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Written by Keming Liang
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Monday, 01 June 2009 00:00 |
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Despite the many pressing issues already on his plate, President Obama reportedly plans to tackle yet another one this summer: immigration reform. Much has been said about this controversial topic, but setting aside the legal and cultural issues, our focus here is simply to explore the relationship between immigration and business conditions. The chart below shows the annual net flow of legal and illegal immigrants from 1990 through 2008. (Accurate data on illegal immigration are, by definition, hard to come by; we used estimates from the Pew Hispanic Center.) The shaded bars indicate periods of recession.
Source: Legal: U.S. Census Bureau; Illegal: Pew Hispanic Center (Click on chart to enlarge)
As can be seen, the flows of both legal and illegal immigrants are sensitive to the business cycle, but the latter appears to be especially cyclical. The flow of legal immigrants tends to drop off after the recession, and not by much. But the flow of illegal immigrants is more affected: It starts to decrease during the recessions and the decrease is much larger. One factor in these different trends may be that illegal immigrants hold lower-skilled jobs and are therefore more likely to be laid off first. Another reason may be that a large proportion of legal immigrants are sponsored by family members, and if these immigrants lose their jobs in a recession, they can stay with their family without having to leave the country immediately. Also, legal immigrants who become residents through employment (via H-B1 work visas and the like) are often highly skilled workers who are more likely to keep their jobs in recessions or can more easily find other jobs and thus stay in the country. The experience in the recession of the early 1990’s was somewhat different. Legal immigration increased during the recession and illegal immigration stayed relatively flat. These trends may have been influenced by legislation, namely the Immigration Reform and Control Act (IRCA) of 1986 and the Immigration Act of 1990. IRCA granted amnesty to certain illegal immigrants, which may have encouraged other illegals to stay with the hope of another amnesty. The 1990 Act increased the number of legal immigrants who could enter the U.S. each year, by allowing more family-sponsored immigration and adding more employment-related visas. The most striking evidence from the chart, however, is that the flow of immigration is sensitive to changing economic conditions. Illegal immigrants come to the U.S. mainly for jobs. When the jobs dry up, so does the inflow of immigrants.
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