From the Federal Reserve Bank, San Francisco: Fed Says Immigrants Expand Productivity; No Evidence of Harm to Native Opportunities

SAN FRANCISCO—Data show that immigrants expand the U.S. economy by stimulating investment and improving worker efficiency and income but not at U.S.-born workers’ expense, according to a report released by the Federal Reserve Bank of San Francisco Aug. 30.

Giovanni Peri, an associate professor at the University of California at Davis and a visiting scholar at the San Francisco bank, summarized his recent research to conclude that immigration has positive financial effects for U.S.-born workers.

Data show that, on net, “immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity. Consistent with previous research, there is no evidence that these effects take place at the expense of jobs for workers born in the United States,’’ Peri said.

He added that there “is no evidence that immigrants crowd out U.S.-born workers in either the short or long run. Data on U.S.-born worker employment imply small effects, with estimates never statistically different from zero. The impact on hours per worker is similar.’’

Immigration Associated With Income Rise

Over the long run, Peri wrote in the bank’s Economic Letter, per worker income rises 0.6 percent to 0.9 percent for each inflow of immigrants that equals 1 percent of employment.

“This implies that total immigration to the United States from 1990 to 2007 was associated with a 6.6 percent to 9.9 percent increase in real income per worker. That equals an increase of about $5,100 in the yearly income of the average U.S. worker in constant 2005 dollars,’’ Peri said.

Such a gain equals 20 percent to 25 percent of the total real increase in average yearly income per worker registered in the United States between 1990 and 2007, Peri said.

A third result is that in the short run, physical capital per unit of output is decreased by net immigration, but in the medium to long run, businesses expand their equipment and physical plant proportionally to their increase in production, Peri said.

Peri was traveling out of the country Aug. 30 and was unavailable for comment on his report.

Immigrants Tend to Take Different Occupations

Already well documented is that U.S.-born workers and immigrants tend to take different occupations, Peri said. Among less-educated workers, those born in the United States tend to have jobs in manufacturing or mining, while immigrants tend to have jobs in personal services and agriculture. Among more-educated workers, U.S.-born workers tend to work as managers, teachers, and nurses while immigrants tend to work as engineers, scientists, and doctors, he said.

Because those born in the United States have relatively better English language skills, they tend to specialize in communication tasks, Peri said. “Immigrants tend to specialize in other tasks, such as manual labor,’’ he wrote.

“The share of immigrants among the less educated is strongly correlated with the extent of U.S.-born worker specialization in communication tasks,’’ Peri wrote in the report titled “The Effect of Immigrants on U.S. Employment and Productivity.’’

“In states with a heavy concentration of less-educated immigrants, U.S.-born workers have migrated toward more communication-intensive occupations. Those jobs pay higher wages than manual jobs, so such a mechanism has stimulated the productivity of workers born in the United States and generated new employment opportunities,’’ Peri said.

This “typically pushes U.S.-born workers toward better-paying jobs, enhances the efficiency of production, and creates jobs,’’ Peri said. Task specialization, however, may involve adopting different techniques or managerial procedures and renovating or replacing capital equipment. “Hence, it takes some years to be fully realized,’’ he said.

As we celebrate this Labor Day, let us thank all workers, and do each justice, whatever their background, origin, or line of work. May our Lord bless all our labor.

I pray for the employed, that they may work as unto Thee and not unto men. I pray for the unemployed, that they may find work and be saved from despondency. Be Thou their strength in adversity. — an excerpt from A General Intercession from A Book of Devotions and Prayers According to the Use of the Polish National Catholic Church.