Immigration and ethnicity.

• Author: Borjas, George J.

Immigration again has become a major component of demographic change in the United States. The flow of legal immigrants has increased steadily since the 1930s, when only 500,000 immigrants were admitted during the entire decade. By the early 1990s, over 800,000 immigrants were being admitted every year. A large number of persons also enter the United States illegally. Despite the enactment of the Immigration Reform and Control Act in 1986, the Border Patrol apprehended 1.3 million illegal aliens in 1992, or 2.4 aliens per minute. Legal and illegal immigration now account for over one-third of the increase in population in the United States, and for over one-quarter of all new workers.

In view of these historic changes in the size of the immigrant flow, it is not surprising that immigration has resurfaced as a pivotal issue in the debate over U.S. social policy. Two central questions in this debate have motivated my research. First, what is the immediate economic impact of immigration? Second, what is the impact of today's immigration on the skill endowment of the labor force in future generations and on the economic performance of tomorrow's ethnic groups?

The Economic Impact of Immigration

The most important characteristic of postwar immigration to the United States is the decline in the skills of successive waves of immigrants relative to the skills of the native-born population.(1) In 1960, newly admitted immigrant men (that is, immigrants who had been in the country less than five years) had 0.4 more years of schooling and earned about 13 percent less than native men. By 1990, newly admitted immigrants had 1.4 fewer years of schooling and earned 38 percent less than natives.

The precipitous decline in skills across successive waves has a number of important social and economic consequences, and is probably the source of much of the current concern over the impact of immigration on the United States. My research indicates that if a particular immigrant wave is tracked over time, there is relatively little convergence of wages between the immigrants and natives. Because more recent immigrant waves start off poorly, it is unlikely that the earnings of the "new immigrants" will ever catch up with those of natives. In fact, the wage differential between immigrants and natives may exceed 20 percent even two or three decades after immigration.

An important consequence of the shift toward an unskilled immigrant flow is that recent immigrants are more likely to become welfare recipients.(2) In 1970, the fraction of newly arrived immigrant households who received cash benefits was smaller than the fraction of native households: 5.5 percent versus 6.1 percent. By 1980, the situation had reversed: immigrant households were about half a percentage point more likely to be on welfare than native households.

In fact, not only do recent waves have a higher propensity for participation in welfare programs, but the longer the immigrants reside in the United States, the higher the probability of receiving welfare. In a sense, the immigrant population "assimilates" into the welfare system. The reasons for this trend are not well understood. The transition into welfare might occur because the...