TEST 2 - Economics of Migration

ITIN

Individual Taxpayer Identification Number. Used by undocumented immigrants to pay taxes as an alternative to a Social Security number. Filing taxes can help prove residency and employment in the US.

Sanctuary

A place of refuge (e.g. a church where Francisco Valderrama lived to avoid deportation). Also refers to cities/jurisdictions that limit cooperation with federal immigration enforcement.

Coyote

A person paid to guide undocumented migrants across the border. About 69% of Mexican migrants used a coyote (Hanson).

Substitutes

Workers who can replace one another. Immigrant and native workers with the same skills are substitutes — more immigrants increases labor supply and reduces wages for natives with similar skills.

Complements

Workers whose presence benefits each other. E.g. immigrant computer programmers increase demand for native managers — more immigrants raises wages for complementary workers.

Spatial correlation approach

Compares wages/employment across cities with different immigrant shares. Problem: immigrants choose cities with higher wage growth, creating upward bias that masks any negative wage effect (Bansak Figure 8.1).

Natural experiment

An event that creates quasi-random variation in immigrant presence. Example: the Mariel Boatlift. Problems: (1) policy changes may not be truly exogenous; (2) control cities may differ from treatment cities in other ways.

Mariel Boatlift

1980 event when ~125,000 Cubans arrived in Miami. Used as a natural experiment to study immigration's labor market effects. Black unemployment rose less in Miami than in control cities — a positive outcome relative to the counterfactual.

Skill cell approach

Groups workers by education and experience, compares immigration share and wages across cells (Bansak Figure 8.3). Limitations: assumes no relationship between cells; natives may respond by getting more education; immigrants may work below their skill level.

Structural approach

Uses an economic model to estimate the effects of immigration, allowing for interactions between skill groups. One of several methods for estimating immigration's wage effects.

H-1B visa

Temporary work visa for high-skilled workers (minimum bachelor's degree), up to 3 years. Capped at 85,000/year and awarded by lottery. 300,000 were requested in 2021. Common for computer programmers.

H-2B visa

Temporary work visa for less-skilled non-agricultural seasonal workers, up to 1 year. Firms that lose the H-2B lottery hire fewer workers and see lower sales and investment (Clemens & Lewis).

H-2A visa

Temporary work visa for agricultural workers. Unlimited. Workers can enter for up to 10 months.

F-1 visa

Temporary student visa.

OPT

Optional Practical Training. After graduation on an F-1 student visa, students can stay and work in the US for 1 to 3 years.

Fiscal impact

The effect of immigrants on government budgets (taxes paid minus services used). Undocumented immigrants pay ~8% of income in state/local taxes. The OECD average immigrant fiscal impact is slightly positive (around zero).

Static vs. dynamic approach

Static: considers only the current year's fiscal effects. Dynamic: considers effects over 75 years, including contributions of children and grandchildren. Federal first-generation estimates are the only positive ones (Figure 10.2) because immigrants are charged marginal — not average — cost, excluding military and debt interest.

Pure public good

A good that is non-rival and non-excludable (e.g. national defense). Immigrants can use it without reducing what's available to others — relevant to fiscal impact analysis.

Quota Act of 1921

Established national-origin immigration quotas in the US, sharply limiting immigration from Southern and Eastern Europe.

Bracero

A Mexican guest worker brought to the US under the Bracero Program (1942–1964). Workers had wage guarantees (min. 30¢/hr) and rights. Texas was initially excluded for its history of abusing Mexican workers. Calavita's thesis: US policy consistently favored US employers.

Operation Wetback

1954 INS enforcement operation under Commissioner Swing that deported approximately 1 million Mexican workers. Workers were replaced by a surge in bracero visas to ensure farmers maintained labor supply.

Immigration Reform and Control Act 1986 (IRCA)

Four provisions: (1) amnesty for undocumented immigrants with long-term US residence; (2) increased border enforcement funding; (3) required employers to verify worker eligibility; (4) created the H-2A and H-2B guest worker programs.

E-Verify

An electronic system to verify whether a worker is eligible to work in the US. Required in some states. States using it saw falls in employment and earnings of low-skilled Hispanics, reduced foreign investment, and (in Arizona) a reduced Hispanic population.

DREAM Act

Proposed legislation first introduced in 2001 that has never been passed. It would provide a path to legal residence for undocumented immigrants who arrived in the US as children.

DACA

Deferred Action for Childhood Arrivals. An Obama executive order allowing undocumented immigrants who arrived as children to receive temporary work permits.

Point-based system

An immigration system that selects immigrants based on skills, education, and language ability (as used in Canada and Australia), rather than primarily on family ties.

Guest worker program

A program allowing foreign nationals to work temporarily in the host country. The Bracero Program was an early US example; H-2A and H-2B are current versions.

Texas Proviso

A clause in a 1952 law that made it illegal to "harbour" undocumented migrants but explicitly stated that employment does not constitute harbouring — effectively exempting employers from penalties.

Diversity lottery

Allows immigration from countries that sent fewer than 50,000 immigrants in the previous 5 years. Applicants must have a high school diploma.

Mariel Boatlift — black unemployment finding

While black unemployment rose in Miami after the boatlift, it rose even more in control cities. Without the boatlift, black unemployment would have risen ~2.3 percentage points; it only rose 1.3 pp — so the outcome was better than expected (Bansak Table 8.1).

Spatial correlation problem

Immigrants choose to move to cities with higher wage growth, creating a positive relationship between immigrant share and wages. This can mask a true negative wage effect of immigration.

Residual method

Method used to estimate the undocumented population: subtract the number of known legal migrants from the total foreign-born population. Used by CMS and cross-checked with occupation and benefits data (Light et al.).

Counterfactual (Boustan)

Boustan estimates what wages would have been without the Great Migration. Black wages in the North would have been 10% higher in 1970; the black/white wage ratio would have improved to 0.85 instead of 0.77. White wages would have been unchanged.

Czech workers in Germany — exception that proves the rule

Czech workers increased unemployment among low-skilled German workers because they were allowed to work but not live in Germany — they increased labor supply but not demand. When immigrants live and work in the host country, they increase both supply and demand (Hernandez).