Episode 20: The Economics of Immigration with Dr. Giovanni Peri
3:47PM May 28, 2022
Speakers:
Dr. Ian Anson
Campus Connections
Sophia Possidente
Dr. Giovanni Peri
Keywords:
immigrants
immigration
umbc
economics
students
people
world
increases
peri
natives
migration
marginal productivity
goods
research
enterpreneurship
country
social science
generate
impact
important
Hello and welcome to Retrieving the Social Sciences, a production of the Center for Social Science Scholarship. I'm your host, Ian Anson, Associate Professor of Political Science here at UMBC. On today's show, as always, we'll be hearing from UMBC faculty, students, visiting speakers, and community partners about the social science research they've been performing in recent times. Qualitative, quantitative, applied, empirical, normative. On Retrieving the Social Sciences we bring the best of UMBC's social science community to you.
"Immigrants, they get the job done." While that infinitely catchy line from Hamilton the Musical is a fun one to listen along to, the social science of immigration is a serious endeavor. Welcoming new arrivals from abroad into one's country poses a whole host of political, social, cultural, and economic questions. While the subject of immigration is therefore an encompassing one for the disciplines, in today's episode of Retrieving the Social Sciences, we take a look at the phenomenon of US immigration from the perspective of economics, and much like the Freakonomics observations of my fellow podcasters, Stephen J. Dubner, there are many surprising and unexpected aspects of migration economics that deserve close scientific scrutiny. On today's show, we hear from Dr. Giovanni Peri, Professor of Economics at the University of California-Davis, and a research associate of the National Bureau of Economic Research in Cambridge, Massachusetts. Dr. Peri is the founder of the UC Davis Global Migration Center and serves on the editorial board of several high profile academic journals. Dr. Peri's remarks help us to better understand how economic decision making plays a role in the contours of migration, both globally and within the United States. You know, a lot of us probably have some preconceived notions about how immigration works. We might assume, for example, that migrants to the US and other wealthy countries often come from some of the poorest countries in the world. We might also assume that immigration to the US is as high as it's ever been, or that immigration wasn't impacted at all by the COVID-19 pandemic. Further, we might be under the assumption that refugees make decisions about where and how to migrate that resemble those of other migrants. Well, according to the researcher, Dr. Peri, it's a lot more complicated. Let's take a listen to Dr. Peri's remarks, which were presented in the fall of 2022, at UMBC, at the Social Sciences Forum Mullen lecture sponsored by the Center for Social Science Scholarship, and organized by the Department of Economics.
This talk is not about selling this talk is about data, facts, and where I think it is useful to build in order to think about immigration in the US. In fact, before talking about immigration in the US, the focus of the talk will be focused on the impact of immigration in the US, I want to talk about some facts of immigration, which are really global, which are happening in the world. And I think you should we should start there to understand how immigration is evolving and what it is. I will also say at several point how a little bit of economics to help us understand immigration, of who migrates, what are the consequences. And then we'll talk about why immigration is so important, and relevant for the economics of the US. I will talk about where immigrant go, what do they do to jobs, to the economy, to innovation, creativity to the US population, and then how they generate these very important linkages. And then I will in the last part, I will talk a little bit about how immigration affects the politics or what are some research informed data about immigration and politics. And then a couple of facts, which still are a little preliminary on how COVID-19 changed migration and why I think going forward some of the impact that COVID-19 had, both on immigration and on the US economy, will be important to understand where we're going to go after that.
The first thing I want to dispel and if you just bring home one thing from this is this idea there is a very powerful and very wrong way of thinking about the US economy, labor market, and what immigrants do that. And this very powerful and very wrong way comes essentially straight out of Malthus. The idea that we live in a world that has a very strongly constrained productive capacity like land and more people you pile up the more the marginal productivity of people goes down. If you think of immigration as a sudden change of a lot of people in constrained resource place, then this will make you say migrant have to displace native, migrant has to push down the wage of natives. The real understanding of our research, not just in immigration economic but in growth economic, in trade, in economic geography, is that it's almost the opposite in fact. Which is when you have more skills, more people, more varieties of ability, more idea in a place close by.more you produce per person, because what matter for our economy is not how much land you produce. Land is not that relevant in production. Is how many ideas you have, how many abilities you have, how more complex is your set of skills. So the way of understanding the effect of immigration is that the economics that you should apply in the labor market is an economic in which a skill, ideas enterpreneurship, creativity, innovation play a key role. And if that's true, more people, and in particular, as I've showed you, out of which a lot of them are also highly educated, this is going to have a massive positive impact on firm, productivity, variety of things. So it's really hard to argue that the most developed country for most developed countries, the Malthusian, a world that maybe works in agriculture in sort of early society is a group good representation of reality. But really, when people say, immigrants steal your job, immigrant push native out of the labor force, they have the Malthusian model in your mind. So in a way that everybody who has taken ECON 1 can think about. THe relationship between productivity and density of people in employment, in a Malthusian world is one in which there is a fixed factor. And as a consequence of when you increase the number of people, immigrant bring number of worker from here to here, you have to push down the marginal productivity. And this world goes with more crowding, more congestion in production, more competition. Instead, in the world in which that we have seen in economics in the last 30 years, the world, I don't know, in which Paul Romer who was the growth economist wins the Nobel Prize, because he says that ideas are really what makes the growth, in which Paul Krugman wins the Nobel Prize in trade and geography because he says his specialization is a variety, is concentration that increases productivity knows who in their world. When you have more people that work in an economy, this increases specialization, increases agglomeration economy as they're called, increases diversity of skill that you need to produce sophisticated goods, and so ultimately increases productivity. And so clearly in a very simple representation, more people,more immigrant, in particular, if they are different people, if they are educated and they have different skills, brings you up along the marginal productivity or along the productivity line. So the theory that more immigrant going to place hurt the wage of natives is really is really very little evidence to support of that type of idea. The second thing that I don't think people have appreciated a lot but the recent research has brought out in a very strong way is that immigrants have a much higher enterpreneurship rate than native do in the United States. What is an enterpreneurship rate? Essentially, is a per 1000 people, the probability that one of them creates a new firm and to create a new job through that firm. Now, you can ask why, why is it that immigrants are and I think that again, selection explains a lot. And all of the characteristics that make you a good enterpreneur are similar probably to the characteristic that brought you to leave your country to begin with. You are probably less risk averse, you have, you fear change a little bit less, you are a little bit more adaptable. These firms that are created by by immigrants, of course employ a lot of natives as well. So, in a sense, if you think that the scars factor in a country is enterpreneurship, having more people who could create who have ideas, who have initiative, who have risk- taking attitude to create the firm can be the most important thing to generate some other jobs. So in this form, in this way, you see how immigrant can be actually very important in creating a generating jobs. Just out of their intrapreneurial impact, you can estimate this correspond to several hundreds of 1000s of jobs that are created in firms which are started by natives, so again, go back to Malthus. If the important factor to produce was land, fixed, more people generate less, but if the important factor to produce our idea, enterpreneurship, creating then more people and more of these kinds of people, increases really the possibilities of everybody.
One obvious thing that people have studied and people have said, but I just want to remind you is that if you look at all the impact that immigrants can have on the economy, their demographic impact can be just as important. Immigrants tend to be young, they come in the US when they're young, and they have more children than Americans. Then eventually, second, third generation are adjusted. But clearly, they will, they could be a force that attenuates the effect of aging, which is happening quite quickly in the labor force. One, they will keep the labor force relatively stable, otherwise, it will start shrinking in the next decade. And the second, maybe they will help with the Social Security. Of course, the Social Security is going to go through a transition because the US is aging. And so you will really need very large emigration to fully stabilize the population, but you can at least attenuate how drastic the impact is. So demographically, clearly, there could be a big, important role of immigrants. And then finally, for economies, immigrants create and other things, more immigrants generate more connection with the rest of the world. And there is a lot of work and a lot of study that shows that more immigrants imply more trade, in particular of complex goods. Means goods, which are differentiated because immigrants didn't know about the culture of the country, maybe they consumed but they also know how to export better this good and more immigrants apply more investment. Company that immigrant and know better how Italy, Lithuania, Korea work, and they can invest in those country better. I'm gonna, again, this these is just a show number. These are network connection, from migration and from trade. But I want to point out that this is the estimated most that a lot of work the consensus for 1% more immigrant, more immigration that you have the import and export of a country with that country of origin increased by .2-.3%, There are a lot of studies, they use different identification, different method, but that's the common result. The more network of immigrants the larger import and export the larger connection. So more goods, more variety of goods are available, more opportunity to invest, and so on.
Okay, last thing I want to say is COVID. I'm going to show you that COVID in COVID, because mobility in the world was stopped because US Consulate didn't process Visa, because it was very hard to come in the US essentially call it as caused, it's caused the two years of immigrant a net of kind of any these are sort of flattened immigration to zero as I will show. At the same time COVID has made realize that Americans that immigrants are crucial in many sectors. Immigrants are over represented in sector that came out to be critical. In healthcare, even just take health care. This is the percentage of immigrants in California on average, in the big state of New Jersey, New York ,and California. And this is the average and see that the presence of immigrants, almost 30% of people in health, working in healthcare are immigrants. Significantly more than the average. Of course, you can see that agriculture is an essential sector, which was back then. Agriculture in the US is only done by immigrants everywhere. So you think that the incredible shortages, the decline of immigration, the realization that they play a critical role, maybe would generate now kind of a little bit of a political direction towards some of these immigration, immigration reforms that we have had, that we that we could do, and we never did. But the answer is no. So to conclude, from an economists point of view, immigration is a great engine of economic growth, and in particular, in the US, immigration has been a great engine of economic growth. And in the longer run, especially if you take a little bit of a longer run perspective, you clearly see that the benefits from less restrictive more, more open and forward looking immigration policy could be significant, could be important. COVID is providing us I just showed you something COVID is giving us also a lot of other things to talk about how we work maybe these immigrant don't even need to come anymore here because they can work remotely. It will give us a lot of things to work and to think about because immigration can change and labor can change after COVID but at the very least shows us how important interconnected immigrants are in many sector plus tells us that the shortages we are experiencing like right now of worker maybe partly dependent on that. Maybe at some point this will be brought in the debate, debate. But leaving aside the politics of it, I think that from an economic point of view, immigration has been, is, and will continue to be after COVID a crucial economic engine for the US.
Now it's time for Campus Connections, a part of the podcast where we connect today's featured content to the work of other scholars on UMBC's campus. Today's connection features the work of our very own CS3 Associate Director, Dr. Felipe Filomeno. Dr. Filomeno, Associate Professor of Political Science and Global Studies, is an interdisciplinary community based scholar focused on human development in the context of Latin America and the Latin American diaspora in the United States. As it turns out our production assistant Sophia Possidente, is here to tell us a bit about a new paper that Dr. Filomeno has published on the topic of immigration. This one is pretty relevant to our many discussions about higher education on the podcast, because Dr. Filomeno's paper studies college students who also happen to be immigrants to the United States. What's this paper all about Sophia?
As it turns out, today's installment of Campus Connections not only features the research of Dr. Filomeno, but his collaborator and fellow UMBC professor Dr. Christopher Brown. Dr. Brown is a lecturer in UMBC's Global Studies program whose specializations include transnational migration and international education. Their paper called "Immigrant Students and Global Education" was not only authored by UMBC faculty, but describes research that was carried out on campus. Using the experiences of real UMBC undergrads, Drs. Filomeno and Brown documented their project as they sought to increase levels of global competence on campus by facilitating student research on the immigrant experience. In the fall of 2019, eight student participants enrolled in a 400 level research practicum course within the Global Studies program. The goal of the class was to examine how the lives and academic careers of immigrant students were shaped by their previous intercultural experiences. Students conducted semester-long independent research projects, which informed the pedagogical observations included in the resulting faculty publication. Drs. Filomeno and Brown concluded that the course was largely successful for students, both grade-wise and in terms of building global competence. While many students originally focused on deficit framings, or what factors make academic life more difficult for immigrant students, continued research and interviews revealed the many ways transnational education is beneficial, both for immigrant students and the communities they're a part of. The work of Dr. Filomeno and Dr. Brown has a very meta nature to it. A research paper about research and observation of UMBC students who in turn observe their classmates. This layered approach truly captures the complicated ways immigrant students and immigrants as a whole are shaped by their surroundings, and how their surroundings are shaped by them.
Thanks again Sophia, for your great synopsis. And thank you to your listeners for learning about immigration, economics and the student experience with us today. Until next time, keep questioning.
Retrieving the Social Sciences is a production of the UMBC Center for Social Science Scholarship. Our director is Dr. Christine Mallinson, our Associate Director is Dr. Felipe Filomeno, and our production intern is Jefferson Rivas. Our theme music was composed and recorded by D'Juan Moreland. Find out more about CS3 at socialscience.umbc.edu and make sure to follow us on Twitter, Facebook, Instagram, and YouTube, where you can find full video recordings of recent UMBC events. Until next time, keep questioning.
