Uneven Burdens
The burden on state and
local governments that Saiz
is referring to has to do
with the use of public services by immigrants, primarily those out of status, and
particularly education and
health services. Critics of
immigration cite the use of
these services, coupled with
the claim that out-of-status
immigrants do not pay
taxes, to advocate for
stricter law enforcement of
immigration laws. The question is whether the data support these
claims.
A 2007 report by the Center for American Progress looked at
the use of health services by immigrants. It found the data do not
support the claim that immigrants have higher rates of consumption of health services than do native populations, especially
emergency room services. For instance, the areas of Miami–Dade,
Phoenix and Orange County (large urban areas with high immigration) have lower rates of emergency use than do areas with low
immigration, like Cleveland and Little Rock.
The Texas State Comptroller recently reported that unauthorized immigrants added an additional $17.7 billion a year to the
Texas economy. 4 On a net basis (the difference between state tax
receipts from immigrants and the cost of providing services to
them), the state comes out ahead by about $430 million per year.
However, consistent with Saiz’ findings, there are unequal
income distributions at the city and county level.
A 2006 report by the Migration Policy Institute examined
other studies that also found costs and benefits from immigration are not evenly allocated. At the federal level, immigrants
contribute substantially in taxes and increase the productivity of
the macro economy. At the local level, tax income from immigrants is not enough to offset the cost of public services to the
population. These distribution issues notwithstanding, the vari-
With the U.S. unemployment rate at almost double digits, many unemployed workers are taking a second look at jobs they weren’t willing to do in the past, jobs that have
typically been performed by immigrants. Interest in these jobs by
“native” workers is renewing the debate about the economic
impact of immigration, both legal and unauthorized.
Economics 101 says that an increase in the supply of labor
leads to a lower equilibrium wage. However, this analysis assumes
all other factors that influence the supply and demand for labor
remain constant. In the real world, this is rarely the case. Thus,
most academic economic studies have focused on estimating the
impact of immigration on
the wages of native workers.
For example, according
to the work of Harvard
University professors
George Borjas and
Lawrence Katz, 1
immigration has a negative impact
(approximately eight percent) on the wages of native
workers with lowest skills,
namely Blacks and
Hispanics without a high
school education. However,
their methodology has been
challenged in the past by
Columbia University professor Jagdish Bhagwati, 2 and more
recently by University of California at Berkeley professor David
Card. 3
According to Professor Card, the data used by Borjas and Katz
is fuzzy, and their methodology gives a one-sixth chance that the
effect of immigration on wages is actually positive. In contrast,
Professor Card compares wage trends in cities with large immigrant populations to cities having few immigrants and finds very
little wage difference.
LOOKING FORWARD The prospects of comprehensive reform are better than ever. When crafting a new set of immigration laws, Congress would be well advised to treat immigration primarily as a labor/employment law and focus its attention on using it to import and retain the human capital the United States will need over the next generation. Secondarily, tax burdens and collections must be coordinated and allocated between states and the federal government so that they are effective, fair and transparent. Finally, the next law’s specifics regarding economics hould be based on validated studies and hard data rather than the current reliance on narrative biases, whether pro or con migration.
The Economics of Migration
BY ENRIQUE LOPEZLIRA
all workers, both native and immigrants. In fact, Borjas and Katz
acknowledge that taking this other effect into account, immigra-
tion’s impact on the wages of native workers would be dampened
50 percent.
Various non-academic studies have been broader in scope,
focusing on the costs and benefits from immigration. Albert Saiz
with the Federal Reserve Bank of Philadelphia found immigration
helps keep inflation low, and boosts rents and housing values.
However, Saiz found that while immigration benefits the average
U.S. taxpayer, it does burden some state and local governments,
raising income distribution issues in the short run.
Issue Interactivity = Complexity
Whether one agrees with Borjas and Katz, or with Card, the economic impact of immigration is much more complex than the
narrow question these studies focus on. In fact, one of the reasons
why the relation between immigration and wages is not clear-cut
is that it cannot be reduced to a simple one-to-one relationship.
For instance, if employers are able to reduce labor costs by hir-
ing immigrant workers, they will be able to devote resources to
other factors of production like physical capital. This increase in
capital will increase the productivity, and ultimately the wages, of
ENRIQUE LOPEZLIRA is professor of economics at Mesa Community
College and adjunct professor of business and finance at Grand Canyon
University in Arizona. He can be reached at elopezlira@mesacc.edu.
