The Effects Of Immigration On The Labor Market Outcomes Of Less Skilled Natives

Author : Zachariah Judson Rutledge
Publisher :
ISBN 13 :
Total Pages : 0 pages
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Download or read book From the Farm to the City written by Zachariah Judson Rutledge and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past few decades, the United States (U. S.) has experienced a massive influx of low-skilled immigrants. Between 1990 and 2018, the total immigrant population increased from 20 million (8% of the population) to 45 million (14% of the population). However, not all low-skilled sectors of the economy have consistently experienced positive immigrantlabor supply shocks. For example, recent evidence suggests that the agricultural sector has experienced a decline in the supply of immigrant workers. Mexican and Central American immigrants are by far the largest group of low-skilled immigrants in the U. S., comprising half of the immigrant population with a high school education or less. About 80% of Mexican and Central American immigrants have at most a high school diploma, and they are typically employed in low-skilled sectors of the economy, such as agriculture and construction. Estimates suggest that 11 million unauthorized immigrants reside in the U. S., 8 million of whom are Mexican and Central American. The issue of unauthorized immigration has led to a contentious debate, driving a wedge between Americans. Opponents of immigration argue that these immigrants take American jobs, depress the wages of native-born workers (natives), and drain resources from the social welfare system. Proponents argue that these immigrants take low-paying, physically demanding jobs that Americans don't want, which reduces the cost of goods and services, and that immigrants often contribute to the tax base even if they are unauthorized to work. Economists have failed to come to a consensus on the debate, partly because it is difficult to find empirical settings that lend themselves to producing exogenous variation in the supply of immigrants. It is plausible that elements on both sides of the debate are valid to some extent, depending on the outcome of interest and the economic sector under consideration. In this dissertation, I examine how changes in the supply of low-skilled immigrants affect various outcomes in the U. S. and the extent to which these immigrants have been able to achieve economic success. The first chapter examines how a decline in the supply of immigrant farmworkers impacts labor-intensive crop production in the state of California. The second chapter investigates how increased immigration impacts native workers in non-farm sectors of the economy. The third chapter documents the extent to which Mexicans and Central Americans have been able to close the earnings and employment rate gap (relative to native workers) over time. As a whole, this dissertation sheds light on how low-skilled immigration creates winners and losers and documents the extent to which immigrants have been successful in assimilating into the U. S. labor market. Chapter 1 extends the existing farm labor literature, which has found evidence of a declining farm labor supply, by quantifying the impacts such changes have on labor-intensive crop production. Specifically, I provide reduced-form estimates of the effects of shifts in the farm labor supply on the production of hand-harvested fruits and vegetables. Using crop production and employment data from California between 1990 and 2017, I estimate fixed-effects panel regressions linking farm employment (measured at the county-year level) to crop production outcomes (measured at the crop-county-year level). Because I use variation in equilibrium employment, as opposed to exogenous variation in the labor supply, I use an equilibrium displacement model to identify plausible sources of bias that may affect my empirical estimates. This exercise reveals that my point estimates should be interpreted as upper bounds for the effects of interest. Empirically, these bounds indicate that a one percent decrease in the farm labor supply (in terms of the number of workers) causes at most a 0.37% reduction in production in the top 10 producing counties, which together produce 86% of the total value of hand-harvested crops in the state. Production effects are channeled primarily through a reduction in harvested acreage, although there are some effects on yield. I also find that a 1% decrease in the labor supply causes at most a 0.46% decrease in the total value of hand-harvested crop production in the top 5 producing counties (or $600 million). The results from this chapter indicate that a declining farm labor supply could generate economically meaningful consequences for farmers, but that it will likely not devastate the aggregate production of fruits and vegetables in the near future. Chapter 2 analyzes the impact of immigration on the labor market outcomes of native workers in the U. S. The analysis focuses on workers in U. S. metropolitan statistical areas using U. S. Census and American Community Survey data between 1990 and 2011. We use a set of imperfect instruments to derive new bounds on the short-run impacts ofimmigration on the earnings, employment rate, and full-time employment rate of natives. We focus on nine sectors with higher immigrant penetration and instrument for the sectoral immigrant share using the immigrant share in all other sectors. We find negative effects of immigration on native earnings in sectors where we would most expect to findthem: low-skilled sectors that produce non-traded goods where immigrant penetration has been high in recent decades. We uncover negative effects on native earnings in the construction, food service, and personal service sectors, with upper bounds ranging from -2.9% to -6.6% for each 10 percentage point increase in the immigrant share. Earnings effects in other sectors are not statistically significant. In the six low-skilled sectors we consider, immigration reduces the native employment rate, with effects ranging from -0.6 to -2.0 percentage points for each 10 percentage point increase in the immigrant share. Our findings indicate that increases in the low-skilled immigrant labor supply lead to worse labor market outcomes for some low-skilled native workers in the short run. Chapter 3 investigates whether recently arrived low-skilled immigrants have been more successful than older cohorts at assimilating into the U. S. labor market. Specifically, we use U. S. Census and American Community Survey data between 1970 and 2017 to examine how different Mexican and Central American cohorts of arrival compare to similarly aged and educated natives in terms of their earnings and employment rate over time. We find that, on average, they started with an earnings gap of 40-45 percent and eliminated half of it within 20 years of arrival. Recent cohorts that arrived after 1995 did better than earlier cohorts in terms of the initial gap and the convergence rate. All cohorts achieved employment rates that surpassed that of natives within 20 years of arrival. The most recent cohorts arrived in the U. S. with no employment rate gap. We conclude that Mexican and Central American immigrants enter the U. S. with a strong proclivity toward being employed. However, despite their successful integration into the labor market in terms of achieving gainful employment, they have not reached parity with their native counterparts in terms of earnings.