HAS THE QUALITY OF IMMIGRANTS DECLINED? EVIDENCE FROM THE LABOR MARKET ATTACHMENT OF IMMIGRANTS AND NATIVES

I. INTRODUCTION Proposition 187 and the uptick of U.S. Congressional initiatives demonstrate renewed debate on the merits of many U.S. immigration policies. Reformers challenge the levels of legal immigration and the criteria for admission as well as immigrants' entitlement to an array of public services and transfers. (In this paper, "immigrants" refer to the foreign born, not permanent resident aliens.) Economics literature on the impacts of immigrants on native U.S. workers' wage and employment opportunities is growing. Other economic research simply seeks to evaluate immigrants' labor market and social characteristics, compares these characteristics to the native population, and investigates whether recent immigrants differ significantly from earlier immigrants. This new literature on the "quality of immigrants" has received considerable attention. Recently economists have extended it in a number of important dimensions. This paper further extends the literature by examining immigrants' labor market activities and assessing whether today's new arrivals display greater labor market idleness than did earlier immigrants. Why is examination of U.S. immigrants' labor market idleness and inactivity worth pursuing? First, a large and growing segment of the nonelderly male population is either institutionalized or withdrawn from the labor market and appears idle. Regarding growth, Juhn (1992) uses the March Current Population Survey (CPS) from 1968 to 1988 to show that in 1987 as compared to 1967 nearly two and one half times as many prime-age, out-of-school men did not work at all during the year. Today more than one out of 20 prime-age men are not employed, not enrolled in school, and have not worked in the past 15 months. Second, immigration is an important source of U.S. population growth. Demographers project that under current U.S. immigration law, immigrants and their children account for about half of the country's population growth presently and will account for 60 percent within a few decades. By 2040, projections suggest that one in four U.S. residents will be an immigrant or the child of an immigrant. In addition, immigration is contributing to the further racial/ethnic diversification of the population (see Fix and Passel, 1994). At the margin, therefore, the human capital or skills that immigrants bring to the labor market deserve scrutiny. Non-elderly males may lack the skills or abilities to land employment or a seat in school. If new immigrants are contributing to the young male population outside the labor market, then the new immigrant flows are exacerbating the dependent population and the population eligible for cash income transfers. (For nonelderly males labor market nonparticipation is a necessary condition for receiving many public cash income transfers, including general assistance and disability payments under social security and supplemental security income.) In addition, the new immigrants may be expanding the urban "underclass." National assessment of U.S. immigration policies should consider these characteristics. II. THE ECONOMIC QUALITIES OF RECENT IMMIGRANTS Two recent studies by Borjas compare, with respect to economic traits, immigrants arriving during the 1980s with those arriving before 1970. (Funkhouser and Trejo, 1995, Butcher and Piehl, 1995, and Funkhouser, 1995, examine various characteristics of 1980s immigrants but do not compare these newest arrival cohorts to pre-1970 arrivals.) Borjas (1995a) uses 1970, 1980, and 1990 census data to examine the log hourly wage rate of immigrant cohorts relative to natives. Restricting his analysis to males aged 25-64, he finds that upon arrival, the 1985-1989 arrival cohort received lower relative wage rates than did the 1965-1969 arrival cohort. The precise magnitude of the decline depends on the method of analysis, but a 15 percentage point decline is representative. Borjas also responds to concerns that immigrant performance upon entry is a poor measure of long-run immigrant achievement. …