22 Immigration McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Number of Immigrants Economic immigrants Legal immigrants Averaging 1 million per year Quotas, refugees, and H1-B provision One-third of population growth One-half of labor force growth LO1 22-2

Number of Immigrants LO1 22-3

Number of Immigrants LO1 22-4

Number of Immigrants Illegal immigrants Estimated from Census data 350,000 per year on average High proportion from Mexico and Central America Total of 11 million residing in the U.S. in 2009; 62% from Mexico LO1 22-5

Number of Immigrants Total1,130, Mexico164, China64, Philippines60, India57, Dominican Republic49, Cuba38, Vietnam29, Colombia27, South Korea25, Haiti24,280 LO1 22-6

Decision to Migrate Take advantage of superior economic opportunities Escape political or religious persecution Reunite with family members LO2 22-7

Decision to Migrate Earnings opportunities Increase value of human capital Moving costs Distance Follow beaten path Age Other factors LO2 22-8

Global Perspective LO2 22-9

Economic Effects Personal gains Economic benefits exceed costs Other issues Uncertainty and imperfect information Backflows Skill transferability Self-selection LO

Impacts on Wages, Efficiency, Output Understand economic outcomes Assumptions U.S. and Mexico Labor demand greater in U.S. No long-term unemployment Labor quality the same Migration is legal and has no cost Wage differentials key factor LO

Impacts on Wages, Efficiency, Output Wage Rate United States Mexico Quantity of Labor (Millions) Quantity of Labor (Millions) DuDu DmDm a A b dD B WeWe Wage Rate WeWe cfFC WuWu 00 WmWm Immigration impacts wages, employment, and output g G LO

Impacts on Wages, Efficiency, Output Wage rates will equalize In the U.S.: Wage rate falls Employment and output rise In Mexico: Wage rate rises Employment and output fall LO

Global Perspective LO4 Emigrant Remittances, Selected Developing Countries 22-14

Impacts on Wages, Efficiency, Output Overall effects: World output rises Efficiency gains Other effects Brain drains U.S. natives lose wage income U.S. businesses gain income LO

Complications and Modifications Migration costs not zero Remittances redistribute income Backflows: temporary migration Immigrant workers as complements vs. substitute labor Expansion of capital in some industries Full employment vs. unemployment LO

Fiscal Impacts Fiscal burden > taxes paid Wages will not equalize Research findings are mixed LO

Illegal Immigration Employment effects Two extreme views Fixed number of jobs in economy Immigrant employment decreases domestic employment 1-for-1 Immigrant work undesirable No domestic workers displaced LO

Immigration Reform 2007: Bush Administration proposed reform Increase funding for use along U.S. – Mexican Border Increase fines for those who hire illegal immigrants Rebalance current system for number of legal immigrants on work Visas Rejected by Congress LO