Weighing the Costs and Benefits of Mexican Immigration

Center for Comparative Immigration Studies

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However, the results also indicate that illegal immigration imposes significant costs on public coffers. Illegal immigrants from Mexico primarily receive welfare benefits on behalf of their American-born children. Overall, the results in Figure 16 indicate that whether legal or illegal, immigrants from Mexico make heavy use of means-tested programs. The findings in Figure 16 also suggest that one possible unintended consequence of legalizing Mexican illegals already in the country would be to substantially increase their use of means-tested programs.

Use of means-tested programs by illegal immigrants from Mexico points to a fundamental problem that would almost certainly exist with any guestworker program. Even if guestworkers are made technically ineligible for means-tested programs, it seems almost certain that they would make use of them anyway by receiving benefits on behalf of their native-born children.

After all, the findings in Figure 16 indicate that despite an outright ban on their use, illegals from Mexico actually use such programs at higher rates than natives in many cases. Any guestworker program would bring in large numbers of immigrants from Mexico with very low skill levels and resulting low incomes. One of the most troubling social trends in recent years has been the rapid increase in the number of people without health care insurance. Although there was a decline in the number of uninsured between and , Increases in the size of the uninsured population strain the resources of health care providers who struggle to provide services to the uninsured.

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Moreover, Americans with insurance have to pay higher premiums as health care providers pass along some of the costs of treating the uninsured to paying costumers. Taxpayers, too, are affected as federal, state, and local governments struggle to provide care to the growing ranks of the uninsured. Although there is no single government program involved, providing care to the uninsured is a significant expense for society, with much of the cost borne by taxpayers and those who do have health insurance.

More than half For natives the corresponding figure is Not surprisingly, lack of insurance is also a severe problem among the U. Figure 17 shows the percentage of Mexican immigrants and their American-born children without health insurance. The figure shows that The figure also shows that The fact that Mexican immigrants and their children are more likely than natives to use Medicaid means that by itself, lack of Medicaid use does not explain why so many Mexican immigrants and their children do not have health insurance.

The results in Figure 17 show that Although they comprise 4. Mexican immigrants who arrived between and and the children born to these immigrants after they settled in the United States accounted for Even after they have lived in the country for many years, lack of health insurance remains a severe problem among Mexican immigrants. Figure 18 shows health insurance coverage among Mexicans based on years of residence in the United States. For those who have lived in the United States between 11 and 20 years, Thus, while Mexican immigrants clearly make progress the longer they live in the United States, those who have lived in the country for many years are still more than twice as likely as natives to be without health insurance.

Among the nearly three million illegal aliens from Mexico in the CPS, we estimated that more than two-thirds, However, lack of insurance is common even among the estimated 4. We estimated that Clearly, lack of health insurance coverage among the Mexican-born population is not simply a matter of legal status. As is the case with poverty, income, and welfare, the low skill level of Mexican immigrants has a direct bearing on why so many lack insurance.

Because of the limited value of their labor in an economy that increasingly demands educated workers, many immigrants hold jobs that do not offer health insurance, and their low incomes make it very difficult for them to purchase insurance on their own. As we have seen, the social and economic status of Mexican immigrants lags far behind that of natives and other immigrants. The primary reason for this is that a very large share of Mexican immigrants lack a formal education. In comparison to natives, Figure 19 shows that poverty, lack of health insurance, and welfare use are all dramatically higher for dropouts than for Mexican immigrants with a college education.

For example, Mexican immigrants who have not graduated from high school are almost three times as likely as natives to live in poverty. In contrast, only 2. In terms of welfare use, households headed by Mexican immigrants who are dropouts are more than twice as likely as natives to use at least one major welfare program.

While households headed by a college-graduate Mexican immigrant are still somewhat more likely than native households to use welfare, the difference is nowhere near as large as it is between natives and dropout Mexican immigrants. The one area where education seems to have less of an impact is on health insurance coverage. Lack of health insurance coverage among college-educated Mexican immigrants is common, with Of course, more-educated Mexican immigrants are still more likely than those with little education to have insurance. But it appears that a large share of the difference remains even after controlling for education levels.

Other factors such as cultural attitudes toward insurance likely explain why such a large percentage of Mexican immigrants do not have health insurance. The findings in Figure 19 are certainly to be expected. Education levels have become a key determinant of economic and social success in United States. Thus, more-educated Mexican immigrants tend to have a socio-economic standing that more closely resembles that of natives than do less-educated Mexicans. Because such a large share of Mexican immigrants lack a high school education and few are college graduates, the overall position of Mexicans is dramatically lower than natives.

In addition, this large gap in education levels explains to a large extent why Mexican immigrants are unable to close the gap with natives even after they have lived in the United States for many years. In the last few years, a good deal of attention has been focused on the dramatic increases in enrollment experienced by many school districts across the country.

Department of Education recently reported that the number of children in public schools has grown by nearly 8 million in the last two decades. All observers agree that this growth has strained the resources of many schools districts. While it is sometimes suggested that most of the increase is the result of the children of baby boomers reaching school age, data from the CPS indicate that "the baby boom echo," as it has sometimes been called, does not explain the growth in the number of children in public schools.

Table 7 shows that there are 8. The children of Mexican immigrants account for 3. The children of immigrants account for such a large percentage of the school-age population because a higher proportion of immigrant women are in their childbearing years and immigrants tend to have more children than natives. This is especially true for Mexican immigrants. Thus, by itself Mexican immigration accounted for more than a third of the national increase in the size of the school-age population since the early s. In some states the impact of Mexican immigration is even larger.

Table 7 shows that Mexican immigration has had a very substantial impact on the size of the school-age population in states such as California, Texas, Arizona, and Nevada. Of course, a dramatic increase in enrollment may not create a problem for public education if tax revenue increases proportionately. Since tax payments generally reflect income levels, the tax contributions made by immigrant families are almost certainly not enough to entirely offset the costs they impose on public schools.

This is especially likely to be the case because Mexican households have twice as many school-age children on average as do native households. The absorption capacity of American public education is clearly an important issue that needs to be taken into account when formulating a sensible immigration policy. Failure to consider this question may have significant consequences for schools in a number of states. This report has focused on the characteristics of Mexican immigrants at the national level. While legal immigration policy and the level of resources devoted to controlling illegal immigration are determined at the national level, the impact of immigration is felt at the local level.

Table 8 reports selected characteristics for Mexican immigrants in the states with the largest Mexican-born populations. Turning first to citizenship rates, Table 8 shows that in every state with a large Mexican population, citizenship rates among Mexican immigrants are very low. The highest percentage is found in Texas, where 25 percent of Mexican immigrants are naturalized citizens.

It should be noted that, as already discussed, nearly 40 percent of the Mexican-born population in the CPS are illegal aliens. This significantly reduces overall citizenship rates among Mexican immigrants. However, even if one removes illegals, it would still mean that fewer than one-half of legal Mexican immigrants have become citizens. In Arizona, they comprise 25 percent of all those in or near poverty.

In Texas, it is 19 percent and in California, Mexican immigrants and their young children account for 34 percent of all persons in or near poverty. Like those for poverty, the figures for welfare use are much higher among Mexican than native households in every state with the exception of Illinois. As a result of their high use rates, Mexican immigrant households account for a significant share of the welfare case load in a number of states.

In California, almost one-fourth of all households in the state receiving welfare are headed by a Mexican immigrant. In Arizona, Mexican households account for 22 percent of all households using welfare and in Texas, 14 percent of households receiving welfare are headed by a Mexican immigrant.

Turning to health insurance coverage, Table 8 indicates that, in every state, Mexican immigrants and their children are more than twice as likely as natives to be without health insurance. In some states, lack of health insurance among Mexican immigrants is more than triple that of natives. Not surprisingly, Mexican immigrants and their minor children make up a large percentage of the entire uninsured population in a number of states.

In California, Mexican immigrants and their children comprise more than one-third of the uninsured. To a very significant degree, the health insurance crisis in California is being driven by immigration from Mexico. The same is true in Arizona, where 31 percent of the uninsured are either Mexican immigrants or the U. The findings in Table 8 indicate that Mexican immigration has dramatically increased the size of the low-income and uninsured populations as well as increased the overall welfare case load in several states.

Clearly, the impact of Mexican immigration on the states is something that policy makers need to consider carefully. Table 8 indicates that failure to consider these effects has significant consequences for a number of states. So far, this report has generally concentrated on public service use by Mexican immigrants; however, this is only half of the fiscal equation. Immigrants also pay taxes to federal, state, and local governments.

The CPS contains estimated federal income tax liabilities for those in the sample. These estimates are based on adjusted gross income, number of dependents, and other tax characteristics. These estimates are useful because they can provide some insight into the likely tax payments made by immigrants and natives. Because of their much lower incomes and their larger family size, Mexican immigrants pay dramatically less in federal income taxes than do natives.

By design, the federal income tax system is supposed to tax those with higher income and fewer dependents at higher rates than those with lower income and more dependents. So the much lower income tax contributions of Mexican immigrants simply reflect the tax code and not some systematic attempt by Mexican immigrants to avoid paying taxes. In , 74 percent of households headed by natives had to pay at least some federal income tax, compared to only 59 percent of Mexican immigrant households.

Even if one confines the analysis to legal Mexican immigrants, the gap between their tax contributions and those of natives remains large. Thus, the very low tax contribution of Mexican immigrants is not simply or even mostly a function of legal status, but rather reflects their much lower incomes and larger average family size. The much lower tax payments made by Mexican immigrants point to a fundamental problem associated with unskilled immigration that seems unavoidable. While much of the fiscal concern centers on use of means-tested programs, clearly tax payments matter at least as much when evaluating the fiscal impact of Mexican immigration.

Changing welfare eligibility or other efforts designed to reduce immigrant use of public services will not change the fact that Mexican immigrants pay significantly less in taxes than natives. While the above analysis provides some insight into the impact of Mexican immigrants on tax receipts at the federal level, it does not show the total fiscal impact of Mexican immigration. Over the last decade, a number of studies have attempted to estimate the total fiscal impact tax payments minus services used of immigrants on the United States at the federal, state, and local levels.

The study, conducted in , found that more-educated immigrants tend to have higher earnings, lower rates of public service use, and as a result pay more in taxes than they use in services. In contrast, the NRC found that because of their lower incomes and resulting lower tax payments coupled with their heavy use of public services, less-educated immigrants use significantly more in services than they pay in taxes. Thus, when all immigrants are examined they are found to have a modest negative impact on public coffers.

These figures are only for the original immigrant, they do not include public services used or taxes paid by their U. Using the fiscal analysis developed by the NRC, it is possible to roughly estimate the fiscal effect of adult Mexican immigrants on the United States. Since a very large share of Mexican immigrants have little formal education, the fiscal burden they create seems unavoidable.

The modern American labor market offers very limited opportunities for the unskilled — immigrant or native. It therefore should come as no surprise that they use a great deal more in public services than they pay in taxes during the course of their lives. While consistent with previous research as well as common sense, the large fiscal deficit created by Mexican immigration should sound a cautionary note to those who argue that there is no harm in allowing large numbers of unskilled workers from Mexico into the country. Even if employers wish to have access to unskilled immigrant labor, the cost to taxpayers indicates that for the nation this may not be wise.

Mexican immigration becomes, in effect, a subsidy for employers of unskilled labor, with taxpayers providing services such as education, health insurance and medical care, and income-transfer programs such as the Earned Income Tax Credit to workers who, because of their low incomes, pay nowhere near enough in taxes to cover their consumption of services. The primary focus of this report has been the impact of Mexican immigrants on the United States. The analysis indicates that the welfare use, income, educational attainment, health insurance coverage, and other measures of socio-economic status for Mexican immigrants lag far behind natives and other immigrant groups.

This is true even for those Mexicans who have lived in the country for many years. So far in this report we have not examined persons of Mexican ancestry who themselves were born in the United States. Since the Current Population Survey asks respondents where their parents were born as well as ancestry for persons who are Hispanic, it is possible to examine by generation what is often referred to as the Mexican-origin population.

Turning to educational attainment first, the figure shows significant progress between the first generation and second generation. Second-generation Mexican-Americans are much more likely to have completed high school than Mexican immigrants. This is also true for the third generation.

However, relative to other natives, second- and third-generation Mexican-Americans have much higher dropout rates. They also have much lower rates of college graduation than other natives. Perhaps even more troubling is that there is no evidence of progress between the second and third generation.

About one-fourth of second- and third-generation Mexican-Americans have not completed high school. At the high end of the education distribution, there is some evidence of progress between the first, second, and third generations. But despite progress, even third-generation Mexican-Americans are much less likely than other natives to have completed a four-year college degree.

Turning to welfare use, the figure indicates that second-generation Mexican-Americans are somewhat less likely to use welfare than Mexican immigrants. However, there seems to be no progress in lowering their use of welfare between the second and third generation. In fact, welfare use rises in the third generation, making them as likely to use welfare as Mexican immigrants. Moreover, even the second generation is still much more likely to be on welfare than are natives in general. There is significant progress from the first to the second generation and then a deterioration among third-generation Mexican-Americans.

As with welfare use, poverty seems to increase slightly between the second and third generations. And of course, in comparison to other natives, native-born Mexican-Americans, both second and third generation, lag far beyond. While it is beyond the scope of this study, it is likely that several factors — including discrimination and culture — explain why persons of Mexican ancestry remain well behind other natives. One factor that is likely to have contributed to the pattern in Figure 20 is the low skill level of Mexican immigrants who entered the country in decades past and whose children are represented by the second and third generations.

Figure 20 indicates that many of their children have found it very difficult to close the gap with other natives. Research by George Borjas indicates that those immigrant groups that arrive with fewer skills tend to remain poorer than those groups who arrive better educated. He concludes that, "differences in skills and labor market outcomes may persist across generations and need never converge.

If this trend continues, many of the children of current and even future Mexican immigrants may also find it difficult to reach parity with other Americans. Thus the low skill level of Mexican immigrants now entering the country may have significant long-term consequences for Mexican-Americans over much of this century.

This report has found that Mexican immigration creates significant challenges for the United States. It has added significantly to the size of the poor and uninsured U. For example, while Mexican immigrants and their young children comprise 4. They also comprise Perhaps most troubling, the findings show that the welfare use, income, and other measures of socio-economic status of legal Mexican immigrants do not converge with natives over time.

Legal Mexican immigrants who have lived in the United States for many years do not enjoy a standard of living similar to that of natives. Their low incomes coupled with high use of means-tested programs create very significant fiscal costs for the country as well. While employers may want increased access to unskilled Mexican labor, this cheap labor comes with a very high cost. The primary reason why Mexican immigrants have not faired well is that a very large share have little formal education at time when the U.

The heavy concentration of Mexican immigrants at the bottom of the labor market also is likely to have a significant negative effect on wages for unskilled natives who are in direct competition with them. Mexican immigrants now comprise 22 percent of all the high school dropouts in the work force, while they comprise 1. Therefore, it is only the lowest-skilled workers who are adversely affected by Mexican immigration.

Because the vast majority of natives have completed high school and are employed in higher-skilled occupations, most natives do not face significant job competition from Mexican immigrants. However, there are more than 10 million adult native-born workers who lack a high school education in the U. And those native-born workers adversely affected by Mexican immigration are among the poorest in the United States and are also disproportionately native-born minorities. Moreover, it is difficult to justify reducing the wages of unskilled workers since their wages, unlike those for other workers, actually declined in the s, indicating that there is no shortage of high school dropouts in the United States.

Although reducing the wages for unskilled workers creates benefits for consumers, the benefits are estimated to be extremely small because wages paid to high school dropouts account for only a tiny fraction of the expenses incurred by employers. For example, high school dropouts are estimated to account for less than 3.

Thus even if Mexican immigration reduced their wages by 10 percent, this would reduce consumers prices by less than four-tenths of one percent. And this is true only if employers pass on all of the saving to their customers. It is simply not possible for a technology-based economy such as the United States, in which skilled labor and capital comprise the overwhelming share of the economic output, to derive large benefits from unskilled immigration. Moreover, because it harms the poor and creates significant fiscal costs for taxpayers, it would seem to make far more sense to reduce Mexican immigration legal and illegal in the future and at the same time work to improve the skills of legal Mexican immigrants already here so as to facilitate their integration into American society.

The findings in this report indicate that the primary reason for the higher rates of poverty, welfare use, lack of health insurance coverage, and the large fiscal costs Mexican immigrants impose on taxpayers stem largely from the fact that most have little formal education. Since the long-term trend of increasing wages for skilled workers while declining or stagnant wages for the unskilled is likely to continue, the most obvious means to improve the situation for Mexican immigrants already here would be to increase their skills.

Weighing the Costs and Benefits of Mexican Immigration: The Mexican-American Perspective

Our efforts to integrate Mexican immigrants into the economic mainstream should therefore focus on job retraining and other efforts designed to improve their ability to compete in the modern American economy. Increasing their ability to compete in the labor market by improving their job skills would not only improve their economic situation, it would reduce the fiscal costs they impose on taxpayers.

Clearly, the success of the millions of Mexican immigrants and their children who now live in the United States is important not only to their future but also important to the future of the country as a whole. Of course, immigration policy should not be changed in order to reduce Mexican immigration specifically; rather it should be changed to reduce unskilled immigration in general. Any change would have to apply to all countries — not just Mexico. By limiting which relatives are eligible for admission, we could reduce the number of immigrants who are admitted without regard to their skills.

The preference for the spouses and children of non-citizens should also probably be eliminated, since these provisions apply to family members acquired after the alien has received a green card, but before he or she has become a citizen. Changing legal immigration in this way would significantly reduce the number of legal immigrants from both Mexico and other countries admitted in the future without regard to their ability to compete in the modern U. The analysis done here indicates that there are at least 3 million and perhaps closer to 4 million illegal aliens from Mexico living in the United States.

Illegal immigration from Mexico has added significantly to the size of the poor and uninsured populations in the United States. Because they receive benefits on behalf of their native-born children, illegal immigrants have also added to the welfare caseload.

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But perhaps most important, in a nation based on the rule of law, it should not be acceptable to have millions of people living in the country without permission. Three steps are needed to make worksite enforcement more effective: Third, more needs to be done at the border. There are approximately four million people qualified for immigration to the United States but who are waiting their turn to receive the limited number of visas available each year in the various family categories.

In addition to reducing the incentive to come before a green card is issued, cuts in legal immigration would also be very helpful in controlling illegal immigration because communities of recent immigrants serve as magnets for illegal immigration, providing housing, jobs, and entree to America for illegals from the same country.

While some may favor guestworker programs in an effort to have access to immigrant labor without the fiscal costs, the heavy use of means-tested programs by the families of illegal aliens shows that this is unlikely to work.

While illegals are generally barred from using means-tested programs, this has not prevented them from making use of such programs because they typically receive welfare on behalf of their the U. Because the primary reason for their low incomes is that so many are unskilled and this fact would not be changed by making them guestworkers, a new guestworker program is likely to impose significant costs on American taxpayers. In addition, by increasing the supply of unskilled workers, guestworkers would still adversely affect the wages of natives and immigrants already here working in low-wage, unskilled jobs.

Finally, it is worth considering that in every country that has attempted to have a guestworker program, it has always resulted in permanent immigration. The findings in this report indicate that if the United States wishes to pursue its national interests, then reducing immigration from Mexico would make a great deal of sense. However, there are other arguments that could be marshaled in support of continued high levels of immigration from Mexico.

First, there is simple altruism. If this is to be the argument for Mexican immigration, then policy makers and others need to make it clear to the American public that although Mexican immigration imposes very real costs on taxpayers and especially on the working poor, the costs incurred are necessary in order to give some fraction of the Mexican population a chance at a better life.

Failure to acknowledge the costs is likely to invoke a very negative reaction from the public as they become aware of the problems created by Mexican immigration. Additionally, once we make the benefits for foreign citizens the justification, immigration in effect becomes a foreign aid program. As such, the costs of Mexican immigration to taxpayers need to be evaluated like any other foreign aid program. It would probably make more sense to provide various forms of development assistance to that country, thereby reaching a much larger share of its population.

A second argument for Mexican immigration combines altruism with practical considerations about the need for the United States to act as an "escape valve" for Mexico. It is often suggested that because Mexico finds it difficult to meet the employment and other needs of its own people, the United States should allow in immigrants to prevent social discontent from possibly destabilizing Mexico.

Of course, there is a very strong counter position which points out that by providing an escape valve, the United States may in fact reduce pressures for change in Mexico, thereby hindering its development. But again, if the escape valve argument is to be the primary justification for Mexican immigration, policy makers in the United States need to honestly acknowledge the costs to the American people.

Another argument is that United States simply cannot control illegal immigration at a reasonable cost. Of course, the primary problem with this argument is that, at present, it is entirely undemonstrated. Partly at the behest of the business community, Congress has chosen not to take even the most elementary steps necessary to reduce illegal immigration, such as creating a computerized system to allow employers to verify the legal status of all new hires or allocating the necessary funds so that the INS can hire the worksite inspectors it needs.

Even when the INS has tried to stop the employment of illegals, Congress has intervened to prevent it from enforcing the law. If policy makers decide that the costs are indeed too high, such a determination must also be accompanied by an honest public discussion about the enormous costs of unskilled immigration.

Because the two countries share a mile border, there can be no doubt that the futures of Mexico and the United States are intimately bound together for all time. While migration is only one of the many issues affecting the two countries, it is perhaps the most intractable because the interests of the two countries do not coincide. Whereas the Mexican government has made clear its desire that more immigrants be allowed to come north, the available data suggest that the costs to the United States clearly outweigh the benefits.

Therefore, finding common ground on the issue will be extremely difficult. While no one debates the right of the United States to decide who may immigrate, pursuing its national interests by reducing unskilled immigration from Mexico may adversely affect relations with Mexico. However, there are many other important issues such as trade, investment, the environment, and drug interdiction on which the interests of the two countries do coincide and therefore a strong working relationship is likely to continue.

Putting aside the effect on U. Even though economic analysis indicates that it is simply not possible for unskilled immigration from Mexico to create significant benefits for United States, those businesses that rely on unskilled labor will likely fight very hard to make sure that there is an abundant supply of such labor in order to keep down their labor costs.

Mexican immigration, in effect, acts as a subsidy for employers who use unskilled, low-wage labor. The fact that many Mexican families are dependent on taxpayers to provide means-tested programs, and that Mexican immigration contributes to school overcrowding and drives down wages for the working poor, is not something employers take into account.

The costs are diffuse, borne by all taxpayers, while employers have a very strong incentive to minimize their labor costs. By providing food stamps, free school lunches, Medicaid, the EITC, and other programs, taxpayers are in effect paying part of the salary for these workers. This is an extremely desirable situation for employers, and like any business receiving a subsidy, those who use unskilled labor will try very hard to retain the subsidy. The fact that some businesses wish to retain this subsidy cannot, however, justify the costs to taxpayers, the dramatic increase in poverty it creates, or the reduction in wages for the poorest American workers.

Therefore, political leadership needs to acknowledge these problems and work to lower the level of unskilled immigration from Mexico. Equally important, policy makers should also devote considerable attention to the plight of legal Mexican immigrants and their young children already here. While its primary purpose is to collect information on employment, the survey contains detailed questions on income, welfare use, health insurance coverage, and many other topics.

There are a number of competing proposals being discussed by Congress. The various guestworker programs differ mainly over the question of legal permanent residency. After that, the workers would be required to return to Mexico and apply for re-entry. Following three successive years, the workers would return to Mexico, fulfill a one-year waiting period, and could then reapply for the program.

The plan includes hour and wage protection for the workers, but it does not include the prospect of permanent residence. In contrast, Senator Gordon H. Under their plan, illegal aliens who have worked in agriculture for six years would be eligible for permanent residency. Other members of Congress have proposed granting an amnesty to some or all of the illegal immigrants living in the United States. Senator Henry Reid D-Nev. Representative Luis Gutierrez D-Ill. Think tanks and academics have also contributed to the discussion.

With regard to the criteria of the programs, the panel listed equitable labor rights, social and health protections, and permanent residence eligibility for qualified workers. The Mexican government has remained cautiously ambiguous when commenting about immigration. Central to their concerns are the "regularization" of Mexican illegal aliens. While this includes permanent visas, employment protections, and Social Security benefits, they have not voiced support for any specific legislative proposal.

While its primary purpose is to collect information on employment, the Survey contains detailed questions on income, welfare use, health insurance coverage, and many other topics. All persons born in the United States, including the children of illegal aliens, are considered natives. The foreign-born population in the CPS includes perhaps five million illegal aliens an estimated three million from Mexico and also persons on long-term temporary visas, such as students and temporary workers.

The survey is considered such an accurate source of information on the characteristics of the foreign-born because unlike the decennial census, households in the CPS receives an in-person visit from a Census Bureau-trained interviewer. For Mexican illegals 18 years of age and older, I further assume that they do not have a high school degree, are less than 60 years of age, and are not married to a U. For persons under age 18, I assume that their parents met the above criteria and that they, too, do not use cash assistance and are themselves non-citizens. One disadvantage of this approach is that it does not include Mexicans who are in the country illegally but arrived prior to However, past research indicates that this number is likely to be very small and does not have a significant effect on the data.

Weighing the Costs and Benefits of Mexican Immigration

It should also be noted that because education is one of the factors used to determine legal status, it is not possible to estimate the educational attainment of illegal Mexican immigrants. Office of Policy and Planning U. Immigration and Naturalization Service. Freeman, and Lawrence F. Economic, Demographic, and Fiscal Effects of Immigration.

Immigration in a Changing Economy: Hamermesh and Frank D. Rickman, and William Levernier. Evidence from a Panel of States. Katz and Alan Krueger. Have Computers Changed the Labor Market? National Bureau of Economic Research.

This allows natives to specialize in those things they do well, leaving those things they do less well to immigrants — the concept of comparative advantage. Since workers are doing what they do best, there should be some increase in the overall level of wealth in the United States from immigration. However, since Mexican immigration is providing the United States primarily with increased access to unskilled labor, which the labor market puts a very low value on, the overall benefit from Mexican immigration must be very small.

This is especially true because imports and labor-saving devices in many cases could be substituted for Mexican immigrant labor. It does not tell us the fraction of goods and services consumed by typical consumers that are provided by high school dropouts. For example, more affluent Americans who employ domestic servants are probably in a better position to benefit from reductions in wages for unskilled workers than is the average American.

This means the impact of Mexican immigration on prices will not be felt uniformly by all households in the United States. In , Mexican immigrants account for 15 percent of labor costs for employers in just the agriculture sector rather than the 14 percent reported in Table 5. Major welfare programs included: Persons living by themselves or with persons to whom they are unrelated are in effect their own family, and their poverty status is calculated based on their individual income. Poverty status is not determined for persons who are institutionalized.

Unrelated individuals under age 15, who are mostly foster children, are not included in most official poverty statistics, and they are not included in this study. The March CPS asks families about their annual income in the year prior to the survey. The native-born children of immigrants are linked with their parents. The numbers in Figure 17 do not include these children. While these numbers may seem low, it should be remembered that these figures include households headed by the elderly and young single people, who generally have no children living with them.

In this report, we ignore immigrant children and confine our estimates only to adults 21 years of age and older. Based on the March CPS, we find that the average age for an adult Mexican immigrant is 30 years and that 67 percent are dropouts, 21 percent are high school graduates only, and 12 percent have at least some college. The NRC study found that the lifetime fiscal effects for persons who are 30 when they arrive is as follows: We would like to thank the authors of the NRC study for providing us with their detailed fiscal estimates by age and educational attainment.

A significant portion of these individuals are the family members of IRCA amnesty beneficiaries. It seems unwise to continue to separate these families. Therefore, it would make sense to grandfather in those already on the waiting list. However, no future applications would be taken for the spouses and minor children of LPRs. A Theoretical Empirical, and Policy Analysis. Paper presented at the annual meeting of the Population Association of America. Home Report Immigration From Mexico.

Camarota on July 1, About the Author Steven A. Findings Large-scale immigration from Mexico is a very recent phenomenon. In , the Mexican immigrant population was less than ,, compared to nearly 8 million in The Mexican immigrant population is highly concentrated, with 78 percent living in just four states, and nearly half living in California alone. Almost two-thirds of adult Mexican immigrants have not completed high school, compared to less than 10 percent of natives.

As a result, the primary effect of Mexican immigration on the U.

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Since the vast majority of natives have completed high school and are employed in higher skilled occupations, most natives do not face significant job competition from Mexican immigrants. By increasing the supply of unskilled labor, Mexican immigration during the s likely has lowered the wages of workers who lack a high school education by roughly 5 percent. The native-born workers adversely affected by Mexican immigration are already among the poorest in the United States. More than one-fourth of the native-born working poor lack a high school education.

Natives without a high school education also comprise a large share of Americans trying to move from welfare to work. There is no evidence to indicate that the United States has a shortage of unskilled workers that needs to be satisfied by immigration from Mexico. The real wages adjusted for inflation of high school dropouts who work full-time actually declined 7. Also, the number of jobs available for unskilled workers declined by , Although Mexican immigration is likely to have a significant impact on the wages of unskilled natives, its overall impact on prices in the United States is very modest because unskilled labor accounts for a very small share of economic output.

By lowering the wages of unskilled workers, Mexican immigration in the s reduced prices by between 0. As a result, immigration from Mexico is almost certainly not an effective tool for holding inflation in check during periods of economic expansion. Even after welfare reform, welfare use among Mexican immigrant households remains much higher than that of natives. Moreover, Mexican immigrant welfare use remains much higher than that of natives, even among Mexican immigrants who have lived in the United States for many years see Figure 1.

More than one-half Even among legal Mexican immigrants who have lived in the country for more than 20 years, more than one-third are still uninsured see Figure 1. By itself, Mexican immigration accounts for 2. The impact on public schools in some states has been even larger. Because of their much lower average incomes and resulting lower tax payments, coupled with their heavy use of means-tested programs, Mexican immigrants have a significant negative effect on public coffers.

The lower educational attainment of Mexican immigrants appears to persist across generations. The high school dropout rates of native-born Mexican-Americans both second and third generation are two and a half times that of other natives. As a result, native-born Mexican Americans lag far behind other natives in income, welfare use, and other measures of socio-economic well being.

The findings of this report point to two conclusions: First, policy makers in the United States need to consider programs designed to improve the labor market skills of legal Mexican immigrants so that they can better compete in the modern American economy. Second, because Mexican immigration reduces wages for the poorest American workers and imposes significant fiscal costs without generating significant economic benefits, the United States should consider policies designed to reduce unskilled legal and illegal immigration from Mexico and elsewhere.

Policy Recommendations There are a number of potential reasons why the United States may wish to allow in large numbers of people from Mexico. Improving the Situation for Legal Mexican Immigrants The findings in this report indicate that the primary reason for the higher rates of poverty, welfare use, and lack of health insurance coverage — and the large fiscal costs Mexican immigrants impose on taxpayers — is that most Mexican immigrants have little formal education. Reducing Future Unskilled Legal Mexican Immigration In most years, more than 90 percent of visas allotted to Mexican immigrants go to the family members of U.

Reducing Future Illegal Mexican Immigration Reducing illegal immigration should also be made a much higher national priority. Guestworker Programs Do Not Solve the Problem While some may favor guest worker programs in an effort to have access to immigrant labor without the fiscal costs guestworkers would be ineligible for welfare , the heavy use of means-tested programs by the families of illegal aliens shows that this is unlikely to work. Introduction At their summit in February of this year, the new presidents of Mexico and the United States promised to work together to create an "orderly framework for migration" between the two countries.

A Highly Concentrated Population In addition to the rapid increase in numbers, Mexican immigration is highly concentrated. Educational Attainment of Mexican Immigrants Looking at educational attainment is a useful starting point because to a large extent income, what kind of job one holds, and socio-economic status in general are closely tied to educational attainment.

Distribution of Mexican Immigrants Across Occupations Table 2 shows the distribution of Mexican immigrants across occupations. Illegal Aliens from Mexico A significant percentage of Mexican immigrants live in the United States without authorization. Distribution of Legal and Illegal Immigrants Across Occupations The figures in Table 2 for legal and illegal Mexican immigrants are based on the above method of distinguishing between the two groups.

Distribution of Mexican Immigrants Across Industries In addition to the kind of jobs they hold, the impact of Mexican immigration on the United States is also dependent on their employment by industry. Distribution of Legal and Illegal Immigrants Across Industries Table 3 also shows the distribution of legal and illegal Mexican immigrants across occupations. Impact of Mexican Immigration on Wages and Prices in the United States As indicated by Figure 6 page 20 , Mexican immigration has significantly increased the supply of workers who lack a high school education, while having a very small effect on the supply of workers in other educational categories.

Most Natives Do Not Face Job Competition from Mexican Immigrants The often-made assertion that immigrants only take jobs Americans do not want is partly correct, at least in regard to Mexican immigrants. Unskilled Natives and Mexican Immigrants Hold Similar Jobs Table 4 reports the distribution across occupations of full-time native workers who lack a high school education and full-time Mexican immigrants. Impact of Mexican Immigration on Prices To determine the actual impact of Mexican immigration on wages and thus prices, there are four questions that must be answered: The available data can be used to provide reasonable answers to these questions: Which workers are affected?

The answer to this question is straightforward. As we have seen, the impact of Mexican immigration is almost exclusively on unskilled workers. Using post immigration as the time frame, there were 1. Thus, post Mexican immigration increased the supply of unskilled labor by This figure is reported in the first column of Table 5. As a point of comparison, post Mexican immigration has increased the supply of all other workers by 0. Although previous research indicates that unskilled immigration reduces wages, there is some debate about the size of the wage effects of immigration on unskilled workers.

Therefore, Column 2 in Table 5 reports three different assumptions about the elasticity of wages for unskilled workers. That is, it provides three different assumptions about the size of the wage response for each one-percent increase in the supply of unskilled labor. Column 3 reports the total impact of Mexican immigration on labor incomes for unskilled workers by multiplying the elasticity assumptions in Column 2 by the total increase in the supply of unskilled labor found in column 1. Column 3 indicates that the total reduction in wages for dropouts is likely to range from While this is a wide range, the most likely impact is probably found in the middle range value of Thus, Mexican immigration in just the s is likely to have had a significant impact on the wages of high school dropout workers in the United States.

Percentage of economic output accounted for by dropouts. This estimate is consistent with previous research, which has attempted to measure unskilled labor as a share of the economy. Column 5 reports the total savings to employers from Mexican-induced reductions in the prices of unskilled labor.

The middle range value indicates that s Mexican immigration is likely to have reduced costs for employers by 0. The percentage of savings passed on to consumers. At present there is no research to indicate what share of immigrant-induced reductions in labor costs are passed on to consumers. In a perfectly competitive market, competition should force firms to pass on all of the savings to consumers.

But in the real world there are always some obstacles to perfect competition and thus it is almost certain that some of the savings will not be passed on. Therefore, Columns 6, 7, and 8 report the effect on prices based on the assumption that businesses pass on 33, 66, or percent of the saving to their customers. Concentrating again on the middle-range value, and assuming that two-thirds of the savings are passed on to consumers, the total impact of Mexican immigration on prices in the United States is estimated at 0. But even assuming that the impact on wages is larger and even assuming that all of the savings makes its way to consumers, Mexican immigration in the s could only reduce prices by three tenths of one percent.

Impact on Native-Born Workers The analysis of wages and prices indicates that Mexican immigration in the s has probably reduced wages for high school dropouts by between 3 and 8 percent. Workers Harmed Are the Poorest and Most Vulnerable Although most natives are not in direct competition with Mexican immigrants, those who are include the poorest workers in the United States.

Wages for the Unskilled Declined in the s Although many in the business community continue to want access to unskilled labor from Mexico, the available evidence indicates that high school dropouts are not in short supply. Poverty and Income So far we have focused on the effect of Mexican immigration on the American economy. Mexican Immigrants Have Very High Poverty Rates Poverty among immigrants in general and Mexican immigrants in particular is significantly higher than that of natives.

But these principles were soon ignored and many Mexicans and former Mexicans lost their land and became strangers in their own country. The greater part of Mexican immigration had come to the U. They came for agricultural jobs in California and Colorado, they also worked as cooper miners in Arizona, coal miners in Colorado and as track layers for western railroads.

The Chinese, Japanese and East Indians used to be also a main labor sources but they could not entry the country anymore because of the restrictive immigration laws. As a consequence the industrial mining and commercial agriculture became dependent on Mexican workers. Afterwards, many of them went north and crossed the border to the U.

Although there were so many of them, they were still immigrants and they were confronted with racism and discrimination. Native Mexican Americans faced similar problem, but because of their longer stay in U. Also employers and government of U.

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During and after World War I more and more cheap labor was required in U. The Mexican Revolution, accelerated modernization in the U. Thus resulted the lack of manpower on U. To satisfy the needs on workers, the U. This program guaranteed as well that Mexican workers would receive specified minimum wages and certain living conditions. Furthermore the transportation and other costs would be paid by the U.

Its peak was achieved in , when four hundred fifty thousand braceros entered. Apparently many of these workers settled and brought families to the U. Also legal immigration, the Mexicans who entered as resident aliens with permanent status, was growing in numbers. According to the census there were 2. These historical factors lead us to the current situation of Mexicans in U. During last decades the economy of Mexico experienced considerable changes connected to the transition to the neoliberal way of economical development and enhancement of processes of regional integration.

Considering the rates of development, Mexico was included into the number of most successfully developing countries of the world and occupied the key positions among other countries in Latin America. If it is true, why are there still Mexicans who wish to leave their homes and immigrate to the U. S, legally or illegally?

The essential difference in a standard of living and wage rates is a major reason of Mexican immigration to the United States. According to the neoclassical theory, labor sources stream direct from countries with low wages to the countries with high wages, while the capital moves in opposite direction. So jobs and higher wages attract many Mexicans immigrants to the Unites States. The second important factor is the neighborhood of the U.

It is clear that it is much easier for Mexicans to enter the United States than for many other immigrants, who live at the longer distance or even overseas. It seems to me, that although the Mexico is one of the most successfully developing countries nowadays, the job opportunities and wage rates are still better in U. Even if the Mexican workers have to work for lower wages they are still searching for chances to emigrate and are seeking a better financial life in U. The first aspect to point out is that Mexican Americans, compared to other minority groups in U. S, have relatively low naturalization rates.

According to Oxford English Dictionary to naturalize means to make someone who was not born in particular country a citizen of that country. Correspondent to numerous studies, the longer immigrants have been in U. Immigrants, who speak English well, are highly educated or have high incomes, are most likely to be naturalized. Business economics - Business Management, Corporate Governance.

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