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

Averaging 1 million per year in Quotas, refugees, and H1-B provision Number of Immigrants Economic immigrants Legal immigrants in U.S. Averaging 1 million per year in Quotas, refugees, and H1-B provision One-third of population growth One-half of labor force growth 25-2 LO1

Number of Immigrants 25-3 LO1

Illegal immigrants in the U.S. Estimated from Census data Number of Immigrants Illegal immigrants in the U.S. 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 25-4 LO1

Number of Immigrants Total 1,130,818 1. Mexico 164,920 2. China 64,238 3. Philippines 60,029 4. India 57,304 5. Dominican Republic 49,414 6. Cuba 38,954 7. Vietnam 29,234 8. Colombia 27,849 9. South Korea 25,859 10. Haiti 24,280 25-5 LO1

Decision to Migrate Take advantage of superior economic opportunities Escape political or religious persecution Reunite with family members Earnings opportunities Increase value of human capital Moving costs Distance Follow beaten path Age Other factors 25-6 LO2

Earnings opportunities Increase value of human capital Moving costs Decision to Migrate Earnings opportunities Increase value of human capital Moving costs Distance Follow beaten path Age Other factors 25-7 LO2

Economic benefits exceed costs Other issues Economic Effects Personal gains Economic benefits exceed costs Other issues Uncertainty and imperfect information Backflows Skill transferability Self-selection 25-8 LO3

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 25-9 LO4

Impacts on Wages, Efficiency, Output United States Mexico a A b Wage Rate Wage Rate Wu d D We We g B Wm G Du Dm c f F C Quantity of Labor (Millions) Quantity of Labor (Millions) Immigration impacts wages, employment, and output 25-10 LO4

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 25-11 LO4

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 25-12 LO4

Fiscal burden > taxes paid Wages will not equalize Fiscal Impacts Fiscal burden > taxes paid Wages will not equalize Research findings are mixed 25-13 LO4

Fixed number of jobs in economy 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 25-14 LO5