BPEA | Spring 2017

Along the watchtower: The rise and fall of U.S. low-skilled immigration

Gordon Hanson,
Gordon Hanson
Gordon Hanson Peter Wertheim Professor in Urban Policy - Harvard Kennedy School
Chen Liu, and
Chen Liu Ph.D. candidate - University of California San Diego
Craig McIntosh
Craig McIntosh Professor of Economics - University of California San Diego

March 23, 2017

From the rhetoric during and since the 2016 presidential election, one would think that the United States continues to experience a surge of low-skilled immigration. Although in previous decades such labor inflows certainly occurred, since the Great Recession U.S. borders have become a far less active place when it comes to the net arrival of foreign labor. The number of undocumented immigrants has declined in absolute terms, while the overall population of low-skilled foreign-born workers has remained stable. In this paper, we examine how the scale and composition of low-skilled immigration in the United States has evolved over time and how relative income growth and demographic shifts in the Western Hemisphere have contributed to the recent immigration slowdown. Because major source countries for U.S. immigration are now seeing and will continue to see weak labor-supply growth relative to the United States, the future immigration of young low-skilled workers looks set to decline further, whether or not U.S. immigration policies take a more draconian turn.

In “Along the watchtower: The rise and fall of U.S. low-skilled immigration,” Gordon H. Hanson, Chen Liu, and Craig McIntosh of the University of California San Diego find immigration to the U.S. of young, low-skilled workers will continue to slow until it reverses in 2050, regardless of U.S. policy, thanks to weak labor-supply growth in Mexico and other Latin American countries.

Instead, a bigger issue of concern for the Trump administration should be a growing number of aging, undocumented permanent residents, the authors argue. Over the course of the next 15 years, the authors calculate, the population of Latin American-born residents over age 40 in the U.S. will grow by 82 percent.

From the early 1980s to the mid-2000s, the U.S. experienced a huge wave of low-skilled immigration, due in part to several macroeconomic factors—such as high U.S. incomes, relatively stable U.S. GDP growth, and slow U.S. labor-supply growth—that made immigration attractive to young, low-skilled workers from Mexico and elsewhere in Latin America, the authors note.

However, around the time of the Great Recession, the undocumented population declined by an annual average of 160,000 individuals between 2007-2014. By 2015, 75 percent of low-skilled immigrants had resided in the U.S. for 11 or more years, while the share of the population aged 18 to 33 had dropped to 27 percent.

The challenge isn’t how to stop large-scale labor inflows, which has largely been achieved, but how to manage a large, settled population of undocumented immigrants.

The authors believe that the Great Recession may have simply advanced forward in time a lessening of low-skilled immigration thanks to changing demographic factors.

Whereas the U.S. baby boom came to a halt in the early 1960s, Latin America’s baby boom didn’t abate until two decades later. Though the supply of working-age Americans began to slow markedly in the early 1980s, they kept growing in Latin America until the 2000s, creating an incentive for migration that is now disappearing along with the later Latin baby boom. Looking forward, demographic pressures for U.S. immigration are set to weaken significantly; indeed, an easing of pressures is already occurring, the authors find.

In addition to demographic changes reducing incentives for migration, the authors note that there has already been a massive increase in U.S. immigration enforcement. Between 2000 and 2010, the number of U.S. Border Patrol agents policing the U.S.-Mexico border doubled, from 8,600 officers to 17,500 officers, and has since remained at historically high levels. Deportations of non-criminal aliens rose from 116,000 individuals in 2001 to an average of 226,000 individuals per year over 2007-2015.

“The current U.S. debate about immigration policy has a backward-looking feel to it. The challenge isn’t how to stop large-scale labor inflows, which has largely been achieved, but how to manage a large, settled population of undocumented immigrants. Massive investments in building border barriers or expanding the U.S. Border Patrol are not going to address this challenge.”

This paper is part of the Spring 2017 edition of the Brookings Papers on Economic Activity, the leading conference series and journal in economics for timely, cutting-edge research about real-world policy issues. Research findings are presented in a clear and accessible style to maximize their impact on economic understanding and policymaking. The editors are Brookings Nonresident Senior Fellow and Northwestern University Economics Professor Janice Eberly and James Stock, Brookings Nonresident Senior Fellow and Harvard University economics professor. Read the rest of the articles here.

Disclosure: Gordon Hanson is a member of the Board of Directors with PriceSmart, Inc. PriceSmart, Inc. has in the past provided Hanson with financial support for his work, but did not provide support for this paper. With the exception of the aforementioned affiliations, the authors did not receive financial support from any firm or person for this article or from any firm or person with a financial or political interest in this article. They are currently not an officer, director, or board member of any organization with an interest in this article.