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Immigration: Help or Hindrance?
Subject Comparative Statics
Topic Labor Markets
Key Words Immigration, illegal immigration, resources, worker shortage, recession
News Story

The Tampa office of the Immigration and Naturalization Service receives about ten letters or calls each week about alleged illegal immigrants. However, the tips are rarely checked out. This is in spite of the "get-tough" policies announced by the INS in 1996.

Although the INS office in Tampa claims it is a result of inadequate resources, a more likely explanation is that the hot economy and consequent worker shortage has led to immigration being regarded as positive. The INS itself has made it easier to obtain permanent residency ("green cards"). Service industries are pushing amnesty programs for illegal immigrants. Hi-tech firms want the cap on temporary professional visas increased. Even unions see immigrants as potential members rather than threats to the employment of Americans.

The INS admits that it has turned away from workplace raids and toward combating the root causes of illegal immigration, such as by strengthening border patrols, deporting illegal immigrants with a criminal record, and breaking up alien smuggling rings.

There are still critics, however, who believe that qualified Americans are being displaced. These attitudes may well increase during the next recession.

(Updated January 1, 2001)

Questions
1. Draw a diagram of the supply and demand for labor in the Tampa area with the supply curve being relatively inelastic. Mark the initial equilibrium wage and employment level.
a) Show the effect on the curve(s) of the growing economy. Also show the consequences for the equilibrium wage and employment level. Why are employers so concerned?
b) Now add the effect of workplace raids by the INS to find illegal aliens. Why would employers be concerned if raids were to continue?
c) If employers are not willing to change wage rates, what happens? Illustrate on your diagram.
2. The recent policy of the INS has been to be more lenient.
a) On your diagram, show the effect on the equilibrium wage and employment level of more visas and green cards, and fewer workplace raids.
b) Why are employers pleased?
c) On your diagram, on the employment axis, divide the equilibrium number of workers into two groups: workers who have been allowed to work as a result of the increase in visas and green cards, and workers previously allowed to work. Compare these numbers with the number of employees allowed to work at the former wage level before the lenient policy was introduced, and explain why some groups still criticize immigration policy. Refer to your diagram.
Source Jeff Harrington, "Embracing Immigrants," St. Petersburg Times, September 17, 2000.

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