AMERICA’S STAKE in IMMIGRATION Why Almost Everybody Wins

Group Members Dương Vạn Nhất Trần Quang Ngân Nguyễn Trung Đức Đỗ Linh Phương Trần Quỳnh Mai

Contents General View 1 Immigration & Globalization 2 Immigration and Complementarities 3 Other impacts & Summary 4

Summary Great majority of American workers get benefit Compete with original labor  Reduce wages Immigrants Or Immigration laws evolve Int. labor force  Contribute to future prosperity of America.

Immigration and Globalization  2005, 2.9 percent of the World’s population are Immigrants.  2004, Trade: 27% of global GDP 20% total savings: outside the original Country Immigration restrictions Potential output Immigration and Globalization

Differences in Wages: 1870, The U.S. Wage = 2.5 x Ireland Wage 1990, The U.S. Wage = 7 x Mexico Wage Transportation cost: Small fraction of Income Culture and ideology: Languages Attitudes toward social welfare programs The seasonings

Immigration and Globalization Productive roles Skills Incumbent Workers Return on investment Cheaper labor Business Owners Complement Compete Immigration workers

Immigration and Globalization Less Educated Workers: Most restricted Undocumented

Effect of immigration EmploymentWages Short-term Wages Long-term Immigration and Complementarities

Native workers Interactive tasks New immigrants Manual tasks High educated and older immigrants When immigration happens…

Immigrant country  Brain gain  Sustain high rates of technological innovation.  Number of PhD. Increases Migrant country  Brain drain  Inflow of funds:  Unilateral transfers  FDI

Immigration and Complementarities The interaction of wages Average wage: determined by average labor productivity Foreign worker: less education and no degrees, lack of language and cultural. Native worker: 89% had a high school degree and more. –Most of manual labor will be performed by foreign- born labor. –Native workers will be able to specialize in language intensive and interactive tasks.  gain more wages.  Immigration tool advantage of new job opportunities for native worker

Immigration didn’t displace native worker doesn’t imply that it didn’t affect their wages.  Native and foreign-born worker are not perfect substitutes in the labor market.

EXAMPLE ON CONSTRUCTION INDUSTRY Manual Intensive Job Interactive Intensive Job

EXAMPLE ON CONSTRUCTION INDUSTRY College Degree High School Degree Structural Engineers Managers Project Leader Structural Engineers Managers Project Leader Brick Layer Worker Supervisor Brick Layer Worker Supervisor

In short term:  Immigrants INCREASE worker supply  DECREASE wage of manual-intensive Workers However  Cheap Labour INCREASE Investment (expanding/start up)  Demand for Labor INCREASES (Supervisor, Manager,…)  Senior Immigrants and Native workers take advantage of the new job opportunities created by newly immigrated workers EXAMPLE ON CONSTRUCTION INDUSTRY

Case key points  People migrate due to the differences in wages among countries.  International immigration benefits both native workers and the immigrants themselves.

Other impacts & Summary

Impacts of Immigration on economy  New immigrations creates jobs in sufficient numbers to leave employment unharmed, even in the relatively short run  The income levels and tax contributions of immigrants increase over time and from generation to generation  They do not consider economic contributions such as consumer purchasing power and the formation of businesses, both of which create jobs and provide federal, state, and local governments with additional revenue through sales, income, business, and property taxes

Immigrants account for very little of the increase in poverty in the United States

Immigrants do not strain the U.S. healthcare system  A 2005 study found that "per capita health care expenditures were 55 percent lower for immigrants than for natives in 1998, even after adjusting for sociodemographic characteristics. On average, immigrants received about $1,139 in health care, compared with $2,546 for native- born residents. Although immigrants comprised 10 percent of the U.S. population in 1998, they accounted for only 8 percent of U.S. health care costs."

Immigrants are a net fiscal benefit to the U.S. economy  the average fiscal impact of immigrants…is positive in part because they tend to arrive at young working ages, in part because their descendants are expected to have higher skills and incomes, in part because they pay taxes for some items, such as national defense and interest on the federal debt, for which they do not impose costs, and in part because they will help to pay the public costs of the aging baby- boom generations

Immigrants pay more in taxes than they consume in public benefits  The study found that immigrants become net economic contributors after 10 to 15 years in the United States

Immigrants are essential to the growth of the U.S. labor force  The 2005 Economic Report of the President points out that "between 1996 and 2003, when total employment grew by 11 million, 58 percent of the net increase was among foreign-born workers," almost all of whom had arrived since The immigrant share of employment growth was even higher in particular occupations, amounting in the period to 86 percent of the 1 million new positions in "precision production, craft, and repair"

Immigrants create jobs  Given that 40 percent of the 44.3 million Latinos and 67 percent of the 13.1 million Asians in the United States were foreign-born as of 2006, immigrants account for a large share of the hundreds of billions of dollars in Latino and Asian purchasing power and entrepreneurship.

Immigrants do not undermine the wages of most native-born workers  The White House Council of Economic Advisers concluded in a 2007 report that roughly 90 percent of native-born workers experience wage gains from immigration, which total between $30 billion and $80 billion per year