Cardiff de Alejo Garcia

Migration patterns and New York City's population

Forbes posted an interactive map last week showing domestic migration patterns into and out of American cities.  Here's what it looks like for New York:

Compared to San Francisco (which has mostly inward migration) or Detroit (mostly outward), New York appears to show a relatively balanced mix of people moving into and out of the city.  But have a look at this chart, taken from a report by the New York Department of City Planning: 

As you can see, from 2000-2007 New York lost quite a few more people to other states than it gained from them.  The city's population continued growing for a couple of reasons: First, the net domestic out-migration was partially offset by immigrants from other countries.  Second, the number of births in the city outnumbered deaths by more than the number of people lost from net migration. 

And it's been like this since the end of the 1970s:

I always get a surprised reaction when I tell someone that more people leave New York each year than arrive.  The common understanding seems to be that New York is such an attractive place that for every person that leaves, someone will always be willing to take her place.

But that's not really how it works.  Sure, people love coming here, but a lot of people also get tired of being here after a while.  Some go back to their home state.  Some will stick around long enough to start a family before moving to a more child-friendly place.  And some who emigrated here from abroad because of the city's ethnic neighborhoods, or because they had family here, will find reasons to try somewhere else.

The city maintains its vitality because the people who come here to take their places tend to be "concentrated in the young working ages, which has been relatively unchanged since 1980. More than two-thirds of all in-migrants to New York City were between 18 and 44 years of age, with almost one-half between 25 and 44. This reflects the important impetus that New York City’s labor market opportunities provide for both new immigrants and native-born young people from other parts of the nation."

 

The report concludes that young people and immigrants "continue to energize New York, fueling the city’s labor force, creating and frequenting its businesses, and sustaining its neighborhoods."

It's no secret that New York is one of the most tolerant American cities for immigrants.  This is partly attributable to historical reasons, but it's also because immigrants do their part to keep the population stable and growing.  Owing to their higher fertility rate, they account for a healthy portion of the "natural" growth shown above.  They make it possible for the city to have the kind of "churn" described in the paper.  

I can't find more updated numbers, but to back this up a bit, as of 2000 about 50% of all births in the City were to foreign-born women; adding together immigrants and their offspring born here accounts for 55% percent of the people in New York.  (That's from page 35 of this report (pdf), and see also page 4 of this one (pdf) to read more about how this impacts specific neighborhoods.)

And most anybody who has lived here long enough will recognize the importance of immigrants to the labor force.  Too many more numbers will bore you, so instead I'll just post another pretty chart (click for full size):

So if you wonder why New York residents are more favorably disposed towards liberalized immigration policies, it's not just because we're so far from the country's southern border or because we're all a bunch of squishy East Coast liberal types.  The benefits of being surrounded by a large immigrant presence are tangible here.

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A couple of paragraphs from the report about the destinations of New York's out-migrants, plus another chart, are beneath the fold:

Robert Shapiro on immigration reform

Ryan Avent interviews interviews Robert Shapiro, author of a recent paper on immigration's impact on American wages, and writes:

I particularly appreciated the point that undocumented workers will find it risky to move around the country. Their geographic mobility is therefore limited, which means that costs are concentrated locally. At the same time, upward mobility is curtailed since some opportunities are too risky to pursue, which increases the time illegal immigrants spend in poverty.

As I posted earlier, the ability of illegal immigrants to move easily from where jobs are scarce to where jobs are abundant is a boon not only to them but to the US economy.

Shapiro also has interesting things to say about about immigration and entrepreneurship, the composition of where immigrants are coming from, and about the family values of illegal immigrants.  The whole interview is just ten minutes.  Check it out:

 

Do immigrants compete with Americans for the same jobs?

One of the more intriguing concepts I've come across in the research about immigration and the US economy goes by the unappealing name of "imperfect substitutabity", which was studied by economists Gianmarco IP Ottaviano and Giovanni Peri in this paper. 

Previous studies had assumed that you could "substitute" a US-born worker with a foreign-born worker in the same job if they had similar levels of schooling and work experience.  So a foreigner with, say, a college degree and two years work experience is assumed to be competing for the same jobs as a US-born worker with the same background (as defined by those two metrics).

Ottaviano and Peri claim this isn't true: their research shows that these two workers are likely to choose different fields of work despite their ostensibly similar background. 

In other words, they're not competing—and not only are they not competing, but the ways in which their different jobs complement each other bring real benefits to the economy:

Conceivably native and foreign-born workers should not be much easier to substitute in production than two U.S. born workers with 5 years of experience difference. One reason for this imperfect substitutability is that, for given skills, U.S. and foreign born workers often choose different occupations (see Card 2001 for more detail). This is particularly true for workers with high and low levels of education (rather than with intermediate levels). For instance among the lowly-skilled (HSD), foreign born workers are highly represented in occupations like tailoring (where 54% were foreign born in 2000) and plaster-stucco masoning (where 44% were foreign-born in 2000), while U.S.-born workers are highly represented among, say, crane operators (where less than 1% was foreign-born in 2000) and sewer-pipe cleaners (where less than 1% foreign-born). Since one would be hard pressed to call these services perfectly substitutable, there is no reason to believe that payments for such services should be equalized. A similar argument applies for the highly-skilled (COG). For instance foreign-born workers are highly represented in scientific and technological fields (45% of medical scientists and 33% of computer engineers are foreign-born) while U.S.-born workers are highly represented among lawyers (less than 4% are foreign-born) or museum curators and archivists (less than 3% are foreign-born). Moreover, even within the same profession, often the U.S. and foreign-born provide different services, and hence benefit from complementing each other, regardless of education level. For instance, Chinese and American cooks do not produce similar meals, nor do Italian and American tailors provide identical types of clothes. Similarly, a European-trained physicist (more inclined towards a theoretical approach) is not perfectly substitutable with a U.S.-trained one (more inclined towards an experimental approach), and a French architect will likely create a starkly different building than an American one."

This goes straight to the idea of whether or not immigrants take away jobs that would otherwise belong to Americans.  Ottaviano and Peri clearly think not, and their reasoning makes sense to me. 

That being said, in the interest of fairness I'll also point to this research paper from Harvard's George Borjas, who challenges their claims about imperfect substitutability.  Ottaviano and Peri have been having an ongoing debate over the last half-decade with Borjas about the impact of immigration on the wages of US-born workers.

The economic costs of stopping illegal immigration

James Fallows:

The American economy is geared to having a large quasi-legal or illegal immigrant presence; many Americans like the economic results but don't like the economic, social, legal, etc consequences. Since the US is not going to deport millions upon millions of immigrants, any conceivable deal requires BOTH a promise to restrict future illegal flow and something short of mass roundups and eviction for those already here.

This is worth digging into a little deeper.  According to The Economic Logic of Illegal Immigration (pdf), a report from economist Gordon Hanson written in 2007, policies focused on halting and reversing the flow of illegal immigration would be actively harmful to the economy and would cause serious disruptions to the labor market in the regions where illegal immigrants are more concentrated.

To understand why, it's first important to know that illegal immigrants are highly responsive to market forces—much more so than legal immigrants, who have to contend with legal hassles that make it challenging to move from one job to another.  Writes Hanson:

Illegal migrants tend to arrive in larger numbers when the U.S. economy is booming (relative to Mexico and the Central American countries that are the source of most illegal immigration to the United States) and move to regions where job growth is strong. Legal immigration, in contrast, is subject to arbitrary selection criteria and bureaucratic delays, which tend to disassociate legal inflows from U.S. labor-market conditions.

Not only can illegal immigrants move quickly to where the jobs are, but the types of jobs they tend to fill are those that Americans gradually have become, over the last few decades, either over-qualified for or less willing to do.  It's true that we're just now coming out of a recession and unemployment is high, but at some point that will change and the previous trend is likely to continue.  Hanson writes:

Due to steady increases in high school completion rates, native-born U.S. workers with low schooling levels are increasingly hard to find. Yet these workers are an important part of the U.S. economy—they build homes, prepare food, clean offices, harvest crops, and take unfilled factory jobs. Between 1960 and 2000, the share of working-age native-born U.S. residents with less than twelve years of schooling fell from 50 percent to 12 percent. Abroad, low-skilled workers are more abundant. In Mexico, as of 2000, 74 percent of working-age residents had less than twelve years of education. Migration from Mexico to the United States moves individuals from a country where their relative abundance leaves them with low productivity and low wages to a country where their relative scarcity allows them to command much higher earnings.

You can draw a couple of conclusions from this beyond the repudiation of the normal complaint that immigrants "steal" American jobs.  The first is that even if you believe that immigration's impact on the economy is negligible at best (more on this in a minute), the beneficial impact on the immigrants themselves is huge.  Maybe that shouldn't be a primary consideration in formulating national policy, but it should count for more than nothing.

Second, any policies that address immigration shouldn't just carve an easier path to legitimacy for illegal immigrants; they should also reduce the bureaucratic hassles experienced by legal immigrants and give them more flexibility to change jobs.  At least from the narrow perspective of economics, this kind of solution would be vastly preferable to one that spends more of the country's resources on tightening up the borders, deporting illegals, and cracking down on employers.

I should point out that Hanson is no squishy pro-immigration idealist.  This paper cites work by George Borjas in claiming that immigration does lower the wages of low-skilled Americans.  That decline is at least partially offset by the disinflation impact of low-skilled immigrants on goods and services—and even the conclusion about wages has been challenged by other economists, but I'll leave that for another day. 

Hanson also writes that the "net economic impact of immigration on the US economy appears to be modest," and accepts that lower-skilled immigrants are probably a (very small) drain on the country's public finances. Again, there are economists who disagree, but Hanson's point is that policies focusing on enforcing the border and reversing illegal immigration would have specific effects, and those effects are, on balance, damaging to national well-being.  This is especially the case when you take into account the costs associated with beefing up the border. 

Anyway, there are some things in the paper that can be quibbled with, as I just mentioned.  But it's an excellent read, and I'll close by quoting from parts of his conclusion at length:

Sending all illegal immigrants home would reduce the U.S. labor force by 5 percent and the low-skilled U.S. labor force (workers with less than a high school education) by 10 percent or more. In 2005, illegal immigrants accounted for 24 percent of workers employed in farming, 17 percent in cleaning, 14 percent in construction, and 12 percent in food preparation. Losing this labor would likely increase prices for many types of non-traded goods and services, increase wages for low-skilled resident labor, decrease incomes of employers that hire these workers, and increase the incomes of taxpayers that pay for the public services these individuals use. The net impact of these changes would be small, although in some regions and industries the dislocation caused by the labor outflow would be considerable. ...

Because the aggregate gains or losses are small, any new policy that requires a major outlay of funds would be likely to lower U.S. economic well-being. In a rush to secure U.S. borders, some policymakers insist that major efforts are needed to prevent continued illegal inflows from abroad. While the goals of reducing illegality and establishing greater border control are laudable, it would be difficult to justify massive new spending in terms of its economic return. ...

Illegal immigration is a persistent phenomenon in part because it has a strong economic rationale. Low-skilled workers are increasingly scarce in the United States, while still abundant in Mexico, Central America, and elsewhere. Impeding illegal immigration, without creating other avenues for legal entry, would conflict with market forces that push for moving labor from low-productivity, low-wage countries to the high-productivity, high-wage U.S. labor market.

*****

I'm in the process of aggregating some of the recent academic literature on immigration and the US economy for a series of blog posts.  It's taking me longer than I expected, so in the meantime I'll sporadically share some of the more interesting bits I come across. 

I highly recommend this post by Matthew Yglesias.  Also this one.

   

Arizona's idiotic immigration law

There are plenty of reasons to think that Arizona's new immigration law is bad policy, not the least of which is its moral repugnance.  But if you just want to stick to the practical side of things and appeal to the self-interest of Arizonans, you could do worse than this:

My colleague Dowell Myers points out that for the housing market in the US to remain healthy, we must "cultivate new immigrant residents." Arizona's new law, which would require immigrants (legal or otherwise) to "carry papers" creates what I would consider to be an atmosphere of hostility to immigrants--all immigrants. I am also awaiting the spectacle of a police officer demanding the "papers" of a native-born Latino.

In any event, people have a propensity to go where they feel welcome, and avoid places where they are not. Hostility to immigrants in general and Latinos in particular seems to be a political loser in California, so Arizona's policies may lead to higher demand for houses in California.

That's from public policy professor Richard Green (via Free Exchange), and it makes sense.  Arizona's politicians might claim that this law doesn't apply to citizens, and that American Latinos therefore needn't worry.  But it does create an exceedingly unpleasant environment, and it makes Hispanics living in Arizona less likely to stay (especially if family members are there illegally) and those outside the state less likely to move there.   

Opponents of liberalizing immigration laws like to focus narrowly on the supply side: they believe immigrants "steal" American jobs, push down wages, and are a drag on the public purse.  They're wrong about those things, but what's strange is how skeptics so rarely acknowledge that immigrants are also themselves a source of consumption and demand.  Pushing them out means fewer people dining in your restaurants, shopping in your malls, and yes, buying and renting your houses.  Free Exchange writes:

And consider that Phoenix home values have declined 52% from their peak, are still off on a year-over-year basis, and declined in both January and February of this year. As Mr Sumner put it, now might not be the optimal moment to send out a signal to property markets that Hispanic immigration is about to slow sharply. 

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This paper from Albert Saiz concludes: "Immigration pushes up rents and housing values in US destination cities. The positive association of rent growth and immigrant inflows is pervasive in time series for all metropolitan areas."

The best book I've read on the benefits of immigration, which are many and varied, is this one.