Does U.S. immigration policy harm domestic workers?
Issues and Background
...the net gains from current immigration are
small, so it is unlikely that these gains can play a crucial role in
the policy debate. Economic research teaches a very valuable
lesson: the economic impact of immigration is essentially
distributional. Current immigration redistributes wealth from
unskilled workers, whose wages are lowered by immigrants, to
skilled workers and owners of companies that buy immigrants'
services, and from taxpayers who bear the burden of paying
for the social services used by immigrants to consumers who
use the goods and services produced by immigrants.
~George J. Borjas, November, 1996, The Atlantic Monthly
...highly skilled immigrants, who also create jobs for Americans, are not the only ones
contributing to our economic boom. Even the less-skilled immigrants contribute to our
economy and our lives by working in jobs most Americans do not want, such as cleaning
offices, cooking in restaurants, and ringing up purchases in the grocery store. They, in turn,
contribute by buying homes, clothes, and groceries. The wonderful cultural diversity brought
to the United States by immigrants has become secondary to their willingness to work hard
and become part of today's America.
Most U.S. residents today are the descendants of immigrants who arrived in the U.S. during the
past 150 years. Concern over the effect of immigration on domestic workers, however, have
resulted in the passage of several laws designed to restrict immigration. Unions, in particular,
have argued for more restrictive immigration policy on the grounds that immigration lowers
the wage and employment levels for domestic residents.
There were no substantial restrictions on immigration into the U.S. until the passage of the Quota Law of
1921. This law set quotas on the number of immigrants based upon the country of origin. The
Quota Law primarily restricted immigration from eastern and southern Europe. The Immigration
and Nationality Act Amendments of 1965 (and subsequent amendments) eliminated the country-specific quota
system and instead established a limit on the maximum number of immigrants allowed into the U.S.
Under this Act, preferential treatment is given to those who immigrate for the purpose of
family reunification. Those possessing exceptional skills are also given priority. No limit,
however, is placed upon the number of political refugees allowed to immigrate to the U.S. (The
definition of a political refugee, however, is narrowly defined and has sometimes been quite
Not all immigrants, of course, enter the country through legal channels. Individuals often
enter the country on student or tourist visas and begin working in violation of their
visa status. Other individuals enter the country illegally without a valid U.S. visa.
The Immigration Reform and Control Act of 1986 addresses the issue of illegal immigration by
imposing substantial fines on employers that hire illegal immigrants.
The Illegal Immigration Reform and Immigrant Responsibility Act (IIRAIRA) of 1996 provided
several new restrictions to immigration. Host families could only accept immigrants if the host
family receives an income that is at least 125% of the poverty level. This Act also required
that the Immigration and Naturalization Service maintain stricter records of entry and exit by
The Secure Fence Act of 2006, signed on October 26, 2006, authorizes the construction of an
additional 700 miles of fencing along the border in an attempt to reduce illegal immigration.
Supporters of this legislation argue that this will both improve homeland security and help protect
low-wage native-born workers from competition from low-wage illegal immigrants.
Those who support stricter limitations on immigration argue that immigrants increase the supply
of labor in many labor markets, resulting in lower wages in the affected markets. This argument
is somewhat flawed, though, in that it does not take into account the increase in labor demand
that also occurs as a result of immigration. The demand for labor is a "derived demand." This
means that the demand for labor is derived from the demand for final
output. Immigrants provide labor to various labor markets. In return, however, immigrants
receive labor income that is used to buy goods and services produced in the domestic economy.
As the demand for output rises, so does the demand for the labor that produces this output.
Increased immigration, therefore, results in higher levels of both labor demand and labor supply.
Thus, the effect of immigration on wages will vary across labor markets. In those labor markets
in which labor supply rises by more than labor demand, wages will fall. In other labor markets,
however, labor demand will rise by more than labor supply and wages will rise. Thus, increased
immigration will be expected to cause lower wage rates in some occupations while higher
wages will be received in other labor markets. The overall effect on domestic wages is,
to a large extent, an issue that can only be resolved empirically. Recent studies by David Card,
Cordelia Reimers, Kristin Butcher, and George Borjas have found that immigration has little
overall impact on wage rates for domestic workers. Increased immigration, however, appears to generate small adverse
wage and employment effects for domestic workers who have not completed high school.
While immigration may lower wage rates for some domestic workers, it should be also noted that
these lower wage rates benefit producers. Lower wage rates also result in lower equilibrium
product prices, thereby benefiting consumers. From society's perspective, the gains from immigration
to producers and consumers should be weighed against the losses to low-wage workers.
Advocates of increased immigration note that children do not begin working the minute they
are born. It requires substantial expenditures in the form of food, clothing, shelter, education, and
other childrearing costs to produce an adult worker. These investments in human capital formation
are quite substantial. Immigrant workers, unlike newborn children, are able to begin engaging in
productive activities upon their arrival in the country. The cost of much of their human
capital formation was borne by the country from which they emigrated. Since most immigrants
arrive at a stage in their life in which they are relatively productive, higher immigration rates
generally result in an increase in the proportion of the population that is working. As the
proportion of the population that is working rises, per capita income also rises.
Concern over the future of social security is also used to support relaxed immigration
restrictions. Declining birthrates in the U.S., combined with rising lifespans, result in
a steady increase in the ratio of retired to working individuals over the next few decades.
An increase in the number of younger immigrants could help to alleviate this problem.
Until the last few decades, most immigrants to the U.S. possessed higher
levels of education, skills, and training than were the norm in their country of origin. Much
of the immigration to the U.S. during this period was from countries in which the return to
human capital was lower than in the U.S. The higher rate of return on human capital investments
in the U.S. provides skilled workers with more incentive to emigrate to the U.S. In recent decades,
however, most immigration to the U.S. has been from countries in which there is a higher level
of income inequality. In this case, less skilled workers receive a higher return to emigration
to the U.S. This has resulted in a larger proportion of immigrants possessing a relatively low level
of human capital accumulation in recent years.
Opponents of immigration often express concern that immigrants use high levels of government
services. This has been a more significant issue in recent decades since recent immigrants
have generally possessed lower levels of education and training than had been possessed by earlier
waves of immigrants. It is interesting to note, though, that illegal immigrants may provide a lower
cost to society since they do not generally receive transfer payments from the government.
As an examination of the readings below will suggest, immigration is a topic on which there
are some very strong feelings. There is, however, a growing body of empirical evidence that
should help resolve some of these disputes.
Primary Resources and Data
- U.S. Citizenship and Immigration Services
The U.S. Citizenship and Immigration Services web site contains information on current U.S. immigration
law and policy.
- Harvard University Library Open Collections Program, "Immigration to the United States"
This website provides a timeline describing the history of U.S. immigration and immigration law
between 1789 and 1940. Links are provided to pdf files of relevant scanned documents in the Harvard Library
- The History Channel, "Ellis Island - Timeline"
This website provides a timeline describing the history of Ellis Island from the 17th century to the present.
- Congressional Budget Office, "Immigration Policy in the United States"
This February 2006 Congressional Budget Office document provides an overview of the evolution of U.S. immigration policy from 1790 to the present.
It provides detailed analysis of current immigration law and policy. (The Adobe Acrobat viewer is required to view this document. You may download this viewer by
- Quota Law of May 19, 1921
The Quota Law of May 19, 1921 established country-specific quotas on immigration.
- Historical Documents, "Immigration and Nationality Act Amendments of October 3, 1965"
This website provides a description of the key provisions of the
Immigration and Nationality Act Amendments of 1965. These Amendments ended the
country-specific quotas for immigrants.
- Immigration Reform and Control Act of November 6, 1986
The Immigration Reform and Control Act of 1986 provides amnesty to illegal immigrants who have been in the U.S. for a
specified period while imposing penalties on employers of illegal immigrants.
- Secure Fence Act of 2006
The Secure Fence Act of 2006 authorizes the construction of an additional 700 miles of fencing along the U.S.-Mexico border.
- Homeland Security, "Yearbook of Immigration Statistics"
The Yearbook of Immigration Statistics contains an extensive collection
of current and historical U.S. immigration statistics. It also provides information on immigration law enforcement actions.
- Marian L. Smith, "Race, Nationality, and Reality: INS Administration of Racial Provisions in U.S. Immigration and Nationality Law Since 1898"
Marion L. Smith, the senior historian for the U.S. Immigration and Naturalization Service, describes
the evolution of U.S. immigration law in this Summer 2002 article, appearing in Prologue Magazine.
The primary focus of this article is the role of race and nationality in immigration law.
- WashLaw Web, "Immigration Law"
Washburn University School of Law Library provides this extensive collection of links to online
resources that deal with immigration law.
- The 'Lectric Law Library Lawcopedia, "Immigration Laws, Policies, and Issues"
This web site provides a useful summary of U.S. immigration laws and policies as well as a discussion
of current policy issues related to immigration.
- Immigration and Naturalization Service, "Illegal Immigration Reform and Immigrant Responsibility Act of September 30, 1996"
This 1996 law attempted to make illegal entry into the U.S. more difficult. It also substantially slowed
down border crossings by road and rail. (The text of this law appears about 3/4 of the way through this document.
You can get to it quickly by searching for the first few words of the title of this law using your browser's search function.)
- George Borjas, "Immigration"
George Borjas provides a historical discussion and economic analysis of immigration and U.S.
immigration policy in this online article appearing in The Concise Encyclopedia of Economics.
This article provides a very useful overview of this topic.
- Phillip L. Martin, "The Economics of Immigration"
Philip L. Martin discusses some of the economic issues associated with immigration policy in this
May 1995 online article. This article, designed to provide background material for journalists,
provides a useful overview of the major economic issues associated
with immigration and introduces many of the basic concerns that are often raised about U.S.
Different Perspectives in the Debate
- George J. Borjas. "The Economics of Immigration"
George J. Borjas examines the economic effects of immigration in this article appearing in the
December 1994 issue of the Journal of Economic Literature. He notes that, as a result of the low levels of
education and training possessed by most recent immigrants, high levels of immigration
have contributed to rising levels of income inequality in the U.S. during the past two decades. Borjas
also observes that recent waves of legal immigrants tend to receive a relatively high level of
transfer payments. He indicates that immigrants in earlier decades tended to receive relatively
high wages after a few years of residence and were unlikely to receive welfare benefits. Borjas
argues that U.S. immigration law should be modified to provide preferential treatment for
skilled workers. He also suggests that a larger number of immigrants should be allowed when the
economy is strong and fewer immigrants allowed when unemployment rates are relatively high.
- Randy Capps, Michael Fix, Jeffrey S. Passel, Jason Ost, and Dan Perez-Lopez, "A Profile of
the Low-Wage Immigrant Workforce"
Randy Capps, Michael Fix, Jeffrey S. Passel, Jason Ost, and Dan Perez-Lopez examine the characteristics
of the low-wage immigrant labor force in this November 2003 Urban Institute online article.
They observe that immigrants constitute a growing share of the labor force. Immigrants
comprise 11% of the population, but represent 14% of all workers and 20% of all low-wage workers.
Recent immigrants, on average, have substantially lower levels of education and job training
than domestic workers. (The Adobe Acrobat viewer is required to view this document. You may download this viewer by
- Daniel Griswold, "Testimony before the Senate Committee on the Judiciary, Subcommittee
on Immigration, Border Security and Citizenship"
Daniel Griswold addresses the issue of immigration law reform in this May 26, 2005 testimony. He argues
that immigration helps keep inflation low and growth high in the U.S. economy by providing a source of
labor that rises during expansions and declines during recessions. Griswold suggests that immigrant workers
tend to fill jobs in which there is a shortage of domestic workers. He argues that laws should be revised
to allow for temporary visas to allow immigrant workers to fill jobs in which there is a temporary
- Vernon M. Briggs Jr., "Immigration Policy: A Tool of Labor Economics? Immigration and the U.S.
Labor Market: Public Policy Gone Awry"
In this 1993 Levy Public Policy Brief, Vernon M. Briggs Jr. argues that U.S. immigration law should be revised to
provide priority for immigrants who possess the human capital characteristics that are
needed in U.S. labor markets. He also suggests that the current policy of providing priority based upon family
reunification results in the entry of a large number of immigrant workers who possess low levels
of education and training. Since there is no evidence of a shortage of unskilled workers,
Briggs argues that this policy depresses wages for workers in these low-wage markets.
(The Adobe Acrobat viewer is required to view this document. You may download this viewer by
- Alan B. Krueger, "Two Labor Economic Issues for the Immigration Debate"
Alan Krueger, in this April 4, 2006 letter, notes that recent Congressional debate on the
issue of immigration reform involves the assumption that immigration reduces the employment of
native-born workers. He observes that there is little credible evidence that supports this argument.
Krueger also argues that it would be inefficient to not allow guest workers some degree of labor market
mobility. Krueger summarizes several important recent studies that indicate that even large-scale
immigration to specific geographical regions do not have an adverse effect on wages or employment
for native-born workers in the affected region. Krueger observes that most studies that argue
that immigration harms native-born workers are based on theoretical models, not empirical evidence.
He argues that these theoretical models do not take into account the increase in labor demand that
occurs when immigration occurs; nor do they take into account the possibility that immigrants may
possess higher levels of entrepreneurial ability. (The Adobe Acrobat viewer is required to view this document. You may download this viewer by
- Kevin F. McCarthy and Georges Vernez, "Immigration in a Changing Economy:
California's Experience--Questions and Answers"
In this 1998 Rand report, Kevin F. McCarthy and Georges Vernez examine the changing conditions of
immigration in California during a 30-year period. They find that, while employers in California
have consistently benefited from immigration, there have been growing costs to the public
sector (primarily through higher educational costs) and to native-born low-wage workers (in the form
of lower wage rates). McCarthy and Vernez observe that immigration has been rising at a rapid
rate. Education and job skill levels, though, have been declining for immigrant workers relative to
native workers. They argue that educational and skill levels should be considered in immigration
decisions. (The Adobe Acrobat viewer is required to view this document. You may download this viewer by
- Rand, "Publications of the RAND Center for Research on Immigration Policy, 1989-1999"
This page contains links to a collection of studies on immigration conducted by the RAND Center for Research on Immigration Policy.
- Donald R. Davis and David E. Weinstein, "Technological Superiority and the Losses from Migration"
In this May 2002 NBER working paper, Donald R. Davis and David E. Weinstein examine the effects of
immigration resulting from technological differences. They show that this causes the more technologically
advanced country to lose from immigration. Davis and Weinstein estimate that the loss for the U.S. may
be approximately equal to 0.8 percent of GDP. (Caution: this paper requires a fairly high level of
mathematical and theoretical sophistication.) The Adobe Acrobat viewer is required to view this document. You may download this viewer by
- Californians for Population Stabilization, "Immigration"
Californians for Population Stabilization is a group that is lobbying for a lower rate of
population growth in California. They note that the population of the state has doubled since 1960.
Since 96% of the growth in the California population is due to immigration, they argue for more
stringent immigration restrictions.
- The CNMI Guide, "Characteristics of the CNMI Labor Force and the Need to Control Immigration"
The Commonwealth of the Northern Mariana Islands (Saipan, Tinian, and Rota) has been a U.S.
Commonwealth since 1978 (and had been a U.S. Trust Territory since 1947). This online article describes
concerns over a proposal to impose U.S. immigration laws on islands that rely extensively on
- Walter A. Ewing, "Not Getting What They Paid For: Limiting Immigrantsí Access to Benefits
Hurts Families Without Reducing Healthcare Costs"
Walter A. Ewing argues, in this 2003 online document, that the 1996 welfare reform law prohibited most immigrants with permanent
resident status from receiving benefits from transfer payment programs. While this lowers the cost of
TANF and food stamp programs, it does so at the expense of the nutritional and health care needs of
low-income immigrant households. While children born in the U.S. to these immigrant households are
eligible for benefit programs, the evidence suggests that these benefits are not being received in households
in which the parents are not eligible for benefits.
- Congressman Tom Tancredo, "Congressional Immigration Reform Caucus"
This website describes the efforts of the Congressional Immigration Reform Caucus to have troops
placed along U.S. borders to prevent illegal immigration. The concern appears to be primarily
related to national security.
- California Coalition for Immigration Reform
This is the website of a group arguing for stricter enforcement of immigration law and a reduction
in the number of immigrants allowed into the U.S.
- Glenn Spencer's American Patrol Report
This site provides anecdotal evidence of problems associated with a high level of immigration of
low-wage workers. It also provides links to news articles that support a need for tighter
- Center for Immigration Studies
This organization provides a variety of arguments and studies suggesting that there should be greater
restrictions on immigration into the U.S.
- Julian Simon, "Immigration: The Demographic and Economic Facts"
Julian Simon argues that immigration tends to provide net benefits to the U.S. in this December 11, 1995
Cato Institute study. He notes that immigration rates are only about one-third of their level in the
early part of the twentieth century. Simon provides a summary of research findings that
indicate that immigration generates little or no adverse wage or employment effects for
- Alexis De Tocqueville Institute, "Immigration"
The Alexis De Tocqueville Institute provides annotated links to resources that discuss the
beneficial impacts of immigration on the U.S. economy.
- Bronwyn Lance, "The Economic Impact of Immigrants"
In this May 2000 online document, Bronwyn Lance cites anecdotal evidence and research studies that
indicate that immigration benefits the U.S. economy. She notes that immigrants have higher labor
force participation rates than domestic residents. Lance cites a study that she co-authored that
suggests that higher levels of immigration leads to rising property values in cities.
- Bronwyn Lance, "The Traffic Jam and Job Destruction Act: Why Congress Must Do Away With Border-Clogging Provision Slipped Into 1996 Law"
In this June 1999 online article, Bronwyn Lance discusses the problems with the entry and exit
reporting requirements of the Illegal Immigration Reform and Immigrant Responsibility Act. She observes
that these requirements cannot be easily met with current technology and have resulted in substantial
delays in border crossings.
- Rakesh Kochhar, "Does Immigration Hurt U.S. Workers?"
Rakesh Kochhar summarizes the empirical evidence of immigration on U.S. labor markets in this
August 24, 2006 Pew Research Foundation online article. He reports on a Pew Research Foundation
study that finds no clear relationship between immigration and wages using immigration and wage
data for U.S. states.
- American Immigration Law Foundation
The American Immigration Law Foundation provides an extensive collection of online studies and
other resources that suggest that immigration provides net benefits to the U.S. economy.
- American Immigration Lawyers' Association
The American Immigration Lawyers' Association provides online studies and other resources that
describe the benefits that the U.S. receives from immigration.
- U.S. Committee for Refugees and Immigrants
The U.S. Committee for Refugees and Immigrants is an organization that attempts to help immigrants
and refugees in the U.S. In addition to describing their support programs, this website also
provides information on the international problems that have resulted in refugee situations.