Chapter 23 Immigration Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

23-2 Number of Immigrants Economic immigrants Legal immigrants Migration averaged 1 million per year Quotas, refugees, and H1-B provision One-third of population growth One-half of labor force growth LO1

23-3 Number of Immigrants LO1

23-4 Number of Immigrants Illegal immigrants Estimated from Census data 250,000 per year on average High proportion from Mexico and Central America Total of 11.1 million residing in the U.S. in 2012; 58% from Mexico LO1

23-5 Decision to Migrate Take advantage of superior economic opportunities Escape political or religious oppression Reunite with family members LO2

23-6 Decision to Migrate Earnings opportunities Increase value of human capital Moving costs Distance Follow beaten path Age Other factors LO2

23-7 Economic Effects Personal gains Economic benefits exceed costs Other issues Uncertainty and imperfect information Backflows Skill transferability Self-selection LO3

23-8 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 LO3

23-9 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 LO3

23-10 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 LO3

23-11 Complications and Modifications Migration costs not zero Remittances redistribute income Backflows: temporary migration Immigrant workers as complementary resources vs. substitute resources Expansion of capital in some industries Full employment vs. unemployment Negative self-selection LO3

23-12 Fiscal Impacts Fiscal burden > taxes paid Wages will not equalize Research findings are mixed LO3

23-13 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 Compensating wage differential LO4

23-14 Startling Slowdown in Illegal Immigration Number of illegal immigrants in the U.S. tripled between 1990 and 2007 That number fell 8% in 2009 because of deceased job prospects during the recession Illegal immigration population leveled off 2010 and 2011 at 11.1 million Falling birthrates Better local job opportunities Government policies Stronger border enforcement

23-15 Optimal Immigration Immigration can either benefit or harm a nation, depending on several factors Immigration should be expanded until its MB = MC The level of immigration is set through quotas, special provisions, border enforcement and immigration laws LO5