The economic consequences of amnesty for unauthorized immigrants.

• Author: Orrenius, Pia M.
• Position: Essay

Immigration policy reform has reached an impasse because of disagreement over whether to create a pathway to legal permanent residence and eventual U.S. citizenship for unauthorized immigrants. The United States first--and last---offered a large-scale amnesty as part of the Immigration Reform and Control Act (IRCA) in 1986. Despite increased border enforcement and provisions for employer sanctions, the law failed to curtail unauthorized immigration. The 9/11 terror attacks renewed the emphasis on national security and led to stricter policies regarding undocumented immigrants. Over the past decade, border and interior enforcement has increased, while avenues that allowed some illegal residents to adjust to legal status have been eliminated, and a growing number of states have adopted laws aimed at driving out unauthorized immigrants. (1)

In the 25 years since IRCA, the unauthorized immigrant population swelled to 11 million (Hoefer, Rytina, and Baker 2011; Passel and Cohn 2011). This 2010 estimate is slightly below the peak of about 12 million in 2007, before the onset of the Great Recession, but more than four times the number of people who legalized their status under the 1986 amnesty. The net inflow of unauthorized immigrants currently appears to be near zero, but this may be more due to the relatively weak economy in the United States than to stricter policies (Cave 2011).

Whether to offer a legalization program to unauthorized immigrants is ultimately a moral and political decision, but policymakers should also consider the economic implications of an amnesty. Legalization has economic benefits, most of which accrue to the people who adjust their status and their families. Tax revenues are likely to increase, an important consideration in an era of large deficits. There are costs as well: an amnesty entails losing the benefits of baying a relatively cheap, flexible workforce; there may be a negative labor market impact on competing workers; and government transfers to the legalized population may rise. More importantly, policymakers need to think carefully about the implications of a legalization program for future illegal and legal immigration. The U.S. experience after IRCA indicates that an amnesty not accompanied by a well-designed, comprehensive overhaul of legal immigration policy can lead to increased legal and illegal flows and political backlashes.

Background on the Unauthorized

Unauthorized immigration to the United States was not a substantial issue until the 1970s. The undocumented population rose from a few hundred thousand, primarily agricultural workers, in the late 1960s to several million, mainly living in urban areas, in 1980. This increase in the undocumented population was partly due to U.S. policy shifts that cut off the avenues for legal entry, such as the termination of the Bracero temporary farm worker program in 1964. In 1977, the United States extended country-specific quotas on the number of legal immigrants admitted each year to Western Hemisphere nations, including Mexico (Donato and Carter 1999). Fewer visas became available at the same time that the role of Mexican immigrants in the U.S. labor market evolved from seasonal agricultural work to year-round employment in the services and manufacturing sectors. Eventually, increased nonagricultural employment, tougher border enforcement, and fewer visas led to longer durations of stay by the undocumented. Immigrant families settled in the United States, and the seasonal, circular migration by workers that previously dominated Mexico-U.S. labor migration flows diminished (Angelucci 2005, Reyes 2004).

While the majority of unauthorized immigrants cross the border illegally ("entry without inspection," in official parlance), others overstay or violate the terms of a visa, such as working while on a non-work visa. This article uses the terms unauthorized, undocumented, and illegal immigrants synonymously to include all these types of migrants. Unauthorized immigrants account for about 30 percent of the total foreign-born population in the United States and 5 percent of the workforce (Passel and Cohn 2010). The populations of naturalized citizens and legal permanent residents (green card holders) are larger than the unauthorized population while the number of legal temporary migrants--primarily temporary foreign workers and students living in the United States is much smaller.

Estimates suggest that the unauthorized immigrant population increased by about 500,000 annually during the early 2000s. Given return migration, the inflow of unauthorized immigrants was even larger, averaging 850,000 per year during the period 2000 to 2005 (Passel and Cohn 2010). The inflow slowed considerably during the U.S. housing bust and subsequent recession, although the volume of return migration appears to have changed little during the downturn. As a result, the unauthorized immigrant population shrank slightly between 2007 and 2009 but has since stabilized.

Mexico is the main source country of undocumented immigrants, accounting for almost 60 percent of the unauthorized population. The relative strength of the U.S. and Mexican economies is therefore one of the fundamental drivers of illegal immigration; unauthorized immigration increases when the U.S. economy improves or the Mexican economy weakens (Orrenius and Zavodny 2005). However, the fraction of unauthorized immigrants who are from Mexico has declined over time. Other Latin American countries contributing heavily to the undocumented population include E1 Salvador, Guatemala, Honduras, Ecuador, and Brazil. The Philippines, India, Korea, and China round out the top 10 countries of origin for the unauthorized immigrant population in 2010 (Hoefer, Rytina, and Baker 2011).

Like the population of legal immigrants, unauthorized immigrants are highly geographically clustered and urban but have become more dispersed during the last two decades. Almost 40 percent of unauthorized immigrants reside in California and Texas. California's undocumented population remained nearly unchanged during the 2000s while Texas's grew. Georgia, Nevada, and North Carolina experienced tremendous increases in their unauthorized immigrant populations during the late 1990s and the 2000s (Passel and Cohn 2010).

Much of the undocumented population appears to have permanently settled in the United States. Estimates suggest that less than 1 in 10 unauthorized immigrants arrived within the last 5 years, and most have lived here for more than a decade (Hoefer, Rytina, and Baker 2011). While the typical unauthorized immigrant is a male between file ages of 18 and 39, there are also substantial numbers of undocumented women and children. As tougher border enforcement has led more families of unauthorized immigrants to settle here, U.S. births to undocumented immigrant women have risen. About 8 percent of all children born in the United States between March 2009 and March 2010 have at least one unauthorized parent. Over one-third of undocumented adults living in the United States have a U.S.-born child (Passel and Cohn 2009). Under current laws, U.S.-born children cannot sponsor a parent for a green card until file child is 21 years old.

Almost all unauthorized immigrant men are in the labor force, either working or actively searching for a job. The main reason for their extraordinarily high labor force participation rate--94 percent among working-age men in 2008--is, of course, that virtually all of them enter the United States to work. It is also a result of the undocumented population's relative youth and lack of access to government transfer programs. Undocumented working-age women are actually less likely to be in the labor force than either U.S. natives or legal immigrants, however, probably because a greater proportion of them have young children (Passel and Cohn 2009).

Unauthorized immigrants tend to be near the bottom of file U.S. skill distribution and to hold low-wage jobs. Almost half of adult unauthorized immigrants have not completed high school, and they comprise a startling 22 percent of all non-high school graduates in the United States. Undocumented workers are disproportionately employed in farming; building, grounds keeping, and maintenance; construction; and food service (Passel and Cohn 2009).

These numbers and characteristics point to file importance of addressing the problems posed and faced by the undocumented immigrant population. It is large and settled; most are unlikely to leave the country voluntarily. Their relatively low skill levels and lack of documentation likely trap them in low-wage jobs. Their children, most of whom are U.S. citizens, face significant obstacles to socioeconomic advancement as well. Legalization may help address some of these issues, but, as discussed below, it raises others.

U.S. Policies toward the Unauthorized

IRCA was a tremendous change in U.S. policy toward unauthorized immigration in several ways. It was the first--and so far the only--large-scale amnesty in U.S. history. Nearly 2.7 million people legated their status via two programs, one for long-term U.S. residents and another for seasonal agricultural workers. The number legalized far exceeded expectations, in part due to widespread fraud in the agricultural workers program. IRCA sought to stem future unauthorized inflows by making it illegal to hire undocumented immigrants; requiring employers to verify workers' eligibility; increasing funding for border enforcement; and creating the H-2A and H-2B programs for temporary agricultural and non-agricultural foreign workers, respectively.

Illegal inflows fell in the immediate years after IRCA before beginning to rise again in 1990. As Figure 1 shows, Border Patrol apprehensions along the U.S.-Mexico border, a proxy for illegal inflows, fell from 1.6 million in 1986 to about 853,000 in 1989. Since IRCA legalized a huge fraction of the undocumented population...