- Email: [email protected]
Issues in the Economics of Immigration
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Book reviews / The Social Science Journal 39 (2002) 137–153
Issues in the Economics of Immigration Edited by George J. Borjas; Chicago: University of Chicago Press, 2000, 399 pages This volume consists of 9 papers presented at a conference held by the National Bureau of Economic Research (NBER) in 1998. While immigration is not as hot a topic as it was a decade ago, the size of the phenomenon assures its continuing importance to policy makers. Borjas notes in his introduction that the percentage of annual U.S. population growth accounted for by immigrants is approaching the 40–50% levels reached during the Great Migration (1881–1924), and the foreign-born fraction of the population increased from 4.7 to almost 10% between 1970 and 1998. The volume emphasizes two general topics of concern: the factors that influence the economic performance of immigrants and the economic impacts of immigration on different aspects of American society. Borjas contributed the first essay on the economic progress of immigrants. The standard Americanization hypothesis predicts that immigrants enter the U.S. labor market at lower wages than native workers, but the wage gap narrows significantly over time. Tracking specific cohorts of immigrants in the 1970, 1980, and 1990 censuses, Borjas finds that in 1970 immigrants 25–34 years old earned 13% less than natives in the same age group, but 10 years later the gap was 6%, and 20 years later only 3%. But the economic effects of the assimilation process varied significantly, depending on an immigrant’s country of origin and initial human capital endowment. He concludes that the Americanization process does not “even out” the playing field, and it may actually increase income inequality among immigrants of different national origins and levels of education. Julian R. Betts and Magnus Lofstrom examine the trends and implications of the educational attainment of immigrants. They find that immigrants’ level of education relative to the native-born fell between 1970 and 1990. This education gap explains over half the earnings gap between immigrants and natives. Nevertheless, the absolute level of education among immigrants rose over the same period and the top half of the immigrant population was as highly educated as the top half of natives. Not surprisingly, the return to education acquired after immigrating to the USA is higher than the return to that acquired in the country of origin, but this varies by country. They also present some indirect evidence that immigrants tend to “crowd out” natives from attending school. This result would need direct evidence from case studies to be credible. Edward P. Lazear examines the issue of whether immigrants contribute to a diversity in the labor force that increases overall productivity and the wages of native workers. He develops a theoretical model that implies gains from diversity when immigrants have skills different from native workers, have knowledge relevant to native workers, and can communicate with native workers. Based on data from the 1990 census, he concludes that current immigration policy, favoring immigrants who are family members of U.S. residents, does not enhance productive labor force diversity. He recommends instead a policy that sells immigration slots, or one that ranks immigrants based on labor market characteristics. Edward Funkhouser looks at the trend in employment rates of immigrants. He finds that there is a large increase in employment rates in the initial years after immigration and an eventual convergence in employment rates between newer and older immigrant cohorts. The initial disadvantage and subsequent change in employment rates is larger for more skilled
Book reviews / The Social Science Journal 39 (2002) 137–153
145
immigrants, suggesting a lack of transferability of human capital accumulated in the home country during the initial years following migration. Guillermina Jasso, Mark R. Rozenzweig, and James P. Smith take a critical look at the conventional wisdom that the average skills of recent immigrants have been declining relative to those of the U.S. population. They argue that errors in identifying recent immigrants in census surveys have led to data sets flawed with large numbers of non-legal immigrants and non-immigrants. They feel more accurate data are to be found in records of legal immigrants collected by the U.S. Immigration and Naturalization Service (INS). Analyzing these alternative data for 1972–1995, they find that for most of the period the labor market quality of male legal immigrants has been as high or higher than that of male native-born workers and that there has been a steady rise in the quality of legal immigrants during the last half of the 1980s and throughout the 1990s. David Card, John DiNardo, and Eugena Estes look at trends in the economic status of immigration’s “second generation”—the offspring of immigrant parents between the 1940s and the 1990s. While finding some decline in the economic status of the children of immigrants in the lower deciles of the income distribution, this is not found in the middle and higher deciles. Overall, children of immigrants tend to have higher levels of education and earnings than children of comparable natives have. In light of the recent law banning new immigrants from Medicaid eligibility for 5 years after arrival, Janet Currie examines the question of whether children of immigrants are more likely than children of natives to make use of Medicaid. She finds that while children of immigrants are more likely than other children to be eligible for Medicaid, the percentage of immigrant children actually covered by Medicaid is only slightly higher than for natives. She attributes this to the lower take-up rates of benefits among eligible immigrants versus natives and to recent eligibility expansions that increased coverage more among natives than immigrants. She concludes that the costs of Medicaid eligibility for immigrant children were relatively small (less than $6 million annually) and costs under the new law may be higher if lack of preventive medical care for children of new immigrants increases emergency room visits. Alan L. Gustman and Thomas L. Steinmeyer compare the Social Security benefits of immigrants versus the native-born. They feel that the present system of treating the previous time of residence outside the USA as zero earnings years is inefficient. This increases benefits not only for immigrants with lower lifetime earnings, but also for those who have similar wealth and incomes as the native-born. The formula particularly increases benefits for immigrants with high incomes who have only been here a decade or two before retiring. They recommend a system of pro-rating Social Security benefits for immigrants on the basis of a fraction of a standard 35–40 year base period in the USA. Lower income immigrants adversely affected by this revision could have their benefits augmented by Supplemental Security Income (SSI), food stamps, and Medicaid. They note that even if the current rules for the foreign-born somewhat distort the income redistribution intent of the social security system. Overall, immigrants contribute more to the system than they receive in benefits. In the final essay, Kristine F. Butcher and Anne Morrison Piehl examine how changes in U.S. immigration laws and INS regulations have affected California’s criminal justice system. They find that more severe sentencing standards for immigrants convicted of crimes and required deportation for crimes other than violent felonies (especially drug offenses)
146
Book reviews / The Social Science Journal 39 (2002) 137–153
resulted in steadily increasing numbers of immigrants being incarcerated and for longer average terms. While there is little evidence that immigration results in higher crime rates, they conclude that policy changes based on that assumption have increased the direct costs to the California criminal justice system as well as the indirect costs to both immigrant and native inmates. Most of the papers in this volume are methodologically narrow, depending on econometric analysis of data within the framework of human capital models, but they deal with relatively new topics or re-examine standard topics from a different slant or with new data. While some of the authors reach conclusions that are at odds with conventional wisdom and others that may be politically unpopular, I was impressed with the relative modesty of their claims. All the authors go out of their way to indicate how complex immigration issues are and to emphasize the limitations of their particular results. Given the relatively advanced econometric analysis in almost all the essays, I was surprised by their readability. Full econometric results are presented in tables, but key points are explained in the text of the essays in a way that non-economists can understand. A minor disappointment is that references are only presented for each individual essay, whereas a bibliography for the volume as a whole would have been very valuable. The quality of this collection is as high as the two previous NBER-sponsored ones on immigration, and I recommend it as an essential resource for any social scientist interested in the economic aspects of immigration. Stewart Long Department of Economics, California State University Fullerton, CA 92834, USA E-mail address: [email protected] PII: S0362-3319(01)00163-X
Making Social Science Matter: Why Social Inquiry Fails and How it can Succeed Again Bent Flyvbjerg; Cambridge, England: Cambridge University Press, 2001, 204 pages In Making Social Science Matter, Bent Flyvbjerg addresses an important problem for all areas of research in the social sciences. He argues that the current obsession in the social sciences, of trying to be like the natural sciences, leads to poor research and a fundamental misunderstanding of the strengths proper research in the social sciences can demonstrate. Further, he offers his own new methodology for the social sciences that his argues will allow good and important work to be done in the social sciences using its strengths rather than trying to emulate the natural sciences. In doing so, Flyvbjerg relies heavily on social philosophy from Aristotle to the present day in order to put together a method for what he calls phronetic social science. He is careful to remark at the outset that his method for phronetic social science is not the only such method that might be developed. The book is divided into two sections. The first section consists in Flyvbjerg’s argument that the path that social science is on is not the one best suited to answer the questions social science is meant to answer. This argument is made in two parts and contains both a positive
Book reviews / The Social Science Journal 39 (2002) 137–153
Issues in the Economics of Immigration Edited by George J. Borjas; Chicago: University of Chicago Press, 2000, 399 pages This volume consists of 9 papers presented at a conference held by the National Bureau of Economic Research (NBER) in 1998. While immigration is not as hot a topic as it was a decade ago, the size of the phenomenon assures its continuing importance to policy makers. Borjas notes in his introduction that the percentage of annual U.S. population growth accounted for by immigrants is approaching the 40–50% levels reached during the Great Migration (1881–1924), and the foreign-born fraction of the population increased from 4.7 to almost 10% between 1970 and 1998. The volume emphasizes two general topics of concern: the factors that influence the economic performance of immigrants and the economic impacts of immigration on different aspects of American society. Borjas contributed the first essay on the economic progress of immigrants. The standard Americanization hypothesis predicts that immigrants enter the U.S. labor market at lower wages than native workers, but the wage gap narrows significantly over time. Tracking specific cohorts of immigrants in the 1970, 1980, and 1990 censuses, Borjas finds that in 1970 immigrants 25–34 years old earned 13% less than natives in the same age group, but 10 years later the gap was 6%, and 20 years later only 3%. But the economic effects of the assimilation process varied significantly, depending on an immigrant’s country of origin and initial human capital endowment. He concludes that the Americanization process does not “even out” the playing field, and it may actually increase income inequality among immigrants of different national origins and levels of education. Julian R. Betts and Magnus Lofstrom examine the trends and implications of the educational attainment of immigrants. They find that immigrants’ level of education relative to the native-born fell between 1970 and 1990. This education gap explains over half the earnings gap between immigrants and natives. Nevertheless, the absolute level of education among immigrants rose over the same period and the top half of the immigrant population was as highly educated as the top half of natives. Not surprisingly, the return to education acquired after immigrating to the USA is higher than the return to that acquired in the country of origin, but this varies by country. They also present some indirect evidence that immigrants tend to “crowd out” natives from attending school. This result would need direct evidence from case studies to be credible. Edward P. Lazear examines the issue of whether immigrants contribute to a diversity in the labor force that increases overall productivity and the wages of native workers. He develops a theoretical model that implies gains from diversity when immigrants have skills different from native workers, have knowledge relevant to native workers, and can communicate with native workers. Based on data from the 1990 census, he concludes that current immigration policy, favoring immigrants who are family members of U.S. residents, does not enhance productive labor force diversity. He recommends instead a policy that sells immigration slots, or one that ranks immigrants based on labor market characteristics. Edward Funkhouser looks at the trend in employment rates of immigrants. He finds that there is a large increase in employment rates in the initial years after immigration and an eventual convergence in employment rates between newer and older immigrant cohorts. The initial disadvantage and subsequent change in employment rates is larger for more skilled
Book reviews / The Social Science Journal 39 (2002) 137–153
145
immigrants, suggesting a lack of transferability of human capital accumulated in the home country during the initial years following migration. Guillermina Jasso, Mark R. Rozenzweig, and James P. Smith take a critical look at the conventional wisdom that the average skills of recent immigrants have been declining relative to those of the U.S. population. They argue that errors in identifying recent immigrants in census surveys have led to data sets flawed with large numbers of non-legal immigrants and non-immigrants. They feel more accurate data are to be found in records of legal immigrants collected by the U.S. Immigration and Naturalization Service (INS). Analyzing these alternative data for 1972–1995, they find that for most of the period the labor market quality of male legal immigrants has been as high or higher than that of male native-born workers and that there has been a steady rise in the quality of legal immigrants during the last half of the 1980s and throughout the 1990s. David Card, John DiNardo, and Eugena Estes look at trends in the economic status of immigration’s “second generation”—the offspring of immigrant parents between the 1940s and the 1990s. While finding some decline in the economic status of the children of immigrants in the lower deciles of the income distribution, this is not found in the middle and higher deciles. Overall, children of immigrants tend to have higher levels of education and earnings than children of comparable natives have. In light of the recent law banning new immigrants from Medicaid eligibility for 5 years after arrival, Janet Currie examines the question of whether children of immigrants are more likely than children of natives to make use of Medicaid. She finds that while children of immigrants are more likely than other children to be eligible for Medicaid, the percentage of immigrant children actually covered by Medicaid is only slightly higher than for natives. She attributes this to the lower take-up rates of benefits among eligible immigrants versus natives and to recent eligibility expansions that increased coverage more among natives than immigrants. She concludes that the costs of Medicaid eligibility for immigrant children were relatively small (less than $6 million annually) and costs under the new law may be higher if lack of preventive medical care for children of new immigrants increases emergency room visits. Alan L. Gustman and Thomas L. Steinmeyer compare the Social Security benefits of immigrants versus the native-born. They feel that the present system of treating the previous time of residence outside the USA as zero earnings years is inefficient. This increases benefits not only for immigrants with lower lifetime earnings, but also for those who have similar wealth and incomes as the native-born. The formula particularly increases benefits for immigrants with high incomes who have only been here a decade or two before retiring. They recommend a system of pro-rating Social Security benefits for immigrants on the basis of a fraction of a standard 35–40 year base period in the USA. Lower income immigrants adversely affected by this revision could have their benefits augmented by Supplemental Security Income (SSI), food stamps, and Medicaid. They note that even if the current rules for the foreign-born somewhat distort the income redistribution intent of the social security system. Overall, immigrants contribute more to the system than they receive in benefits. In the final essay, Kristine F. Butcher and Anne Morrison Piehl examine how changes in U.S. immigration laws and INS regulations have affected California’s criminal justice system. They find that more severe sentencing standards for immigrants convicted of crimes and required deportation for crimes other than violent felonies (especially drug offenses)
146
Book reviews / The Social Science Journal 39 (2002) 137–153
resulted in steadily increasing numbers of immigrants being incarcerated and for longer average terms. While there is little evidence that immigration results in higher crime rates, they conclude that policy changes based on that assumption have increased the direct costs to the California criminal justice system as well as the indirect costs to both immigrant and native inmates. Most of the papers in this volume are methodologically narrow, depending on econometric analysis of data within the framework of human capital models, but they deal with relatively new topics or re-examine standard topics from a different slant or with new data. While some of the authors reach conclusions that are at odds with conventional wisdom and others that may be politically unpopular, I was impressed with the relative modesty of their claims. All the authors go out of their way to indicate how complex immigration issues are and to emphasize the limitations of their particular results. Given the relatively advanced econometric analysis in almost all the essays, I was surprised by their readability. Full econometric results are presented in tables, but key points are explained in the text of the essays in a way that non-economists can understand. A minor disappointment is that references are only presented for each individual essay, whereas a bibliography for the volume as a whole would have been very valuable. The quality of this collection is as high as the two previous NBER-sponsored ones on immigration, and I recommend it as an essential resource for any social scientist interested in the economic aspects of immigration. Stewart Long Department of Economics, California State University Fullerton, CA 92834, USA E-mail address: [email protected] PII: S0362-3319(01)00163-X
Making Social Science Matter: Why Social Inquiry Fails and How it can Succeed Again Bent Flyvbjerg; Cambridge, England: Cambridge University Press, 2001, 204 pages In Making Social Science Matter, Bent Flyvbjerg addresses an important problem for all areas of research in the social sciences. He argues that the current obsession in the social sciences, of trying to be like the natural sciences, leads to poor research and a fundamental misunderstanding of the strengths proper research in the social sciences can demonstrate. Further, he offers his own new methodology for the social sciences that his argues will allow good and important work to be done in the social sciences using its strengths rather than trying to emulate the natural sciences. In doing so, Flyvbjerg relies heavily on social philosophy from Aristotle to the present day in order to put together a method for what he calls phronetic social science. He is careful to remark at the outset that his method for phronetic social science is not the only such method that might be developed. The book is divided into two sections. The first section consists in Flyvbjerg’s argument that the path that social science is on is not the one best suited to answer the questions social science is meant to answer. This argument is made in two parts and contains both a positive