EFFECTS OF IMMIGRANTS ON THE 1980–1990 U.S. WAGE EXPERIENCE

I. INTRODUCTION According to the 1990 Census, 8.6 million immigrants arrived in the United States between 1980 and 1990 - three million more than those who entered a decade earlier. The high immigration of the last decade has brought much attention to the economic impacts of immigrants on the U.S. economy. Critics of U.S. immigration policy argue that the economy of the United States cannot absorb immigrants as in the past (Briggs, 1984; Huddle, 1993). To support this claim, they point to the stagnant wages, slow job growth, and declining incomes of less-skilled workers (Lamm and Imhoff, 1985; Huddle, 1993). Advocates of this position argue not only that immigrants are not what they used to be, but that the economy is not what it used to be. Consequently, immigration restrictions are being advocated under the assertions that natives are being hurt by the recently arrived immigrants and that the U.S. labor market cannot absorb such high immigration levels. Studies using 1970 and 1980 Census data show that the effects of immigration on native labor are trivial (Grossman, 1982; Borjas, 1987; Altonji and Card, 1991; Butcher and Card, 1991). However, research focusing on high immigration areas finds mixed results (Card, 1989; Muller and Espenshade, 1985; Smith and Newman, 1977). Available research is of little help in addressing the question of whether the current economy can continue to absorb immigrants as in the past. Most studies are based on a one-point-in-time data, such as 1970 or 1980 Census data, which cannot support analysis of changes over time. In addition, most studies analyze the effects of all immigrants rather than recent immigrants, further impeding assessment of the economic effects of new immigration. By answering three inter-related questions, this paper addresses the issue of changes in the capacity of U.S. and local labor markets to absorb immigrants. (i) Was immigration more harmful in 1990 than in 1980? (ii) Is there a saturation point after which higher immigration is detrimental to native labor, and if so, was there any change in this pattern between 1980 and 1990? (iii) Has the labor market standing of the typical native worker in main immigration gateways deteriorated during the last decade? The analysis here answers these questions using 1980 and 1990 Census data and focuses on the effects of immigrants who entered the United States between 1980 and 1990. If a reduction in economy's capacity to absorb immigrants has occurred, the increase in recent immigrants as a percent of the labor market should have had a more negative effect on the wages of native labor in 1990 as compared with 1980. If there is a saturation point after which additional immigration can hurt native labor, then immigration effects on wages should vary according to the size of the immigration flow. The analysis here also tracks the 1980-to-1990 performance of the average worker in each area with different levels of immigration. If the capacity of local areas to absorb immigrants has declined, the wages of the average worker in areas of high and medium recent immigration should have deteriorated relative to those in areas of low recent immigration. II. A BRIEF REVIEW OF U.S. IMMIGRATION POLICY Immigration legislation in the United States was virtually nonexistent until 1872, when the Chinese Exclusion Act was passed. That Act suspended Chinese immigration and barred naturalization for existing Chinese immigrants. The late 1800s gave witness to a huge rise in new arrivals, mostly from Western and Northern Europe. The same economic, religious and political conditions that prompted this migration, coupled with technological advances in transportation at the turn of the century, brought increasing numbers of immigrants from Southern and Eastern Europe as well. Immigration laws were enacted not only to stem the rapid inflow of newcomers but to limit the quantity and influence the quality of individuals emigrating from certain areas (Vialet, 1990). …