Immigration Policy
Gordon H. Hanson
University of California, San Diego
and National Bureau of Economic Research
July 2004

1. Introduction
Immigration is a source of contention in American life. The issue divides the
public, as it divides both major political parties. When asked about the contributions ofimmigrants to U.S. society, 70% of survey respondents recognize these as being positive.
But when asked about the level of immigration, 45% of survey respondents would preferto see the number of immigrants entering the country reduced (Scheve and Slaughter,
2001a). This leaves the public roughly divided between those that prefer scaling down
immigration and those that prefer maintaining it at current levels. Americans appear tobelieve that immigration offers a range of potential benefits to the country, but are also
concerned about the costs associated with admitting foreigners.
In this setting, reforming immigration policy might seem like a political minefield
better left unexplored.

However, ignoring immigration would be a mistake.

U.S.

immigration policy is broken and in need of repair. Perhaps the most glaring examples ofpolicy failure are that one third of immigration is illegal and the population of illegal
immigrants in the United States now exceeds 8 million individuals. Rampant illegality
undermines U.S. economic, legal, and political institutions and threatens U.S. national
security. Left alone, the problem will not solve itself. Each year 400,000 new illegal
immigrants enter the country. While the U.S. Border Patrol attempts to control illegal
immigration by policing U.S. borders, its efforts has been ineffective.
One reason that immigration creates political tension is that immigrant inflows in
the United States are growing steadily. Between 1970 and 2003, the share of the foreignborn in the U.S. population increased from 5% to 12%. Whereas previous generations ofimmigrants came mainly from Europe, today’s immigrants come primarily from Asia and1

Latin America. In contrast to their predecessors, many of today’s immigrants enter withskill levels far below those of the typical U.S. worker.
The economic rationale for immigration is that it increases national income forexisting residents. By expanding the labor pool, immigration helps utilize U.S. capital,technology, and natural resources more efficiently. However, the gains to immigration
are not evenly distributed.

Labor inflows tend to reduce incomes for workers that

substitute on the job with immigrant labor and to raise incomes for factors thatcomplement immigrant labor. Since many new immigrants are unskilled, immigration
tends to depress wages for low-skilled resident workers.
A second way in which immigration redistributes income is through its impact on
public finances. Given their relatively low skill levels, immigrants are much more likelythat the native-born to use public assistance and other entitlement programs. This hasremained true even after welfare reform in 1996, which restricted the access of
immigrants to many public benefits. Low immigrant skill levels mean low earningpotential and low contributions to tax revenues. The end result is that immigration
appears to create a net fiscal burden on U.S. native-born taxpayers.
The new presidential administration will have to make choices over four
dimensions of immigration policy:

the level of immigration, the composition of

immigrants, the rights to grant new immigrants, and enforcement against illegal
immigration. On each dimension, there is scope for reforming policy in a manner that
increases the net benefits of immigration to the United States and moderates
immigration’s impact on the distribution of income.

22. Past and Current U.S. Immigration Policy
Before the 1920’s, there were few numerical limits on U.S. immigration.1 Overthe second half of the 19th century, immigration grew in fits and starts (Figure 1). By
1910 new immigrant arrivals totaled 1 million individuals a year and the foreign-bornshare of the U.S. population reached 15% (Figure 2). Opposition to high levels of
immigration resulted in the passage of the Immigration Act of 1924, which imposed entry
quotas based on national origin that sharply restricted immigration overall, and fromcountries outside Western and Northern Europe in particular.2 After 1924, immigration
declined dramatically and did not again reach significant levels until the 1960’s.
Current U.S. immigration policy is based on a quota system established by the
Hart-Celler Immigration Bill of 1965. Hart-Celler revised quotas based on national
origin and made family reunification a central feature of U.S. admission decisions.3
Under the present system, U.S. Citizen and Immigration Services (USCIS) assigns
applicants for permanent legal residence to one of seven categories, with each subject toits own quota level.4 The law guarantees admission to immediate family members of
U.S. citizens, who are exempt from entry quotas. Specific quotas are assigned to otherfamily members of U.S. citizens, immediate family members of legal U.S. residents,
individuals in special skill categories, and refugees and asylees facing persecution in their1

One exception was the Chinese Exclusion Act of 1892, which banned immigration from China.
For histories of U.S. immigration policy see Tichenor (2002) and Daniels (2003).
3
The 1965 law amended the Immigration and Nationality Act of 1952, which had created skill-based categories for
immigration, without changing the 1924 restrictions on national origin (Smith and Edmonston, 1997).
4
In 2003, the Immigration and Naturalization Service (INS) was moved from the Department of Justice to the
Department of Homeland Security (DHS). INS functions were divided among three DHS agencies. Immigrationrelated services moved to U.S. Citizenship and Immigration Services (USCIS), enforcement of immigration laws in theinterior United States moved to U.S. Immigration and Customs Enforcement (ICE), and enforcement of U.S. borders,
including the U.S. Border Patrol, moved to the Bureau of Customs and Border Protection (CBP).
23

home countries.5 Of the 1,063,732 permanent legal immigrants admitted in FY 2002,
63% gained entry as family members of U.S. citizens or legal residents, 17% gained entry
on the basis of employment preferences, 12% were refugees,6 and 8% were in othercategories (DHS, 2003).

Additional admissions occur through temporary visas, thelargest classes of which are for high-skilled workers (H-1B) or short-term manuallaborers (H-2A, H-2B), who tend to be low skilled.7
After five years as permanent legal residents, immigrants are eligible to apply for
U.S. citizenship. Citizenship confers the right to vote and the right to draw on all
government benefit programs for which an individual is eligible. In 1996, as part ofwelfare reform, Congress excluded non-citizen immigrants from access to many
entitlement programs (Zimmerman and Tumlin, 1999). Since that time, some U.S. states
have restored immigrant access to some benefits. The Supreme Court has ruled that the
government may not deny public education or emergency medical services to foreignborn U.S. residents, even those in the country illegally.
Though the United States does not set the level of illegal immigration explicitly,
existing policy in effect allows substantial numbers of illegal aliens to enter the country.
The foreign-born share of the U.S. population, shown in Figure 2, includes substantial

5

The Immigration Act of 1990 set a flexible cap for legal admissions at 675,000 of which 480,000 would be familybased, 140,000 would be employment-based, and 55,000 would be “diversity immigrants.” The law also set temporary
immigration at 65,000 for the H-1B program and 66,000 under the H-2 program, and created new categories for
temporary admission of workers (O, P, Q, R). Subsequent legislation created categories for temporary immigration of
professional workers from Canada and Mexico as part of the North American Free Trade Agreement (DHS, 2003).
6
The Refugee Act of 1980 created procedures for the admission of refugees “of humanitarian concern,” eliminatingrefugees and asylees as a category of the existing quota-preference system (DHS, 2003).
7
To obtain a temporary work visa, a worker must be sponsored by a U.S. employer. The H-1B visa applies mainly toworkers in high-tech industries. It was created in 1990 to permit foreigners with a college degree to work in the UnitedStates for a renewable three-year term for employers who petition on their behalf. In 1998, the U.S. Congress raised
the annual number of H-1B visas from 65,000 to 115,000; in 2000, it raised the limit further to 195,000 visas; and in
2003, it allowed the number of visas to fall back to 65,000. The H-2B visa, created by the Immigration Reform andControl Act of 1986, applies to seasonal laborers in agriculture. The bureaucratic steps needed to obtain H-2 visas areonerous, which appears to limit their use. In a typical year, no more than 35,000 H-2B or H-2A visas are awarded.

4

numbers of illegal immigrations.8 In 2002, the illegal immigrant population appeared tobe between 8 and 10 million individuals (Bean et al., 2001). Most illegal immigrants
enter the United States by crossing the U.S.-Mexico border or by overstaying temporary
entry visas. The U.S. Border Patrol enforces against illegal immigration by policing the
U.S.-Mexico border and other points of entry from abroad and by seeking to prevent thesmuggling or employment of illegal aliens. While the U.S. Border Patrol has enforced
the border against illegal immigration since 1924, the modern experience of high levelsof illegal immigration dates back to the 1960’s and the end of the Bracero Program(1942-1964), which allowed large numbers of seasonal farm laborers from Mexico and
the Caribbean to work in U.S. agriculture on a temporary basis.
Current U.S. policy on illegal immigration is based largely on the Immigration
Reform and Control Act (IRCA) of 1986, which made it illegal to employ illegal aliens,
mandated monitoring of employers, and expanded border enforcement.9 IRCA alsooffered amnesty to illegal aliens who had resided in the United States since 1982. As aresult of IRCA, the United States granted permanent legal residence to 2.7 million
individuals, 2 million of whom were Mexican nationals (Figure 1).

In FY 2002,

immigration authorities apprehended 1,062,279 illegal aliens in the United States (Figure3), 88% of whom were captured by the Border Patrol at or near the U.S.-Mexico borderand 12% of whom were captured in the U.S. interior.10 Of those apprehended by the
Border Patrol, 96% were Mexican nationals (DHS, 2003). Over time, the Border Patrol

8
These figures are based on the U.S. population census. The Census Bureau estimates that its population figures
undercount illegal immigrants residing in the United States by 15%.
9
Prior to this time it had been illegal to “harbor” illegal aliens but not to employ them (Calavita, 1992).
10
Apprehensions of illegal aliens overstate attempted illegal immigration as a single individual may be captured by the
Border Patrol multiple times in a given year. The post-9/11 drop off in apprehensions appears to have been temporary.
Preliminary data for 2003 suggest apprehensions have returned to previous levels.

5has dramatically stepped up border enforcement. Between 1980 and 2000, expenditure
on border enforcement increased by 5 times in real terms (Figure 4). Most of the Border
Patrol’s activities are concentrated in U.S. cities that border Mexico.

This hasencouraged those attempting illegal entry to cross in the less populated – and moretreacherous – desert and mountain regions of Arizona, California, and Texas. The end
result has been an increase in deaths among illegal border crossers from 50 individuals ayear in the early 1990’s to 300-500 per year in the early 2000’s (Cornelius, 2001).

3. A Profile of U.S. Immigration
Immigration is changing the United States by making the population more
ethnically diverse, by increasing the number of low-skilled workers in the labor force,and by expanding the population of individuals residing in the country illegally. In thissection, I use data from the U.S. Current Population Survey and U.S. Census ofPopulation and Housing to examine the characteristics of the U.S. immigrant population.
These data include both legal and illegal immigrants.
Recent immigrants come primarily from Asia and Latin America. Of immigrants
entering the United States between 1990 and 2003, 58% came from Latin American and
26% came from Asia (Table 1). Mexico is the most important source country for
immigration, accounting for 34% of all immigrants arriving since 1990 and 30% of thetotal U.S. foreign-born population. In Mexico, this labor outflow has had a major effecton the country’s population. In 2000, 8% of individuals born in Mexico resided in the
United States (Chiquiar and Hanson, 2002). The shift in U.S. immigration toward Asiaand Latin America has diminished Europe’s role. In 2003, while 41% of immigrants who

6had entered the United States before 1970 came from Europe, only 12% of immigrants
entering the country since 1990 came from the region.
For illegal immigration, the importance of Asia and Latin America as source
regions is even greater. Table 2 reports estimates by the U.S. Census Bureau of the U.S.
illegal immigrant population in 2000. Between 1990 and 2000, the illegal population
increased from 3.8 to 8.9 million individuals.11

In 2000, Asia and Latin America

accounted for 75% of the U.S. illegal immigrant population, up from 69% in 1990.
Mexico is by far and away the largest source country for illegal immigrants, accounting
for 45% of the illegal population in 2000.

In 2000, the share of the foreign-born

population in the country illegally was (at least) 31% for all immigrants, 19% for
immigrants from Asia, 36% for immigrants from Latin America, and 49% for immigrants
from Mexico (Costanzo et al., 2001).
Immigrants tend to settle in specific U.S. regions. Upon arriving in the UnitedStates, immigrants tend to settle in the "gateway" states of California, Florida, Illinois,
New Jersey, New York, and Texas.12 In 2002, these six states were home to 67% of
immigrants but only 40% of natives (Table 3). California, on its own, is home to 28% of
all immigrants (but only 12% of natives). Within the gateway states, most immigrants
live in a few large cities. In 2000, 50% of immigrants, but only 21% of natives, lived injust five metropolitan areas: Los Angeles, New York, San Francisco, Miami, andChicago. Illegal immigrants are also regionally concentrated. In 2000, 68% of illegal
immigrants lived in gateway states, with 32% living in California alone (INS, 2001).

11

These figures are without adjusting for the undercount of illegal immigrants mentioned in note 8. Assuming a 15%
undercount, the population of illegal immigrants would be 4.4 million in 1990 and 10.2 million in 2000.
12
In the 1960’s and 1970’s, Massachusetts and Pennsylvania were also gateway states for immigration.

7

Breaking with historical patterns, the states with the fastest growth in theirimmigrant populations during the 1990’s were not gateway states but states located in theSoutheast (Georgia, North Carolina), Mountain West (Arizona, Colorado, Nevada), andGreat Plains (Nebraska, Kansas) (Figure 5). These states also had high growth in native
employment (Figure 6), suggesting that immigrants tend to move to regions where job
growth is strong.13 The shift in population out of gateway states is even more notable
among the illegal foreign-born population. Between 1990 and 2000, the share of illegal
immigrants residing outside the six gateway states increased from 20% to 32%.
Immigrants are concentrated at the extremes of the skill distribution. Immigrants
are much more likely than natives to have low levels of schooling. In 2003, 33% ofimmigrants 25 years and older had not completed the equivalent of a high-school
education, compared to only 13% of U.S. natives (Figure 7).

At the same time,

immigrants are as likely as natives to be highly educated, with 27% of each group having
completed a bachelor’s degree (and a slightly higher fraction of immigrants having
completed an advanced degree). Immigrants are under-represented in the middle of theskill distribution, among workers with a high school education or some college. This
group accounts for 60% of natives but only 41% of immigrants. Borjas (1999a) showsthat in the 1960’s and 1970’s the educational attainment of immigrants was more similar
to that of U.S. natives. The increasing skill gap between natives and immigrants appears
to be a consequence of the shift in immigration from Europe, where schooling levels are
similar to those in the United States, to Asia and Latin America, where schooling levels
are well below those in the United States.

13

The correlation between the log change in the share of the state population that is foreign born and the log change
state native employment from 1990 to 2000 is a highly statistically significant 0.53.

8Immigrants earn less than U.S. natives and tend to be employed in low-wage
occupations. A low level of schooling and a lack legal status confine many immigrants
to low-wage jobs. In 2003, while 62% of natives were managers, professionals, or
technical or administrative staff, only 43% of immigrants were in one of theseoccupations (Figure 8). And, while only 25% of natives worked in low-paying manuallabor or agricultural occupations, 43% of immigrants held one of these jobs. These
occupational differences contribute to earnings differences between natives andimmigrants. Among full-time, year-round workers in 2003, 45% of immigrants but only
25% of natives earned less than $25,000 a year (Figure 9). As is the case with the
distribution of skills, immigrants are under-represented in the middle of the earnings
distribution. While 40% of native workers earned between $35,000 and $75,000 a year,
only 21% of immigrants fell into this category. Overall, median earnings for native
workers were 30% higher than for immigrants.14 Borjas (1999b) shows that, as with theskills gap, the gap between native and immigrant earnings has grown over time.
Low skill levels and limited English language ability contribute to immigrants’
low labor-market earnings. Borjas (1999b) finds that in 1990 lower levels of educationand U.S. labor-market experience account for 38% of the wage differential between
natives and immigrants.

Bleakley and Chin (2003) estimate that lack of English-

language proficiency substantially lowers an individual’s earnings.

Illegality also

contributes to low wages, by confining immigrants to low-skill occupations or by giving
U.S. employer’s greater bargaining power in setting wages. Kossoudji and Cobb-Clark
14

These differences in earnings do not control for differences in annual hours worked or for differences in age,education, and other characteristics between immigrants ant natives. Using data from 1990, Borjas (1999b) finds that
controlling for differences in hours worked, natives earned 16% more than immigrants; and controlling also for age,education, and other observable characteristics, natives earned 10% more than immigrants. This pattern has changed
markedly over time. In 1960, natives earned 4% less than immigrants (controlling for hours worked) and 1% less than
immigrants (controlling for hours worked and other observable characteristics).

9

(2002) examine illegal immigrants who attained legal status as a result of the IRCA
amnesty in the late 1980’s and early 1990’s. They find that the penalty for being anillegal immigrant in the 1980’s was a wage that was 14% to 24% lower than for legal
workers. Lower wages for illegal immigrants may be one reason that U.S. employers
oppose efforts to increase enforcement against illegal immigration (Calavita, 1992).
Immigrants are more likely than natives to receive welfare benefits.

As aconsequence of lower earning power, immigrants are more likely than natives to live inpoverty and to be eligible for means-tested entitlement programs. Further enhancing
their eligibility, immigrants tend to have larger families, spreading their smaller incomes
across more household members, and tend to have more children, giving them access toprograms targeted to the young. Some entitlement programs – such as TANF (temporary
assistance for families with needy children), SSI (supplemental security income), andgeneral assistance – provide cash benefits, and other programs – such as Medicaid, foodstamps, housing and energy subsidies, and school meal programs – provide in-kindbenefits. In 1994, 25% of immigrant households and 15% of native households received
some type of government assistance (Table 4).15
In 1996, Congress undertook a major reform of federal welfare programs (Fix andPassel, 2002). The reform mandated work requirements as a precondition to receive
benefits, limited the life-time use of certain benefits, gave states more discretion overprogram design, and excluded non-citizens from access to many benefits. Congress
substituted state entitlements to open-ended federal funds with block grants, leaving

15

There is abundant academic literature that documents this pattern. See Borjas (1999a). Table 4 shows the fraction ofhouseholds headed by an immigrant or headed by a native in which at least one household member receives a specified
government benefit. This means that U.S.-born children of immigrants who live with their parents are included in
calculating the fraction of immigrant households using entitlement programs.

10states with considerable autonomy over individual eligibility criteria. For immigrants
arriving before 1996, states have the option of whether to use their federal block grants toprovide this group with TANF, Medicaid, and other benefits (Table 5). For immigrants
arriving after 1996, states may not use federal block grants to provide non-citizens withthese benefits, but they are free to use other state funds to create substitute programs.
After five years, immigrants may apply for citizenship, which guarantees their access topublic benefits for which they meet standard eligibility criteria. For new immigrants, thisin effect mandates a five-year waiting period for access to most benefits. States now varyconsiderably in the programs they offer to immigrants (Zimmerman and Tumlin, 1999).
Despite major changes in welfare policy, immigrants remain more likely than natives toreceive benefits. In 2003, 24% of immigrants and 15% of natives received some time ofgovernment assistance. Continuing high immigrant usage of entitlement programs isprimarily due to Medicaid. While immigrant usage of Medicaid remained stable between
1994 and 2003, there were sharp declines (overall and relative to natives) in immigrantusage of cash benefits and food stamps, suggesting welfare reform has had an impact on
the type of government benefits that immigrants receive.
While welfare reform excludes illegal immigrants from receiving government
benefits, U.S. courts have ruled that it is against the law to deny illegal immigrants
emergency medical services. This puts states with large illegal-immigrant populations ina quandary.

Without access to public health care, many illegal immigrants use

emergency medical services for routine health problems or delay seeking medical care
until their health problems become acute. The expense of providing emergency medicalcare to the illegal population has lead some states to provide illegal immigrants with11

state-funded preventive health care, as a means of holding down costs. This suggests thatsome states have found that the prevalence of illegal immigration makes certain aspects
of welfare reform inefficient.

4. The Benefits and Costs of Immigration
Immigration increases the incomes of U.S. residents by helping utilize domestic
resources more efficiently. These benefits, however, are not shared equally. Immigration
redistributes income away from factors that compete with immigrants in the labor market.
This redistribution creates political opposition to immigration.

A second source of

opposition to immigration comes from the costs that immigration imposes on resident
taxpayers. If immigrants receive more in government benefits than they pay in taxes,
then immigration imposes a net fiscal burden on U.S. natives.
Immigration, much like international trade and international capital flows, tends
to raise global welfare.

Wage differences between countries reflect economic

inefficiencies associated with an oversupply of labor in low-wage countries and anundersupply of labor in high-wage countries. By moving labor from low-wage to highwage countries, immigration helps raise global productivity. These global efficiency
gains are shared by immigrants and by some U.S. factor owners.
Benefits of Immigration. Immigration generates a surplus in the form of extra
income to domestic factors of production. By increasing the supply of labor, immigration
raises the productivity of factors that are complementary to labor. More workers allow
U.S. capital, land, and natural resources to be exploited more efficiently. These gains in
productivity result in income gains to owners of these factors. It is no surprise, then, that12

U.S. business interests support immigration.16 But increasing the supply of labor also
drives down wages for U.S. workers. Borjas (2003) estimates that over the period 1980
to 2000 immigration contributed to a decrease in average U.S. wages of 3%. Thisestimate accounts for the total change in the U.S. labor force due to immigration,
including both legal and illegal sources. Since immigration is concentrated among thelow-skilled, low-skilled natives are the workers most likely to be adversely affected.
Over the 1980 to 2000 period, wages of native workers without a high-school degree fell
by 9% as a result of immigration.17 Consistent with these effects, Scheve and Slaughter(2001b) find that opposition to immigration in the United States is most intense among
native workers with low schooling levels (less than a high-school education).
To calculate the net change in national income associated with immigration, we
sum up the income changes associated with immigration for all domestic factors of
production. Using a simple model of the U.S. economy,18 the immigration surplus takes
a very tractable form:

Immigration Surplus as a % of GDP = -0.5*(% change in wages due to immigration)*(% change in labor force due to immigration)*(labor share of national income)

Applying this formula to results in Borjas (2003) for 1980 to 2000, a crude calculation of
the immigration surplus for the U.S. economy in 2000 would be

0.5*(3.2%)*(11%)*(0.70) = 0.12%
16

The National Association of Manufacturers states, “Foreign nationals have made enormous contributions to U.S.
companies, our economy and society as a whole. To continue our economic and technological preeminence we need toensure that we have access to the talent we need to lead and compete.” (http://www.nam.org/)
17
Borjas (2003) also estimates that over the 1980-2000 period immigration reduced wages for college graduates by
5%, wages for high-school graduates by 3%, and wages for those with some college by a negligible amount.
18
This model assumes there is one good and two factors of production. It is straightforward to extend this model toallow for a more complicated environment.

13

A rough estimate, then, is that immigration raises U.S. GDP by slightly more than onetenth of a percent.

Borjas (1999b) produces more sophisticated estimates of theimmigration surplus by allowing for labor of different skill types and by allowing forvarying effects of immigration on wages. However, no reasonable alternative estimate
would differ from our crude estimate by more than a factor of two. The gain in U.S.
income from immigration simply isn’t very large.
Since the immigration surplus is larger when the wage effects are larger, the gains
to immigration are greater when immigration has a larger impact on the distribution ofincome. A country gains most from immigration when it admits labor whose skills are
scarcest. In this case, immigration has a larger negative impact on the wages of theaffected labor group, but also yields a larger gain in national income. Holding constant
the level of immigration, the United States could increase the immigration surplus byconcentrating immigration among skill groups that are in relatively short supply. For theUnited States, this would mean concentrating immigration even more at the extremes ofthe skill distribution. Very highly skilled workers are in relatively short supply in the
United States, as they are everywhere. It is perhaps less apparent that very low-skilledworkers are in increasingly short supply.

The share of employed native-born U.S.

workers with less than a high-school education fell from 50% in 1960 to 8% in 2000 andis expected to continue to decline (Borjas, 1999a). Adding workers in the middle of theskill distribution, which for the United States includes high-school graduates throughcollege graduates, would produce a relatively small immigration surplus.

14

Two factors mitigate the impact of immigration on wages and reduce the potential
immigration surplus. One is that the supply of capital in the U.S. economy is not fixed.
Immigration raises the productivity of capital, creating incentives for further investment(either by domestic residents or by foreigners). More investment increases the capitalstock, raising the productivity of labor and thereby offsetting some of the wage losses
associated with immigration. An elastic supply of capital (but one that is less thanperfectly elastic) means that immigration has only a modest impact on wages. A second
factor that helps mitigate the wage impact of immigration is international trade.
Immigration of low-skilled labor reduces U.S. demand for imports from low-wagecountries. Reduced imports from low-wage countries increases U.S. domestic demand
for low-wage labor, partially absorbing the influx of foreign labor.
Our estimate of the immigration surplus ignores many factors and so should betreated with caution. For instance, during World War II, the immigration of scientists
from Europe helped spur U.S. advancements in physics, chemistry, and other fields.
After the war, these advancements appeared to help raise the pace of innovation in U.S.
industry. Such dynamic effects of immigration are plausible but are very hard to gauge.
If these effects are important, static estimates of the immigration surplus will tend tounderstate immigration’s true economic impact.
Another group that benefits from international migration is the immigrants
themselves. Chiquiar and Hanson (2002) estimate that in 1990 the gain in wages for
Mexican immigrants from moving to the United States was $2.50 to $4.00 an hour,adjusted for cost of living differences. This amounts to an approximate annual gain in
real income of $5,000 to $8,000 a year, or 1.5 to 2 times per capita GDP in Mexico. For

15

the migrant, this income gain is larger than the effect any conceivable development
policy. Even the most optimistic estimates of the impact of the North American Free
Trade Agreement on an individual worker in Mexico would be a small fraction of thegain associated with moving to the United States.19
The counterpart to an immigration surplus in host countries is an emigration loss
in countries that send migrants abroad. By exporting labor, sending countries suffer aloss in GDP associated with less efficient utilization of their resources.20 As with theimmigration surplus, the emigration loss is proportional to the emigration-induced change
in wages. For Mexico, Mishra (2003) estimates that over the period 1970 to 2000
emigration increased average wages in Mexico by 8%. By 2000, the number of Mexican
emigrants in the United States was equal to 16% of the labor force Mexico. Based onthese figures, the emigration loss for Mexico in 2000 would be 0.5% of GDP. However,in Mexico’s case, the loss is more than offset by income emigrants remit to family
members in Mexico, which in 2000 was 1.1% of GDP and in 2002 was 1.5% of GDP.
On net, residents of Mexico – those who do not migrate abroad – appear to gain from
emigration, with much of the gain presumably going to the family members of migrants,
who are the primary recipients of remittances.
In other countries, remittances are an even larger share of economic activity,
exceeding 10% of GDP in 2003 in the Dominican Republic, El Salvador, Haiti,
Honduras, Jamaica, and Nicaragua (IADB, 2004). The InterAmerican Development
Banks finds that in 2003 in El Salvador, Guatemala, Honduras, and Mexico over 14% of

19

The upper end of the estimated income gain to Mexico from the North American Free Agreement was 5% of GDP(Brown, Deardorff, and Stern, 1992).
20
In theory, the sum of the immigration surplus in receiving countries and the income gain to migrants exceeds theemigration loss in sending countries.

16

adults received remittances from the United States.

In that year, Latin American

immigrants in the United States sent a total of $31 billion to their home countries,
amounting to 1.4% of the region’s GDP.
For the United States, the impact of immigration policy on Mexico and Latin
America should not be ignored. Due to shared geography and history, the United Statesand Mexico have a special relationship. The opportunity to emigrate to the United States
gives Mexico a safety valve, which may have helped the country avert domestic turmoil
during the severe macroeconomic instability the country experienced in the 1980’s and1990’s. Attempted illegal entry at the U.S.-Mexico border increases sharply following
declines in Mexico’s real wage (Hanson and Spilimbergo, 1999).

After Mexico’s

currency crises in 1982, 1987, and 1995, each of which involved major economic
contractions, there was a surge in illegal immigration from Mexico. In the absence of theopportunity to migrate to the United States, these periods of economic crisis would likely
have involved even higher levels of unemployment and larger declines in real wages. A
richer and more stable Mexico is surely in the U.S. interest.
Costs of Immigration. In a world without distortions, there would be no costs
associated with immigration. Clearly, we are far from such a world. U.S. tax andspending policies distort individual decisions about how much to work, how much tosave, and how much to invest. Immigration, by admitting large numbers of low-skilledindividuals, exacerbates inefficiencies associated with the country’s welfare system.
Also, population growth – whether due to immigration or to other sources – worsens
distortions associated with poorly defined property rights over air, water, highways, andcommon areas. More people mean more pollution and more congestion.

17

If immigrants pay more in taxes than they receive in government benefits, thenimmigration generates a net fiscal transfer to native taxpayers. The total impact ofimmigration on U.S. residents – the sum of the immigration surplus and the net fiscal
transfer from immigrants – would be unambiguously positive. On the other hand, if
immigrants pay less in taxes than they receive in government benefits, then immigration
generates a net fiscal burden on native taxpayers – natives would in effect be making an
income transfer to immigrants.

Paying for this fiscal transfer would require somecombination of tax increases on natives, reductions in government benefits to natives, andincreased borrowing from future generations (by issuing government debt). In this case,the total impact of immigration on U.S. residents would be positive only if theimmigration surplus exceeded the fiscal transfer made to immigrants.
The National Research Council (NRC) recently conducted two detailed casestudies of the fiscal impacts of immigration, one on New Jersey and another on
California. Both states have relatively large immigrant populations. In 2000, the share of
the adult population that is foreign born was 34% in California and 24% in New Jersey,
compared with 15% in the nation as a whole. However, the two states have immigrant
populations with quite different skill profiles and patterns of welfare usage. In 2000, theshare of immigrant households headed by someone with less than a high-school
education was 34% in California and 29% in the nation as a whole, but only 23% in New
Jersey.

Similarly, the share of immigrant households receiving cash benefits fromwelfare programs was 13% in California and 10% in the nation as a whole, but only 8%
in New Jersey. These differences in welfare uptake are only partly due to immigrants in
California being less skilled. California also appears to be more generous in the benefits18

it offers. While the less-skilled native population is larger in New Jersey (high-school
dropouts are 11% of New Jersey’s native adult population and 8% of California’s), native
welfare usage is still greater in California. The share of native households receiving cash
benefits is 8% in California and 7% in the nation as a whole, but only 5% in New Jersey.
Based on federal, state, and local government expenditures and tax receipts, the
NRC estimates that the short-run fiscal impact of immigration is negative in both New
Jersey and California.21 In New Jersey, using data for 1989-1990, immigrant households
received an average net fiscal transfer from natives of $1,484, or 2.5% of average state
immigrant household income.22

Spread among the more numerous state native

population, this amounted to an average net fiscal burden of $232 per native household,or 0.4% of average state native household income. In California, using data for 19941995, immigrant households received an average net fiscal transfer of $3,463, or 9.1% of
average immigrant household income, which resulted in an average fiscal burden on
native households of $1,178, or 2.3% of average native household income.
Two factors explain why natives make net fiscal transfers to immigrants: (1)immigrant households are larger with more children, leading them to make greater use of
public education, and (2) immigrant households earn lower incomes, leading them tomake greater use of welfare programs and lower contributions to taxes.
It is apparent from the NRC study that variation in welfare policies and immigrant
characteristics yield fiscal consequences that vary widely across U.S. states. Native
taxpayers in California, with its less-skilled immigrant population and high immigrant
uptake of welfare, make relatively large fiscal transfers to immigrant households. Within
21

The study included as many federal, state, and local government services and sources of tax revenue on which it was
feasible to collect data. See Smith and Edmonston (1997) for details.
22
All figures based on the NRC study are in 1996 dollars.

19the United States, it appears the fiscal costs of immigration are borne quite unevenly.
States with poorer immigrant populations and more generous policies are likely toshoulder a much larger share of the fiscal burden associated with immigration. Further
concentrating the distributional consequences of immigration, California and some otherhigh-immigration states have progressive tax systems, in which high-income taxpayers
account for a disproportionate share of tax revenues. Thus, higher-income taxpayers inhigh-immigration states are likely to pay much of the fiscal cost of immigration.
Public opinion is consistent with this reasoning. High-income individuals instates that provide generous benefits to immigrants appear to be acutely aware of the
fiscal costs they bear. Nationally, more-educated individuals tend to be more favorable
toward immigration. However, their support varies markedly across U.S. states. The
highly-educated (college education or advanced degree) are most opposed to immigrationin states that have both large immigrant populations and high immigrant uptake of
welfare (Hanson, Scheve, and Slaughter, 2004).

This suggests that the fiscal costs

associated with immigration shape individual preferences toward immigration policy. In
California, for instance, the anti-immigration sentiments of high-income voters were
important in the passage of Proposition 187 in 1994, a ballot measure that denied state
benefits to illegal immigrants (and that was later overturned by the courts).
Estimated fiscal transfers associated with immigration are due entirely to transfers
at the state and local level. Immigration has a decidedly negative impact on state andlocal public finances.

At the federal level, immigrants make a positive net fiscal

contribution. This is because national defense accounts for a large fraction of the federal
benefits immigrants receive. As a public good, the cost of national defense is unaffected20

by immigration. Adding taxpayers through immigration lowers the effective amount thefederal government must charge native taxpayers to cover defense outlays.
For the nation as a whole, the NRC estimates that immigration imposes a shortrun burden on the average native household of $166 to $226, or 0.20% to 0.25% of U.S.
GDP in 1995. Comparing the average of these two estimates to the immigration surplus
of 0.12% of GDP, a back of the envelope calculation suggests that in the short run
immigration reduces the income of U.S. residents by about 0.1% of GDP.
This estimate is only meant to be suggestive. Going from a short-run to a longrun estimate of the fiscal cost of immigration can change the results dramatically.
Immigrants are relatively young and far from their peak earning and taxpaying years. As
immigrants age, their net fiscal contribution increases. Also, they have children who arelikely to obtain more education and to pay more in taxes than their parents. The NRC
estimates that the average immigrant admitted in 1990 would produce a net fiscal
contribution of $80,000 over the next 300 years (in present discounted value terms). This
contribution depends crucially on the immigrant’s skill level.

The long-run fiscal

contribution is negative for low-skilled immigrants (less than a high-school education)and positive for higher-skilled immigrants (more than a high-school education).
Going 300 years forward obviously requires very strong assumptions about the
future economic environment. Even for the average immigrant, the annual net fiscal
contribution is negative for the first 25 years after arriving in the United States. The
long-run estimate rests on the assumption that the federal government will later raise
taxes to bring the federal budget into balance. If this doesn’t happen, the long-run fiscal

21

contribution of the average immigrant would be negative.23 Under any scenario, thelong-run fiscal impact of immigration on state and local governments is negative. Thus,in both the short-run and the long-run state and local governments (and the taxpayers that
support them) pick up much of the fiscal tab associated with immigration.
We are left with two perspectives on the fiscal consequences of immigration. In
the short-run the fiscal impact of immigration appears to be negative. In the long-run thefiscal impact may be positive or negative, depending on how federal taxes and spending
change in the future.

This leaves uncertainty about whether the total benefits ofimmigration exceed the total costs. However, it is clear that these benefits and costs are
distributed quite unevenly. Capital owners, land owners, and other employers appear tocapture much of the benefits associated with immigration (and also benefit from thelower wages they end up paying native workers). Taxpayers in high-immigration states
are likely to shoulder immigration’s fiscal costs.
When it comes to the politics of immigration, the short-run impacts may matter
more than those in the long-run. It is probably reasonable to expect many voters to put
more weight on the negative fiscal contribution immigrants make during their first 25
years in the country and less weight on the positive fiscal contribution they make 100
years in the future. Those who place more weight on the short-run consequences ofimmigration are likely to conclude that immigration makes the United States worse off.

5. Reforming U.S. Immigration Policy
The short-un impact of immigration on the United States appears to be on theorder of 0.1% of U.S. GDP. Whether negative (if one takes a shorter-run view) or
23

See Borjas (1999a) for a discussion of this issue.

22

positive (if one takes a longer-run view), the effect of immigration is far less significant
than the political debate surrounding the issue would suggest.
While the gains or losses associated with changing the level of immigration
appear to be small, there are clear gains associated with changing how the U.S. manages
immigration. First, those that benefit most from immigration bear few of its costs.
Employers capture the immigration surplus, but taxpayers in high-immigration states bear
the fiscal burden. The United States could shift the fiscal cost of immigration from
taxpayers to employers and to immigrants by restructuring immigrant access to publicbenefits. Second, current policy in effect allows one-third of immigration to be illegal.
Being illegal prevents immigrants from moving freely between jobs, which keeps thempoor and lowers the potential immigration surplus. Illegality also creates an underclass ofresidents with little prospect of participating in U.S. political life. The United States
could diminish its reliance on illegal immigrants by expanding temporary immigration
and by requiring employers to verify the eligibility of workers they hire. Third, current
U.S. policy, by setting the level of immigration without regard to U.S. economic
conditions, yields a small immigration surplus. The United States could raise the surplus
by concentrating immigration among workers whose skills are in scarce supply and by
adjusting admission levels in response to U.S. business cycle conditions. Achieving
these objectives would require changing the rights granted to immigrants, enforcement
against illegal immigration, and the level and composition of immigration.
Immigrant Rights. Currently, legal immigrants gain permanent legal residence
upon entering the country.24 This gives them access to some public benefits on arrivaland to others after five years (when they become eligible to naturalize). One way to24

Obviously, this doesn’t apply to those on short-term entry visas.

23

lower the fiscal cost of immigration would be to phase in more slowly an immigrant’s
access to public benefits. This could be done by having all adult immigrants enter on atemporary work visa (of, say, three years), which would give them rights to certain
benefits (public education, participation in the social security system) but not others(public assistance, food stamps, public housing, Medicaid, etc.). Satisfying the terms ofthe temporary work visa would lead to automatic renewal, and, after a specified numberof renewals, to permanent residence.

After five years as a permanent resident an

individual could apply for citizenship, as is the case currently. Violating the terms of thetemporary work visa – by remaining unemployed for a prolonged period, by usingprohibited forms of public assistance, or by committing a serious crime – would be cause
for denying renewal of the visa and would require the immigrant to return home. Such aplan would tie admission to the United States to work, and, relative to the current policy,
would reduce the short and medium-run fiscal burden associated with immigration.
This proposal would take welfare reform one step further. By requiring new
immigrants to complete several terms as temporary immigrants, it would increase theamount of time during which immigrants lack access to full benefits. It would also makepermanent residence conditional on behavior during a probationary phase. Immigrant
advocates often criticize guest worker programs for relegating immigrants to second-classstatus. As distinct from current guest-worker programs, this approach would guarantee
immigrants a green card, conditional on their complying with the terms of theirtemporary visas. Labor unions also complain about guest worker programs, citing theirlack of labor rights. It would be entirely feasible to grant temporary immigrants full labor
protections, including collective bargaining, a federally mandated minimum wage,

24

unemployment insurance, and mandated health and safety standards. The only difference
between temporary immigrants and other workers is that the former would not haveaccess to the same entitlement programs.
Temporary work visas would offer a solution for how to deal with the 8 to 10
million illegal immigrants currently living in the country. A special pool of visas could
be created for illegal immigrants residing in the United States. The granting of thesevisas would amount to a limited amnesty for these immigrants.25 There is likely to bevehement opposition to an amnesty to illegal immigrants. However, it is inconceivablethat the United States could reduce the illegal population without an amnesty of somesort. An alternative policy, mass deportations of illegal immigrants, would require apolice effort on a scale never before seen in this country. Whatever the opposition to anamnesty, opposition to mass deportations would be more intense. One aspect of a limited
amnesty that might make it politically palatable is that it would not lead immediately to agreen card but to a probationary period on a temporary visa. Former illegal immigrants
would have to earn permanent residence by demonstrating their commitment to being
legally employed. Another objection to an amnesty is that it would raise the incentive for
future illegal immigration. To avoid perverse incentive effects, the United States would
also have to change the way it enforces against illegal entry.
Enforcement. Current U.S. enforcement policy, which has been in place since theearly 1990’s, involves heavy patrols in large cities along the U.S.-Mexico border, lightpatrols in unpopulated zones along the U.S.-Mexico border, and minimal presence in the
U.S. interior (Boeri, Hanson, and McCormick, 2002). Immigration authorities devote

25

This approach parallels President Bush’s recent plan, although the Bush proposal does not specify how temporary
legal immigrants would progress to permanent residence.

25

few resources to investigating or monitoring employers that hire illegal immigrants(GAO, 2002). Of the 955,000 apprehensions the Border Patrol made in 2002, less than
5,000 occurred at U.S. farms or other worksites (the rest occurred at or near the U.S.Mexico border). Few employers face penalties for breaking the law. The number of
employers fined for hiring illegal immigrants declined from 799 in 1993 to 14 in 2000,
with the number of fines above $50,000 falling from 30 in 1993 to 7 in 1997 and to 0 in
2000. The result of this policy is that once in the United States illegal immigrants facelittle risk of apprehension or deportation. Overall, U.S. enforcement policy is ineffective.
After the United States dramatically increased enforcement expenditures in the early
1990’s (Figure 4) illegal immigration actually increased.
What makes current efforts at enforcement difficult is that employers haveplausible deniability. They are required only to ask employees for legal documents (e.g.,a social security card and a green card). As long as these appear genuine, employers arelargely free from legal responsibility.

Since employers do not have to verify theauthenticity of the documents, this check serves only to weed out obvious forgeries.
An alternative approach would be to create the capacity for automatic verificationof an employee’s legal status.

Suppose employers were required to verify theauthenticity of social security numbers with the Social Security Administration (SSA). If
the SSA were to create an electronic database to which employers could submit
electronic requests, the verification process would be immediate. Suppose also that each
immigrant was required to have a social security number and to record this number with
the Department of Homeland Security (DHS). If the SSA and the DHS were to cross-list
information with one another, the DHS could easily verify that all legal immigrants had

26

valid social security numbers. With these verification processes in place, employers
would no longer have plausible deniability regarding the employment of illegal
immigrants. The only way they could hire illegal immigrants would be by keeping themoff their official payrolls, in which case they would be overtly breaking the law.
These procedures would make audits of employers by immigration authorities
more transparent. Any employer who had failed to verify the social security status of an
employee (on which there would be an electronic record) would be guilty of an
infraction. A modest increase in interior enforcement could perhaps greatly increase its
effectiveness.

In addition, the DHS would have a record of employment for eachtemporary legal immigrant, which would be useful for evaluating applications forrenewal of work visas. Any immigrant who had failed to be employed for a sufficient
fraction of the visa period (again, on which there would be an electronic record) would beineligible for renewal of a temporary visa or for gaining a green card.26
Level of Immigration. Congress sets the level of immigration without regard to
U.S. economic conditions. The potential immigration surplus is greater when the UnitedStates is in a period of economic expansion than when the country is in a period ofcontraction. A simple alternative would be to create a flexible cap that would on averageachieve the mandated admission level but that would be higher in years when U.S. GDP
growth was high and lower in years when U.S. GDP growth was low. A flexible cap
would complement converting legal immigration to renewable temporary work visas.
Each year, there would be flows out of temporary immigrant status, as individuals
completed the required number of spells and obtained permanent residence or violated
26

Immediate verification of an employee’s legal status would not increase information burdens on either
employees or employers. Currently, employers must complete and retain I-9 identification verification
forms on all employees. This proposal would only make this process electronic.

27

the terms of their visas and had them revoked. Outflows would create openings for new
temporary immigrants, with net total admissions determined by the flexible cap.
Admission quotas for legal immigrants obviously don’t apply to illegal
immigrants.

The United States implicitly sets the level of illegal immigration bychoosing how many legal immigrants to admit and how intensively to enforce U.S.
borders and workplaces.

Given current U.S. policy, about 400,000 new illegal

immigrants enter the country each year. Illegal immigration happens in part because U.S.
employers value the services illegal workers provide.

U.S. immigration authorities

appear to accommodate the needs of employers by lowering enforcement against illegal
immigration during periods in which labor demand in labor-intensive industries is strong(Hanson and Spilimbergo, 2001).

Reducing the level of illegal immigration would

reduce the immigration surplus U.S. employers capture. An alternative is simply tolegalize the illegal inflow. Holding constant the level of immigration, the immigration
surplus would be larger for a workforce of legal immigrants than for a workforce ofillegal immigrants. The wage penalty associated with being an illegal immigrant appears
to be due largely to illegal workers being unable to take advantage of new job
opportunities (Kossoudji and Cobb-Clark, 2002). The relative immobility of illegal
workers makes them less productive, reducing the surplus they generate.
One way to legalize the inflow of illegal workers would be to offer a number of
temporary work visas equal to the current level of legal plus illegal immigration. This
would expand legal immigration to about 1.1 million admissions a year, but would leave
total immigration unchanged. Again, for this policy to make any sense it must be
combined with enforcement against illegal immigration.

28

Current temporary immigration programs are far too small to address illegal
immigration. In a typical year, less than 70,000 H-2 visas are granted to manual laborers.
These visas are non-renewable and amount to a one-time increase in the stock ofimmigrants that occurred when the visa program was created. Each year, the stock turns
over, as entering temporary immigrants replace exiting ones.27
Composition of Immigration. Current immigration policy allocates 480,000 entry
slots to family members of U.S. citizens and U.S. legal residents, 140,000 entry slots toemployer-sponsored immigration, and 55,000 slots to other categories. Converting theseslots to renewable temporary work visas28 and expanding the number of visas toaccommodate illegal immigrants would change the composition of U.S. legal
immigration. New legal admissions would rise to about 1.1 million individuals, about
45% of whom would be sponsored by family members and about 50% of whom would besponsored by employers. This would move the U.S. system closer to that of Canada’s,which reserves half of its entry slots for employment-based immigration. As distinct
from Canada, all adult immigrants would have to comply with the terms of the temporary
work visa in order to graduate to permanent legal residence.
To increase the immigration surplus, the United States should admit workers whoare in relatively scarce supply. One way to achieve this would be for U.S. employers topost electronically jobs that they desire to fill with temporary immigrants. These postings
would reflect the excess demand for labor in the United States. Occupations with thelargest number of postings would indicate where excess demand for labor was the27

President Bush’s proposal to create 250,000 new temporary work visas, which would be renewable once, would alsoamount to a small one-time increase in the immigrant stock (which is far less than the annual inflow of new
immigrants). Presumably, to be effective the Bush policy would require greater enforcement against illegal entry.
28
Work visas would apply to adult immigrants. Some visas could be reserved for minors and senior citizens.

29

greatest. Foreigners could apply electronically for job openings (either to employers or to
brokers who would match immigrants to employers). The number of foreign applicants
per job listing would indicate the excess supply of foreign labor. Occupations in which
the number applicants exceeded the number of job postings (which could be mostoccupations) would indicate the existence of queues for jobs in the United States. The
length of these electronic job queues by occupation would indicate to immigration
authorities where the gains to immigration would be the greatest and so where toconcentrate the allocation of temporary work visas.
This approach would be likely to maintain immigration of low-skilled workers.
These workers are in short supply in the United States and in abundant supply abroad. In
particular, they are in abundant supply in Mexico, where workers can migrate to theUnited States at relatively low cost. Low-skilled immigration creates an immigration
surplus. The key to avoid having low-skilled immigration create a net fiscal burden, as
current research suggests it does now, is to delay immigrants’ access to public benefits.
An alternative way to reduce the fiscal cost of immigration, as Borjas (1999a) andothers have suggested, is to curtail low-skilled immigration altogether. Concentrating
immigration among the high-skilled would, relative to current U.S. policy, raise theimmigration surplus and lower the fiscal cost associated with immigration. There arethree disadvantages to purely skills-based immigration.

First, it would require asubstantial increase in enforcement against illegal immigration. The plan proposed here,
which legalizes the illegal inflow, has a much lower enforcement burden. Second, raisinghigh-skilled immigration would be likely to lower global economic welfare. For poor
countries, losing high-skilled labor could have very negative effects on their GDPs and30

on the performance of their political, legal, and educational institutions. Brain drain
removes not just scarce factors of production from a country but also government leaders,judges, and teachers. Third, lowering low-skilled immigration would lower immigrationfrom Mexico, causing considerable hardship for the country. Emigration raises wages in
Mexico, serves as a safety valve during times of economic crisis, and through remittances
increases national income. Presumably, it also substantially increases the standard ofliving of migrants. In the end, trying to reduce low-skilled legal immigration would be
only likely to perpetuate low-skilled illegal immigration.

31

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Bleakley, Hoyt and Aimee Chin. 2003. “Language, Skills, and Earnings: Evidence fromChildhood Immigrants.” Mimeo, UCSD.
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34

New Admissions

New Admissions with IRCA

Permanent Legal Immigration (000s)

1800
1600
1400
1200
1000
800
600
400
200
0
1820

1840

1860

1880

1900

1920
Year

1940

1960

1980

2000

Figure 1: Permanent Legal Immigration in the United States

35

Foreign-born Population Share (%)

16

14

12

10

8

6

4
1900

1920

1940

1960

1980

2000

Year

Figure 2: Share of the Foreign Born in the U.S. Population36

Total Apprehensions

Border Patrol Apprehensions

1800

Illegal Aliens Apprehended (000s)

1600
1400
1200
1000
800
600
400
200

1930

1940

1950

1960

1970
Year

1980

1990

2000

Figure 3: Apprehensions of Illegal Aliens in the United States

37

2000

Millions of 1998 US$

1750
1500
1250
1000
750
500
250
1960

1965

1970

1975

1980
Year

1985

1990

1995

2000

Figure 4: U.S. Government Expenditure on Border Enforcement38

Immigrant Share of State Population, 1990 and 2000

3

Imm Pop Share 2000 / Imm Pop Share 1990
(log scale)North Carolina
Georgia
Arkansas
Tennessee

Nebraska

2
KentuckyKansasSouth Carolina
Colorado
Utah
Minnesota
NevadaAlabamaOklahoma
Iowa
Arizona
OregonIndianaIdaho Delaware Virginia
MissouriMississippi
Texas
Washington
South Dakota
MarylandNew Mexico
Illinois
Wisconsin
District of Columbia
New Jersey
FloridaAlaskaPennsylvania
Louisiana
Michigan
Wyoming
Massachusetts
California
RhodeislandConnecticut
New York
West Virginia
Ohio
North Dakota

Hawaii
New Hampshire
Vermont

Montana

1
Maine

.01

.1
Immigrant Population Share 1990
(log scale).2.3

Figure 539

Growth in Immigrant Population and Native Employment, 1990-2000
3

Imm Pop Share 2000 / Imm Pop Share 1990
(log scale)North Carolina
Georgia
Arkansas
NebraskaTennessee

2

District of Columbia

KentuckyKansasSouth Carolina
Alabama Minnesota
Oklahoma
Iowa
OregonIndiana
Missouri
Delaware
Virginia
Mississippi
Texas
SouthWashington
DakotaMarylandNew Mexico
Illinois
Wisconsin
New Jersey
Pennsylvania AlaskaFlorida
Louisiana
Michigan
Wyoming
Massachusetts
California
Connecticut
RhodeislandNew York
West Virginia
Ohio
Hawaii

Colorado

Utah

NevadaArizona
Idaho

North Dakota
New
Hampshire
Vermont
Montana

1
Maine

.8

1.2
1
Native Employment 2000 / Native Employment 1990 (log scale)

1.4

Figure 640

Educational Attainment of Immigrants and Natives, March 2003
40.0

35.0

30.0

25.0
NativesNaturalized Citizens
Non-Citizens

20.0

15.0

10.0

5.0

0.0
Less than 9th 9th to 12th grade
grade(no diploma)

High school
graduate

Some college orassociate degree

Bachelor's
degreeAdvanceddegreeEducational Attainment

Figure 741

Occupational Distribution of Immigrants and Natives, March 2003
40.0
35.0
30.0
25.0
NativesNaturalized Citizens
Non-Citizens

20.0
15.0
10.0
5.0
0.0
Managerial and Technical, sales,
professional
and admin.
specialty
supportServiceoccupations

Production,
craft, and repair

Operators,
fabricators,
laborers

Farming,Fishing, Forestry

Major Occupation Group

Figure 842Earnings Distribution of Immigrants and Natives, 2002
35.0

30.0

25.0

20.0

NativesNaturalized Citizens
Non-Citizens

15.0

10.0

5.0

0.0
$1 to 14,999

15,000 to 24,999 25,000 to 34,999 35,000 to 49,999 50,000 to 74,999 75,000 and up
Income Category

Figure 943

Table 1: Source Countries for U.S. Immigration, 2003
Foreign-Born Pop.
Level
(000s)

Pct.
Distbn.

Cohorts by Arrival Year
Pre1970

1970
to
1979

1980
to
1989

1990
or later(level in 000s)
All Countries

34,612

100.0

4,759

4,983

8,213

16,657

11.7
25.6
57.6
5.0

34.1
3.7
4.6
3.8
1.3
3.3
1.9
2.5
2.0
1.4
2.2

Region of Birth
EuropeAsia
Latin America
Other Areas

5,415
8,994
18,285
1,918

15.6
26.0
52.8
5.5

40.6
14.0
35.3
10.1

(percent of cohort)
14.6
9.7
33.3
29.3
47.6
56.4
4.5
4.6

Country of Birth
1 Mexico
2 Philippines
3 India
4 China
5 Germany
6 El Salvador
7 Cuba8 Vietnam
9 South Korea
10 Canada
11 Dominican Rep.

10,237
1,458
1,184
1,168
1,091
1,025
1,005
947
916
853
726

29.6
4.2
3.4
3.4
3.2
3.0
2.9
2.7
2.6
2.5
2.1

16.0
2.9
0.8
2.6
12.5
0.6
7.9
0.5
1.3
8.2
1.3

26.4
5.9
3.5
3.0
2.6
2.0
2.9
4.5
4.1
2.2
2.3

30.1
4.9
2.5
3.1
1.8
4.3
2.2
3.4
3.8
1.4
2.3

Source: March 2003 Current Population Survey

44

Table 2: Illegal Immigrants in the United States, 2000

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Continent of Origin
All Continents
North America
South America
EuropeAsia
AfricaOceania

Total
8,705,421
5,312,990
624,419
1,113,683
1,363,419
243,342
47,568Country of Origin
All Countries
MexicoU.S.S.R., incl. Est., Lat., Lith.
El Salvador
GuatemalaChina, incl. Taiwan
Cuba
India
Korea
Colombia
CanadaPhilippines
United Kingdom
Japan
Germany
Yugoslavia
EcuadorPolandOther

Total
8,705,421
3,871,912
344,877
336,717238,977
226,886
216,297
200,306
182,621
174,786
156,231
155,239
123,246
118,357
113,327
110,280
105,197
92,684
1,937,481

Source: DAPE

45

Table 3: Immigration and Population in U.S. States, 2003

California
New York
FloridaTexas
New Jersey
Illinois
NationState Share of State Share of Share of
Foreign Born
Foreign-Born
National
in Population
Population
Population
12.3
27.5
27.8
6.7
11.7
21
5.7
8.8
18.6
7.5
10.4
16.8
3.0
4.4
17.6
4.4
4.4
12.1
--

--

12.1

Source: March 2003 Current Population Survey

46

Table 4:
Use of Means-Tested Programs in 1994 by Householder's Nativity & Year of Entry (%)1
Nativity of Householder
Welfare Program

NativeImmigrant

Immigrants by Year of Arrival
1970- 1980- Since
Pre-1970
79
89
1990

(a) 1994
Public Assistance2

4.5

8.1

3.6

8.3

11.1

12.7

SSI3
Food Stamps
Medicaid
Any of the above

3.9
8.4
13.3
15.3

6.2
13.7
22.4
24.6

7.5
8.5
16.0
17.8

6.0
14.4
22.4
24.9

5.4
17.9
27.9
30.4

5.3
17.4
27.7
29.7

(b) 2002
Public Assistance2

1.6

2.3

1.2

1.9

2.9

2.6

SSI3
Food Stamps
Medicaid
Any of the above

3.6
5.5
13.6
14.9

5.0
6.5
23.2
24.2

7.7
5.8
18.5
19.4

6.3
5.7
21.6
22.5

5.0
8.0
27.3
28.3

2.8
6.3
23.7
24.7

1

Immigrants and native households defined by nativity of household head. Year of entry based onhousehold head.
2

Includes AFDC (1994), TANF (2002), and General Assistance Program.

3

Supplemental Security Income.
Source: Current Population Survey, March 1995 and March 2003.

47

Table 5

SSI

Food
StampsOther Federal
Means-Tested
Benefits

State/Local
Public Benefits

State option
Eligible forfirst 5 years

State option
Eligible forfirst 5 years

State option
Eligible forfirst 5 years

Barred for first
5 years; state
option afterward
Eligible forfirst 5 years

Barred forfirst 5 years; state
option afterward
Eligible forfirst 5 years

State option
Eligible forfirst 5 years

No

Nob

Noc

No

No

Noc

Medicaid

TANF

Qualified Immigrants Arriving before August 23, 1996
Legal
Permanent
Residents
Asylees,Refugeesa

Yes
Eligible forfirst 7 years

No
Eligible forfirst 5 years

State option
Eligible forfirst 7 years

Qualified Immigrants Arriving after August 23, 1996
Legal
Permanent
Residents
Asylees,RefugeesNo
Eligible forfirst 7 years

No
Eligible forfirst 5 years

Barred for first
5 years; state
option afterward
Eligible forfirst 7 years

Unqualified Immigrants
IllegalImmigrants
PRUCOL
Immigrants

No

No

Nod

No

Emergency
services only
Emergency
services onlya

Cuban and Haitian entrants, Amerasians, and aliens granted withholding of deportation are also included in this group.
States have the option to provide WIC to unqualified immigrants.
c
Selected programs are exempted, including short-term non-cash relief, immunizations, testing and treatment forcommunicable diseases, and selected assistance from community programs.
dThose immigrants receiving SSI as of August 22, 1996, will continue to be eligible until September 30, 1998.
b

PRUCOL= Persons Residing under Cover of Law

48