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Immigrant Legalization as a Poverty Reduction Tool

With the re-election of President Obama, sweeping the Hispanic vote by 71 per cent, the issue of immigration reform is no longer an afterthought. It’s now vaulted to the center of conversation on national politics and policy.  

In October, Obama told the Des Moines Register that, other than deficit reduction, immigration reform will be the top policy objective of his second term. He also said this during his first campaign for president, but it didn’t happen.

There are multiple– and debatable – reasons for this, but one factor for certain is the conflicting and ambivalent nature of public opinion on the issue.

The most contentious part of immigration reform is the legalization of about 11 million unauthorized immigrants living in the United States. Part of the opposition to legalization concerns its perceived impact on the U.S. economy and workers. The preponderance of research indicates that immigration– both legal and illegal – is an overall net benefit for the macro-economy. Legalization also increases economic opportunity for unauthorized immigrants who disproportionately live in poverty.

The 1986 Immigration Reform and Control Act legalized about 2.7 million unauthorized immigrants and it provides a natural experiment on how legalization has impacted income and poverty among immigrants.

Social scientists across the political spectrum have generally found that legalization increases unauthorized immigrants’ wages, putting more money in the hands of immigrant workers to better provide for their families. Specifically, A 2010 RAND study on the effects of legalization found that it led to a 5 percent increase in wages for legalized immigrants.

The RAND study described how legalization leads to increased wages: “Illegal status generates barriers that constrain the choices of both workers and employers.”

A 2002 study by economists found similar results, concluding that the 1986 amnesty led to an average 6 percent increase in wages among legalized immigrants. While legalization alone will not lift all immigrants out of poverty, it does provide them with more opportunity to earn more and pursue further education so that immigrant families are not consigned a life in the shadow economy.

Researchers have identified a “wage penalty” for unauthorized immigrants that is primarily due to the imperative for authorized immigrants to keep a low profile: “When unauthorized workers enter the U.S. labor market, they may be less likely to maximize wages than to minimize the risk of apprehension. The risk of apprehension…provides incentives to work in jobs thatrequire little investment and training, and have flat experience profiles. These features ofemployment impede future investment--perpetuating and exacerbating wage differences.”

One of the most recent and comprehensive studies of the economic impact of legalization was published by the libertarian Cato Institute this year. Reviewing the literature on the economic impacts of legalization, researchersfound even larger wage increases from legalization, ranging from 6 to 13 percent.The study also examined almost two decades of research literature on theeconomic impacts of legalization, including on U.S. born workers. It found mixed results.

On the one hand, legalized workers who have comparable skills to native-born workers could become labor market competitors with natives because they are no longer being held back by their legal status. On the other hand, legalization is likely to lead to increased employer compliance with labor and health and safety regulations. Due to this, some research indicates that legalization leads to increases in wages among some U.S. workers.

Legalization will undoubtedly have positive impacts on the children of unauthorized immigrants – 73 percent of whom were born in the United States. The Cato study states, “Increased family incomes and greater stability would promote assimilation and socioeconomic advancement.”

The impact of legalization on immigrants and U.S. workers is not a closed research subject and not all researchers agree. A 2010 study by the California Public Policy Institute found that legalization would have little impact for both immigrant and U.S. workers – either positive or negative – because many legalized workers remain in low-skill occupations.

Still, a majority of analysis indicates that immigrant legalization would help immigrants earn more money, providing momentum for immigrant families to escape poverty. While other factors like immigrants’ education levels and English-language ability also constrain their earnings, 20 years of social science has found that legalization provides immigrants with opportunity to improve their economic condition and the chance to contribute to an economic growth.

 

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Comments

Great article. Let's hope both political parties cooperate on immigration reform.

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