Financial Education & Economic Inclusion The Immigrant Experience April 22, 2013

1. Realizing the Gains from Immigration Reform Pia Orrenius Federal Reserve Bank of Dallas Financial Education & Economic Inclusion The Immigrant Experience April 22, 2013 Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.

2. Road map • Economic contributions of low-skilled immigrants • Likely gains from immigration reform

3. Rising influx of foreign-born,low-skilled workers

4. Over halfof migrants from Mexico, Central America lack a high school degree Note: Composition of educational attainment among immigrants by country of origin. Source: 2011 American Community Survey

5. Immigrants fill some of the toughest jobs (low-education)

6. Immigrants go where the jobs are Note: Coordinates indicate deviation from average foreign born population log growth (vertical axis) and from average state nonfarm payroll log growth (horizontal axis) from 1990 to 2009.

7. Economic benefits of immigration • Immigrants benefit from higher wages • Family, origin from remittances • Natives also benefit • More workers, lower prices • Higher productivity through specialization; efficiency through mobility • Higher return to capital boosts investment • Immigration surplus $38-$75 billion per year • Complementary immigration, bigger boost

8. Low-education immigrants have high employment rates compared to natives No High School Diploma

9. Low-education immigrants have low unemployment rates when compared to natives No High School Diploma

10. Immigrants earn 20 percent less than natives Real Median Weekly Earnings

11. Immigration Reform Likely gains

12. Unauthorized population as large as permanent resident population Source: Pew Hispanic Center

13. Low-skilled: Work visa applicationsfar outstrip number available

14. Immigration reform • Legalization for unauthorized immigrants • Work visas for low-skilled, non seasonal workers • Resolution of the green card queues • Currently extend decades for Mexicans

15. Impacts of immigration reform • Migrants • Higher wages; better job matches • Restore circularity • Youth: better education, socio-economic outcomes • Natives/Previous migrants • Expand tax compliance; Even playing field • Improve working conditions • Any downsides?

16. Concluding thoughts • Low-skilled immigration has been large, with high shares unauthorized • Outcome of robust labor demand, plentiful labor supply in Mexico • Increasingly costly, disruptive system • Immigration reform likely broadly beneficial • Timely too

18. Low-skilled immigrants earn less Note: Median hourly wages among full-year workers by educational attainment and nativity. Source: 2011 American Community Survey

19. “Immigration Surplus:” The rise in natives’ incomes from immigration • Labor force grows, output increases • Immigrants account for nearly one-half labor force growth since 1996 • Prices fall, return to land and capital rise. • Efficiency gains • Complement native workers at high, low ends of skill distribution • Fill jobs natives shun • Move to where jobs are • High-skilled: Boost innovation, entrepreneurship