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Should the U.S. Have Locked the Heaven's Door? Reassessing the Benefits of the Postwar Immigration

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  • Chojnicki, Xavier

    ()
    (University of Lille 1)

  • Docquier, Frédéric

    ()
    (Université catholique de Louvain)

  • Ragot, Lionel

    ()
    (University of Lille 1)

Abstract

This paper examines the economic impact of the second great immigration wave (1945-2000) on the US economy. Contrary to recent studies, we estimate that immigration induced important net gains and small redistributive effects among natives. 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). We use a backsolving method to calibrate the model on historical data and then consider two counterfactual variants: a cutoff of all immigration flows since 1950 and a stronger selection policy. According to our simulations, the postwar US immigration is beneficial for all cohorts and all skill groups. These gains are closely related to a long-run fiscal gain and a small labor market impact of immigrants. Finally, we also demonstrate that all generations would have benefited from a stronger selection of immigrants.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1676.

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Length: 33 pages
Date of creation: Jul 2005
Date of revision:
Publication status: published in: Journal of Population Economics, 2011, 24 (1), 317-359
Handle: RePEc:iza:izadps:dp1676

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Keywords: computable general equilibrium; welfare; inequality; immigration;

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References

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  1. Alan J. Auerbach & Philip Oreopoulos, 2000. "The Fiscal Effects of U.S. Immigration: A Generational-Accounting Perspective," NBER Chapters, in: Tax Policy and the Economy, Volume 14, pages 123-156 National Bureau of Economic Research, Inc.
  2. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  3. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, Elsevier, vol. 74(1), pages 141-150, October.
  4. Jagadeesh Gokhale & Benjamin R. Page & John Sturrock, 1999. "Generational Accounts for the United States: An Update," NBER Chapters, in: Generational Accounting around the World, pages 489-518 National Bureau of Economic Research, Inc.
  5. George J. Borjas, 1998. "Immigration and Welfare Magnets," NBER Working Papers 6813, National Bureau of Economic Research, Inc.
  6. Timothy Miller & Ronald Lee, 2000. "Immigration, Social Security, and Broader Fiscal Impacts," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 350-354, May.
  7. Hans Fehr & Sabine Jokisch & Laurence Kotlikoff, 2004. "The Role of Immigration in Dealing with the Developed World's Demographic Transition," NBER Working Papers 10512, National Bureau of Economic Research, Inc.
  8. Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economics Impact on the Welfare of the Native-Born Population?," CESifo Working Paper Series 1273, CESifo Group Munich.
  9. Wasmer, Etienne, 2001. "Measuring human capital in the labor market: The supply of experience in 8 OECD countries," European Economic Review, Elsevier, Elsevier, vol. 45(4-6), pages 861-874, May.
  10. DE LA CROIX, David & DOCQUIER, Frédéric, 2003. "Diverging patterns of education premium and school attendance in France and the US: a Walrasian view," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2003058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(2), pages 300-323, April.
  12. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(2), pages 705-746, May.
  13. Holger Bonin & Bernd Raffelhüschen & Jan Walliser, 2000. "Can Immigration Alleviate the Demographic Burden?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 57(1), pages 1-, September.
  14. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  15. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 75, pages 352.
  16. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
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