Journal of Population Economics

, Volume 24, Issue 1, pp 317–359 | Cite as

Should the US have locked heaven’s door?

Reassessing the benefits of postwar immigration
  • Xavier Chojnicki
  • Frédéric Docquier
  • Lionel Ragot
Original Paper

Abstract

This paper examines the economic impact of the second great immigration wave (1945–2000) on the US economy. Our analysis relies on a computable general equilibrium model combining the major interactions between immigrants and natives (labor market impact, fiscal impact, capital deepening, endogenous education, endogenous inequality). Contrary to recent studies, we show that immigration induced important net gains and small redistributive effects among natives. According to our simulations, the postwar US immigration is beneficial for all natives cohorts and all skill groups. Nevertheless, the gains would have been larger if the US had conducted a more selective immigration policy.

Keywords

Immigration Welfare Computable general equilibrium 

JEL Classification

J61 I3 D58 

Notes

Acknowledgements

We are grateful to Alan Auerbach, Tim Miller, and Philip Oreopoulos for transmitting their dataset. The second author acknowledges financial support from the ARC convention on “Geographical mobility of factors” (convention ARC 09/14-019) and from the Marie-Curie research and training network “Transnationality of Migrants” (TOM). We thank two anonymous referees for their helpful comments and suggestions on an earlier version of this paper. The usual disclaimers apply.

References

  1. Auerbach AJ, Kotlikoff LJ (1987) Dynamic fiscal policy. Cambridge University Press, Cambridge.Google Scholar
  2. Auerbach AJ, Oreopoulos P (2000) The fiscal effects of US immigration: a generational accounting perspective. In: Poterba J (ed) Tax policy and the economy, vol 14. MIT, Cambridge, pp 123–156Google Scholar
  3. Ben-Porath Y (1967) The production of human capital and the life cycle of earnings. J Polit Econ 75(4):352–365CrossRefGoogle Scholar
  4. Blondal S, Scarpetta S (1997) Early retirement in OECD countries: the role of social security systems. OECD Econ Stud 29:7–54Google Scholar
  5. Bonin H, Raffelhüschen B, Walliser J (2000) Can immigration alleviate the demographic burden. FinanzArchiv 57Google Scholar
  6. Borjas GJ (1990) Friends or strangers: the impact of immigrants on the US economy. Basic Books, New YorkGoogle Scholar
  7. Borjas GJ (1993) The impact of immigrants on employment opportunities of natives in OECD. The changing course of international migration. ParisGoogle Scholar
  8. Borjas GJ (1994) The economics of immigration. J Econ Lit 32(4):1667–1717Google Scholar
  9. Borjas GJ (1995) The economic benefits from immigration. J Econ Perspect 9(2):3–22Google Scholar
  10. Borjas GJ (1999a) Immigration and welfare magnets. J Labor Econ 17(4):607–637CrossRefGoogle Scholar
  11. Borjas GJ (1999b) Heaven’s door: immigration policy and the American economy. Princeton University Press, PrincetonGoogle Scholar
  12. Borjas GJ (2003) The labor demand curve is downward sloping: reexamining the impact of immigration on the labor market. Q J Econ 118(4):1335–1374CrossRefGoogle Scholar
  13. Borjas GJ (2009) The analytics of the wage effect of immigration. NBER working paper 14796Google Scholar
  14. Borjas GJ, Katz LF (2007) The evolution of the Mexican-born workforce in the US labor market. In: Borjas GJ (ed) Mexican immigration to the United-States. University of Chicago Press, Chicago, pp 13–55Google Scholar
  15. Borjas GJ, Freeman RB, Katz LF (1997) How much do immigration and trade affect labor market outcomes? Brookings Pap Econ Act 10:1–90CrossRefGoogle Scholar
  16. Borjas GJ, Grogger J, Hanson GH (2008) Imperfect substitution between immigrants and natives: a reappraisal. NBER working paper 13887Google Scholar
  17. Brown C (1990) Episodes in the public debt history of the United States. In: Dornbush R, Draghi M (eds) Public debt management: theory and history. Cambridge University Press, Cambridge, pp 229–254Google Scholar
  18. Card D, Lemieux T (2001) Can falling supply explain the rising return to college for younger men? A cohort-based analysis. Q J Econ 116(2):705–746CrossRefGoogle Scholar
  19. Cheeseman Day J, Bauman KJ (2000) Have we reached the top? Educational attainment projections of the US population. Working paper 43, Population Division, US Census BureauGoogle Scholar
  20. Chiswick B (1989) The impact of immigration on the human capital of natives. J Labor Econ 7(4):464–486CrossRefGoogle Scholar
  21. De la Croix D, Docquier F (2007) School attendance and skill premiums in France and the US: a general equilibrium approach. Fisc Stud 28(4):383–416CrossRefGoogle Scholar
  22. De la Croix D, Docquier F, Liégeois P (2007) Income growth in the 21st century: forecasts with an overlapping generations model. Int J Forecast 23(4):621–635CrossRefGoogle Scholar
  23. Fehr H, Jokisch S, Kotlikoff LJ (2004) The role of immigration in dealing with the developed world’s demographic transition. NBER working paper 10512Google Scholar
  24. Friedberg RM, Hunt J (1995) The impact of immigrants on the host country wages, employment and growth. J Econ Perspect 9(2):23–44Google Scholar
  25. Gokhale J, Page BR, Sturrock JR (1999) Generational accounts for the United States: an update. In: Auerbach AJ, Kotlikoff LJ, Leibfritz W (eds) Generational accounting around the world. NBER Books, The University of Chicago Press, ChicagoGoogle Scholar
  26. Hao L (2004) Wealth of immigrant and native-born Americans. Int Migr Rev 38(2):518–546CrossRefGoogle Scholar
  27. Heckman J, Lochner L, Taber C (1998) Explaining rising wage inequality: explorations with a dynamic general equilibrium model of labor earnings with heterogeneous agents. Rev Econ Dyn 1(1):1–58CrossRefGoogle Scholar
  28. Imrohoroglu S (1998) A quantitative analysis of capital income taxation. Int Econ Rev 39(2):307–328CrossRefGoogle Scholar
  29. Jean S, Jimenez M (2007) The unemployment impact of immigration in OECD countries. Economic Department working paper 563. OECDGoogle Scholar
  30. Lee RD, Miller TW (1997) The lifetime fiscal impacts of immigrants and their descendants: a longitudinal analysis. In: Smith J, Edmonston B (eds) The new Americans. National Academy Press, Washington, DC, pp 297–362Google Scholar
  31. Lee RD, Miller TW (2000) Immigration, social security and broader fiscal impacts. Am Econ Rev 90(2):350–354CrossRefGoogle Scholar
  32. Levine P, Lotti E, Pearlman J (2003) The immigration surplus revisited in a general equilibrium model with endogenous growth. Discussion paper 02/03, University of SurreyGoogle Scholar
  33. Ottaviano G, Perri G (2006) Rethinking the effects of immigration on wages. NBER working paper 12497Google Scholar
  34. Ottaviano G, Perri G (2008) Immigration and national wages: clarifying the theory and the empirics. NBER working paper 14188Google Scholar
  35. Razin A, Sadka E (1999) Migration and pension with international capital mobility. J Public Econ 74(1):141–150CrossRefGoogle Scholar
  36. Razin A, Sadka E (2004) Welfare migration: is the net fiscal burden a good measure of its economic impact on the welfare of the native-born population? NBER working paper 10682Google Scholar
  37. RiosRull J-V (1992) Population changes and capital accumulation: the aging of the baby boom. Manuscript, Carnegie Mellon University, PittsburghGoogle Scholar
  38. Simon JL (1989) The economic consequences of immigration. Basil Blackwell, OxfordGoogle Scholar
  39. Sims C (1990) Solving the stochastic growth model by backsolving with a particular non linear form for the decision rule. J Bus Econ Stat 8(1):45–47CrossRefGoogle Scholar
  40. Storesletten K (2000) Sustaining fiscal policy through immigration. J Polit Econ 108(2):300–323CrossRefGoogle Scholar
  41. Wasmer E (2001a) Measuring human capital in the labour market: the supply of experience in 8 OECD countries. Eur Econ Rev 45(4–6):861–874CrossRefGoogle Scholar
  42. Wasmer E (2001b) Between-group competition in the labour market and the rising returns to skill: US and France 1964–2000. CEPR discussion paper 2798Google Scholar
  43. Yaari M (1965) Uncertain lifetime, life insurance and the theory of the consumer. Rev Econ Stud 32(2):137–150CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  • Xavier Chojnicki
    • 1
    • 2
  • Frédéric Docquier
    • 3
    • 4
  • Lionel Ragot
    • 5
    • 6
  1. 1.EQUIPPEUniversity of Lille 2LilleFrance
  2. 2.CEPIIParisFrance
  3. 3.FNRS, National Fund for Scientific ResearchBrusselsBelgium
  4. 4.IRESCatholic University of LouvainLouvain-La-NeuveBelgium
  5. 5.EQUIPPE, Faculté des Sciences Économiques et SocialesUniversity of Lille 1Villeneuve d’Ascq CedexFrance
  6. 6.CESUniversity of Paris 1ParisFrance

Personalised recommendations