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Lecture Economics (18th edition): Chapter 22 - McConnell, Brue, Flynn's

Chapter 22 describe the extent of legal and illegal immigration into the United States; discuss why economists view economic immigration as a personal human capital investment; explain how immigration affects average wages, resource allocation, domestic output, and group income shares; relate how illegal immigration affects employment and wages in low-wage labor markets and impacts state and local budgets; demonstrate how economics can inform current immigration discussions and attempts to reform immigration laws. | Chapter 22 Immigration McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Legal and illegal immigration Economic immigration as human capital investment Effects of immigration Effects of illegal immigration Reform of immigration law 22- Immigration Facts Economic immigrants Legal immigrants Averaging 1 million per year Quotas, refugees, and H1-B provision One-third of population growth One-half of labor force growth 22- Immigration Facts Illegal immigrants Estimated from Census data 350,000 per year on average High proportion from Mexico and Central America Total of 12 million residing in 2007, half from Mexico 22- Immigration U.S. Immigrants by Country of Origin, 2007, measured in 1000’s Mexico China Philippines India Columbia Haiti Cuba Vietnam Dominican Republic El Salvador 0 50 100 150 200 Source: U.S. Citizenship and Immigration Services 22- Decision to Migrate Earnings opportunities Increase value of human capital Moving costs Distance Follow beaten path Age Other factors 22- Economic Effects Personal gains Economic benefits exceed costs Other issues Uncertainty and imperfect information Backflows Skill transferability Self-selection 22- Migration Model Understand economic outcomes Assumptions U.S. and Mexico Labor demand greater in U.S. No long-term unemployment Labor quality the same Migration has no cost Wage differentials key factor Migration is legal 22- Migration Model Wage Rate United States Mexico Quantity of Labor (Millions) Quantity of Labor (Millions) Du Dm a A b d D B We Wage Rate We c f F C Wu 0 0 Wm Immigration impacts wages, employment, and output g G 22- Migration Model Wage rates will equalize In the U.S.: Wage rate falls Employment up Output up In Mexico: Wage rate rises Employment down Output down 22- Migration Model Overall effects: World output up Efficiency gains Other effects Brain drains U.S. natives lose wage income U.S. businesses gain . | Chapter 22 Immigration McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Legal and illegal immigration Economic immigration as human capital investment Effects of immigration Effects of illegal immigration Reform of immigration law 22- Immigration Facts Economic immigrants Legal immigrants Averaging 1 million per year Quotas, refugees, and H1-B provision One-third of population growth One-half of labor force growth 22- Immigration Facts Illegal immigrants Estimated from Census data 350,000 per year on average High proportion from Mexico and Central America Total of 12 million residing in 2007, half from Mexico 22- Immigration U.S. Immigrants by Country of Origin, 2007, measured in 1000’s Mexico China Philippines India Columbia Haiti Cuba Vietnam Dominican Republic El Salvador 0 50 100 150 200 Source: U.S. Citizenship and Immigration Services 22- Decision to Migrate Earnings opportunities Increase value of .