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Immigration and Poverty Immigration and Poverty in the United Statesin the United States
Steven Raphael and Eugene SmolenskyGoldman School of Public PolicyUniversity of California, Berkeley
Chapter outlineChapter outlineDocument poverty trends among
the native and foreign bornExamine 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 TrendsBasic Poverty TrendsOverall 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
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Pro
po
rtio
n P
oo
r
All U.S. Residents
Native Born
Immigrants
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 trendsImmigrant poverty trendsPoverty 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
0.05
0.1
0.15
0.2
0.25
0.3
0.35
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Pro
po
rtio
n P
oo
r
Recent Immigrants
Non-recent Immigrants
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 The Distribution of the immigrant population has shifted to higher poverty population has shifted to higher poverty groupsgroups
Distribution of Immigrants by Region of Origin, 1970 and 2005
9.68.2
1.2
7.1
2.7
40.9
11.4
4.3
1.70.9
3.0
0.0
27.5
6.1
8.36.6
9.8
3.5
9.8 10.4
6.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
North
Am
erica
n
Mex
ican
Centra
l Am
erica
n
Caribb
ean
South
Am
erica
n
Wes
tern
Eur
ope
Easte
rn E
urop
e
East A
sia
South
east
Asia
India
/Sou
thwes
t Asia
n
Per
cen
t o
f R
esid
ent
Imm
igra
nt
Po
pu
lati
on
1970
2005
Immigrant poverty and time Immigrant poverty and time in the U.S.: constructing in the U.S.: constructing synthetic cohortssynthetic cohortsCalculate 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 5Synthetic Cohort Analysis of Immigrant Poverty Rates by Census Year and by Year of Arrival
Census Year
Year of First Arrival
1970 1980 1990 2000 2005
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 First Arrival
1970 1980 1990 2000 2005
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 First Arrival
1970 1980 1990 2000 2005
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 First Arrival
1970 1980 1990 2000 2005
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 First Arrival
1970 1980 1990 2000 2005
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 First Arrival
1970 1980 1990 2000 2005
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
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
1970 1980 1990 2000 2005
Imm
igra
nt
- N
ativ
e P
ove
rty
1965 to1970
1975 to 1980
1985 to 1990
1995 to 2000
Qualifications to these Qualifications to these synthetic cohort results synthetic cohort results (Lubotsky 2007)(Lubotsky 2007)
Selective return migrationMeasurement error pertaining to
year of arrival
Contribution of immigration Contribution of immigration to poverty: compositional to poverty: compositional impactimpactwit – proportion of the U.S.
population at time t accounted for by group i
povertyit – poverty rate for group i in time t
iii
iii
povertywpoverty
povertywpoverty
200520052005
197019701970
Decomposing the change in Decomposing the change in the national poverty ratethe national poverty rate
)()( 197020051970200519702005
1970197020052005
ii
iii
iii
iii
iii
povertypovertywpovertywwPoverty
povertywpovertywPoverty
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
-0.002
0.005
-0.007-0.008
-0.006
-0.004
-0.002
0.000
0.002
0.004
0.006
Change poverty 1970 to 2005 Change due to change in population shares Change due to change in group-specificpoverty rates
Ch
ang
e in
pro
po
rtio
n p
oo
r
Contribution of immigration to Contribution of immigration to poverty: labor market poverty: labor market competition with nativescompetition with natives
AssumeImmigrants and natives are
perfect substitutesCapital is fixed
Wages
Employment
D0
S0
S1
W0
W1
E2 E0 E3
Are immigrants and natives Are immigrants and natives perfect substitutes?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 8Distribution of Educational Attainment by Immigration States and by Race/Ethnicity for Adults, 18 to 64 Years of Age, 2000
Foreign-Born Native-Born American CitizensNon-Hispanic
WhiteNon-Hispanic Black Non-Hispanic Asian Hispanic
Education level
Men Women Men Women Men Women Men Women Men Women
< 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 diploma
17.48 15.70 10.02 8.47 23.14 18.73 7.72 6.00 23.29 19.56
High school grad
19.02 20.76 29.04 28.99 33.90 30.18 18.67 17.43 29.80 28.70
Some college
18.43 22.05 31.37 34.66 28.16 33.81 36.60 36.94 28.10 32.37
Bachelors degree
12.62 14.09 17.80 17.81 7.60 9.89 24.18 27.04 7.45 8.78
Masters or higher
10.84 7.83 9.45 8.43 3.02 4.47 10.74 10.96 3.21 3.37
Distribution of Immigrant and Native Born Men Across Earnings Groups Based on Native Population Quartiles
42%
62%
23%
35%
41%
48%
22% 22%25%
32%
14%
26%
15%
9%
25%
21% 20%
17%
21%
7%
29%
12%
26%
10%
0%
10%
20%
30%
40%
50%
60%
70%
Immigrant Hispanic immigrant Native White Native Black Native Asian Native Hispanic
Q1
Q2
Q3
Q4
Is capital fixed?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
Employment
D0 D1
S0
S1
W0W2W1
E2 E0 E3
Simulating the effects of immigration Simulating the effects of immigration between 1970 and 2005 on native between 1970 and 2005 on native poverty ratespoverty 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 Relationships between substitution elasticities and poverty rateselasticities and poverty ratesThe 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
-.4
-.2
0.2
log
we
ekly
wa
ge
diffe
rentia
l: n
ative
-im
mig
ran
t
0 1 2 3 4log 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 through 2005
Using 1970 through 2005
Using 1960 through 2005
Using 1970 through 2005
Log(Ltkj) -0.218 (0.072)
-0.109 (0.043)
-0.227 (0.117)
-0.095 (0.046)
Log(Ltkj) – Log(Ltk)
- - -0.631 (0.095)
-0.125 (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 Native Education-Experience group 8
14.9
33
exp
educ
immig
8
14.9exp
educ
immig
5.2
14.9exp
educ
immig
5.2
5exp
educ
immig
Less than high school
0 – 4 5 – 9 10 – 14 15 – 19 20 – 24 25 – 29 30 – 34 35 – 40
-0.00 -0.02 -0.02 -0.02 -0.02 -0.01 -0.01 -0.00
-0.01 -0.03 -0.04 -0.04 -0.03 -0.02 -0.02 -0.01
-0.07 -0.09 -0.09 -0.09 -0.09 -0.08 -0.08 -0.07
-0.05 -0.09 -0.10 -0.10 -0.09 -0.08 -0.07 -0.06
High school graduates
0 – 4 5 – 9 10 – 14 15 – 19 20 – 24 25 – 29 30 – 34 35 – 40
0.01 0.00 0.00 0.00 0.01 0.01 0.01 0.01
0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01
0.01 0.00 0.00 0.00 0.01 0.01 0.01 0.01
0.01 0.00 0.00 0.00 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 Education-Experience group 5.2
14.9exp
educ
immig
5.2
14.9
33
exp
educ
immig
5.2
14.9
20
exp
educ
immig
5.2
14.9
10
exp
educ
immig
5.2
14.9
5
exp
educ
immig
Less than high school
0 – 4 5 – 9 10 – 14 15 – 19 20 – 24 25 – 29 30 – 34 35 - 40
-0.07 -0.09 -0.09 -0.09 -0.09 -0.08 -0.08 -0.07
-0.05 -0.07 -0.07 -0.07 -0.07 -0.06 -0.06 -0.06
-0.05 -0.06 -0.06 -0.06 -0.06 -0.06 -0.05 -0.05
-0.04 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04
-0.02 -0.01 0.00 0.00 -0.01 -0.01 -0.02 -0.02
High school graduates
0 – 4 5 – 9 10 – 14 15 – 19 20 – 24 25 – 29 30 – 34 35 – 40
0.01 0.00 0.00 0.00 0.01 0.01 0.01 0.01
0.01 0.01 0.01 0.01 0.01 0.02 0.02 0.02
0.02 0.01 0.01 0.01 0.01 0.02 0.02 0.02
0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
0.03 0.03 0.03 0.03 0.03 0.03 0.03 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
Effects Using Upper Bound Wage
Effects Actual
Poverty Rates Elastic Labor
Supply Inelastic
Labor Supply Elastic Labor
Supply Inelastic
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 findingsSummary of findingsImmigrants 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 migrationImmigration 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