07            -0.06            -0.04            -0.01
  10 – 14            -0.09             -0.07            -0.06            -0.04            0.00
  15 – 19            -0.09             -0.07            -0.06            -0.04            0.00
  20 – 24            -0.09             -0.07            -0.06            -0.04            -0.01
  25 – 29            -0.08             -0.06            -0.06            -0.04            -0.01
  30 – 34            -0.08             -0.06            -0.05            -0.04            -0.02
  35 - 40            -0.07             -0.06            -0.05            -0.04            -0.02
High school
graduates
  0–4                 0.01             0.01             0.02             0.02             0.03
  5–9                 0.00             0.01             0.01             0.02             0.03
  10 – 14             0.00             0.01             0.01             0.02             0.03
  15 – 19             0.00             0.01             0.01             0.02             0.03
  20 – 24             0.01             0.01             0.01             0.02             0.03
  25 – 29             0.01             0.02             0.02             0.02             0.03
  30 – 34             0.01             0.02             0.02             0.02             0.03
  35 – 40             0.01             0.02             0.02             0.02             0.03
Some college
Table 10
Actual Poverty Rates and Simulated Poverty Rates for 2005 Among Persons in Households
Headed by Natives
                               Using Lower Bound Wage       Using Upper Bound Wage
                                        Effects                       Effects
               Actual        Elastic Labor      Inelastic  Elastic Labor      Inelastic
               Poverty Rates    Supply       Labor Supply     Supply       Labor Supply
Non-
Hispanics
 White             0.079         0.079           0.078         0.078           0.079
 Black             0.260         0.258           0.258         0.258           0.257
 Asian             0.080         0.080           0.079         0.079           0.079
 Other             0.196         0.195           0.195         0.195           0.195

Hispanic          0.193          0.190          0.191          0.187          0.190
Summary of findings
 Immigrants are poorer now than in the past,
  though this is driven largely by changes in source-
  country composition
 Poverty rates decline quickly with time in the U.S.
  for most immigrant groups
    ◦ Can’t distinguish between assimilation and selective
      return migration
 Immigration has increased the national poverty
  rate through a compositional effect (by about half
  a percentage point).
 Labor market competition between immigrants
  and native has had no discernable impact on
  native poverty rates

								
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