Assimilation of Immigrant Laws into the Labor Market of the US - Research Paper Example

Assimilation of immigrant laws into the labor market of the US Introduction America’s growth is stagnant at around 2%. The deficit of the federal budget has exceeded $ 1 trillion for four consecutive years, while the country’s public debt is around $16 trillion. Compared to the start of recession in 2007, America’s economy presently has about 3 million fewer jobs (Pfeffer Jeffrey, 88-9). The rate of labor participation is the same as that of the 1980’s before the Reagan revolution. The most important duty of the Congress is to initiate economic growth. This calls for the need to promote immigration law reforms. President Obama has stated in the past that his main priority during the second term would be to initiate immigration reforms with a section of senators endorsing a comprehensive immigration reform proposal. Promoting the process of obtaining low-skilled and high skilled workers in America would ensure that the economy gets very qualified workers that would ensure its economic growth (Pfeffer Jeffrey, 80-1). In order to enable the economy move forward, it is important to adopt a flexible system that would enable highly qualified workers to legally enter the country and deliver their services to the economy. This step would be beneficial to native-born Americans, who would therefore be able to notice the various job opportunities. This study seeks to justify the need for the government to make rational attempts to formulate better immigration policies; that allow immigrants leave or enter the labor market depending on the prevailing economic conditions. Theory/Literature Review Through the years, many labor economists have studied and analyzed the effects of immigrants moving into different labor markets. The aim of this research is to shed some light on the various matters affecting the American labor market. It seeks to look into questions such as, “Do immigrants increase income disparity and suppress the wages of American native born workers?”, “Do immigrants lead to labor market crowding and higher unemployment?”, or “Will immigrants drain America’s economic well-being and resources?” Research carried out in the past thirty years still leave out many unanswered questions. It is evident that most of the sentiments that are against immigration are myths, thereby affecting the nation since 1950 (Stachurski John, 65). It is important to note that the composition of individuals moving into the United States is gradually changing. A study carried out by the Federal Reserve Bank indicated that immigrants entering the United States before 1960 were majorly from Canada and Europe (approximately 66%). Presently, the Federal Reserve Bank estimates that about 80% of the immigrants are from Latin America, Asia, and Mexico. It is noted that the aspect of demographic change in the composition of immigrants has significant economic implications on the United States labor markets. According to Stachurski John, (56-7), the lax in the US immigration has made many researchers speculate that the population in America is expected to increase from 250 million to about 450 million people in the next 50 years. According to the Bureau of labor statistics, immigrants supply almost half the country’s population growth, which is in fact steadily rising. A study carried out by David Jaeger, who is a proponent of immigration reforms and an economist for labor statistics, found out that the lax in immigration policies was the major cause for the increasing wage disparity and the current high wage differential. However, Malcolm Gillis, an economic researcher, believes that the increasing wage differential is attributed to an economic phenomenon called educational deepening. From the principles of developmental economics, educational deepening states that with the progress of the economy, the less educated individuals become replaced in the labor force by those who have attained higher education. This phenomenon results in the inevitable fall in the demand for the less skilled laborers regardless of their nation of origin. This simply means that since America has moved away from the blue-collar jobs in the manufacturing industries and become more of a service economy, the less educated laborers become less demanded, while there is increased demand for college graduates (Wingens Matthias, 76-7). Hypotheses It is not easy to rank occupations because it becomes difficult to compare many job attributes (Wingens Matthias, 87). In respect to this limitation, it is possible to assume that occupations of various immigrants can be ranked based on the immigrants’ remuneration. This assumption makes it possible to work with a simple framework and diverse occupations according to which, once an individual secures employment, the probability that the individual’s occupation is ranked is presented by the probability that the immigrant’s returns and personal characteristics lies within the cutoff points range. Data The purpose of the study is to look into the assimilation process of immigrant waves into the American labor market. The study will focus on two critical components of the labor market assimilation with respect to occupational attainment and employment of immigrants in relation to the natives as they lengthen their residency (Wingens Matthias, 112). With this intent, the study will be confined to the analysis of various people in the labor force. The analysis can be presented in the sense that immigrant, i will be willing to work if the market wage offered, w is more than the expected total non-labor income, y. This index function can be defined as: Ii =wi -yi Where, I-is the Immigrant employment w- Is the market wage y- Is the non-labor income The data used in this study will be taken from the American population census. The census is advantageous in the sense that the immigrants can be interviewed irrespective of their legal status (Kolb, Holger, and Henrik Egbert, 78). However, it should be noted that a significant number of unauthorized immigrants will not be able to fill in the questionnaires thus making such a group under-presented. During the 2010 population census in the United States, approximately 20 million households and 60 million people were interviewed. The census majorly gathered information on demographic and personal characteristics (such as education, marital status, or age) and job characteristics (such as occupation, work status, and industry). Given the fact that population census does not provide information relating to the immigrants’ labor earnings, the data on wages for every occupation can be extracted from Earnings Structure Survey. The survey collects individual information on occupations and gross hourly wages. This makes it possible to formulate average hourly wages for every occupation and then use such information to rank the occupations. The null hypothesis can be tested by analyzing the relationship existing between immigrant’s productivity and their levels of remunerations. If there is a positive relationship then it can be concluded that various immigrants can be ranked based on their levels of remuneration (Kolb, Holger, and Henrik Egbert, 90-1). Variables /Models The dependent variable in this analysis is the log of immigrant employment earnings plus their levels of productivity while independent variables include the period worked, experience, educational level categories, marital status, and race. Dummy variables for industry and occupation are not included so as to reflect the movements across the categories as part of the ways in which immigrants can improve on their salaries. The base group, which is the immigrants, is used to pool immigrants (Kogan, Irena, Clemens Noelke, and Michael Gebel, 90-1). The independent variables such as work experience and educational levels will improve the productivity of the immigrants compared to other workers. On the other hand, the independent variable such as the period of time an individual works will also influence the immigrants’ employment earnings. However, independent variables such as race and marital status are likely to affect the productivity of the immigrants in a negative way since racism negatively affects economic growth. Analysis/Findings There is a difference between the educational backgrounds of the native-born Americans and the immigrants. Statistically, the skills of native-born Americans are generally distributed in a curve that is bell shaped. Many Americans have college education and high school diplomas, but few adults do not have high school diplomas. In contrast, the skills of immigrants are distributed in a curve that is U-shaped, with disproportionate number of adults that do not have high school diplomas and for that matter seek manual work. 91% of native-born Americans have higher education or high school diploma while just 62% of non-citizens do have. However, immigrants make the economy become more efficient by eliminating the bottlenecks brought about by shortages in the labor market, both in the low-skilled and high-skilled areas (Kogan, Irena, Clemens Noelke, and Michael Gebel, 107-8). This calls for the need of the federal government to formulate policies that encourage immigrant entering the United States. The figure below shows the share of immigrants and native-born Americans educational attainment. In respect of the occupations and employment categories, there is a wide difference in the choice of occupations of the immigrants and native-born Americans. As shown in the table below, among the professionals, foreign-born workers get employment in mathematical and computer occupations at higher rates than the native-born Americans. Native-born Americans get more employment in legal occupations than the immigrants. According to Abbas Tahir, (102-3), native-born Americans prefer low skilled jobs than the immigrants who prefer occupations such as dentists, research scientists, and computer software and hardware engineers. The table below shows the percentage distribution of native-born Americans and immigrants by occupation. Conclusion American history is characterized by vast challenges and triumphs. The country is largely a nation of descendants and immigrants. Immigration has over the past been part of the life in America; for the good of the country. Some economists have argued that immigration has not been good from America. However, such a notion is not only wrong but also counterintuitive. The goal of America should be to formulate immigration policies that foster and promote economic growth (Abbas Tahir, 89). This involves finding mechanisms to accept individuals who wish to come and work in the country legally. Given the fact that most skills possessed by the immigrants are complements of the native-born Americans skills, allowing entry of immigrants would ensure that there is increased efficiency of the economy and at the same time avail job opportunities to all the Americans. With the American economy slowly recovering, it should give visas to individuals with innovative ideas to enable the economy move forward. Works Cited Abbas, Tahir. Immigration and Race Relations: Sociological Theory and John Rex. London [u.a.: Tauris, 2007. Print. Aydogan-Duda, Neslihan, and Yiu P. Chen. Social Capital and Business Development in High-Technology Clusters: An Analysis of Contemporary U.s. Agglomerations. New York: Springer, 2008. Print. Kogan, Irena, Clemens Noelke, and Michael Gebel. Making the Transition: Education and Labor Market Entry in Central and Eastern Europe. Stanford, California: Stanford University Press, 2011. Internet resource. Kogan, Irena. Working Through Barriers: Host Country Institutions and Immigrant Labour Market Performance in Europe. Dordrecht: Springer, 2007. Internet resource. Kolb, Holger, and Henrik Egbert. Migrants and Markets: Perspectives from Economics and the Other Social Sciences. Amsterdam: Amsterdam University Press, 2008. Print. Pfeffer, Jeffrey. The Human Equation: Building Profits by Putting People First. Boston, Mass: Harvard Business School Press, 2000. Print. Stachurski, John. Economic Dynamics: Theory and Computation. Cambridge, Mass: MIT Press, 2009. Print. Wingens, Matthias. A Life-Course Perspective on Migration and Integration. Dordrecht [etc.: Springer, 2011. Print. Read More