George J. Borjas

The economic analysis of immigration

The study of labor flows across labor markets is a central ingredient in any discussion of labor market equilibrium. These labor flows help markets reach a more efficient allocation of resources. This paper surveys the economic analysis of immigration. It investigates the determinants of the immigration decision by workers in source countries and the impact of that decision on the host countrys labor market. The survey stresses the ideas and models that economists use to analyze immigration, and delineates the implications of these models for empirical research and for our understanding of the labor market effects of immigration.

Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence

Recent research demonstrates that, the greater the number of previous spells of unemployment and the longer their duration, the more likely is the event that an individual will be unemployed at a point in time. Two explanations have been advanced to interpret this finding. The first is rooted in economic theory; the second is based solely on statistical considerations.

Assimilation and Changes in Cohort Quality Revisited: What Happened to Immigrant Earnings in the 1980s?

This article uses the 1970, 1980, and 1990 Public Use Samples of the U.S. census to document what happened to immigrant earnings in the 1980s and to determine if pre-1980 immigrant flows reached earnings parity with natives. The relative entry wage of successive immigrant cohorts declined by 9% in the 1970s and by an additional 6% in the 1980s. Although the relative wage of immigrants grows by 10% during the first 2 decades after arrival, recent immigrants will earn 15%-20% less than natives throughout much of their working lives.

Economic theory and international migration.

The modern literature on the economics of immigration focuses on three related issues: 1) what determines the size and skill composition of immigrant flows to any particular host country; 2) how do the immigrants adapt to the host countrys economy; and 3) what is the impact of immigrants on the host countrys economy? This article reviews the theoretical framework and empirical evidence provided by the economics literature on these questions. It demonstrates that the economic approach, using the assumptions that individual migration behavior is guided by the search for better economic opportunities and that the exchanges among the various players are regulated by an immigration market, leads to substantive insights into these issues.

Immigration and Welfare Magnets

This article investigates if the location choices made by immigrants when they arrive in the United States are influenced by the interstate dispersion in welfare benefits. Income‐maximizing behavior implies that foreign‐born welfare recipients, unlike their native‐born counterparts, may be clustered in the states that offer the highest benefits. The empirical analysis indicates that immigrant welfare recipients are indeed more heavily clustered in high‐benefit states than the immigrants who do not receive welfare, or than natives. As a result, the welfare participation rate of immigrants is much more sensitive to changes in welfare benefits than that of natives.

Consumer Discrimination and Self-Employment

Self-employment rates and incomes differ significantly by race. We show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller. Equilibrium income distributions have two properties: mean black incomes are lower than mean white incomes, and the returns to ability are lower for black than for white sellers. Able blacks, therefore, are less likely to self-select into the self-employment sector than able whites. Using the 1980 census data, we find that observed racial differences in the self-employment income distributions are consistent with the theoretical predictions.

Immigration and the Welfare State: Immigrant Participation in Means- Tested Entitlement Programs

This paper documents the extent to which immigrants participate in the many programs that make up the welfare state. The immigrant-native difference in the probability of receiving cash benefits is small, but the gap widens once other programs are included in the analysis: 21 percent of immigrant households receive some type of assistance, as compared with only 14 percent of native households. The types of benefits received by earlier immigrants influence the types of benefits received by newly arrived immigrants. Hence there might be ethnic networks that transmit information about the availability of particular benefits to new immigrants.

Native Internal Migration and the Labor Market Impact of Immigration

This paper presents a theoretical and empirical study of how immigration influences the joint determination of the wage structure and internal migration behavior for native-born workers in local labor markets. Using data from the 1960–2000 decennial censuses, the study shows that immigration is associated with lower in-migration rates, higher out-migration rates, and a decline in the growth rate of the native workforce. The native migration response attenuates the measured impact of immigration on wages in a local labor market by 40 to 60 percent, depending on whether the labor market is defined at the state or metropolitan area level.

Foreign Competition, Market Power, and Wage Inequality

This paper investigates the link between the trend in the returns to education and foreign competition in concentrated industries. We argue that the impact of foreign competition on the relative wages of less skilled workers depends on the market structure of the industry penetrated. The empirical evidence indicates that employment changes in a small group of trade-impacted concentrated industries can explain not only part of the aggregate rise in wage inequality in the United States, but also some of the differences in the trends in wage inequality across metropolitan areas.

Job Satisfaction, Wages, and Unions

This paper provides a systematic empirical analysis of the effect of union membership on job satisfaction and wages, and shows how the interaction between these effects leads to empirically observable relations between unionization and individual quit probabilities. Using the National Longitudinal Survey of Mature Men, several empirical results were obtained. First, union members, on average, report lower levels of job satisfaction. Interestingly, unionization causes greater dissatisfaction at higher tenure levels. These findings are attributed to both the politicization of the unionized labor force and the fact that union members face flatter earnings profiles. The importance of the latter effect is reflected by the empirical fact that unions have a strong negative effect on quit probabilities at low levels of tenure, but the effect diminishes (absolutely) as tenure increases.