Sunday, March 21, 2010

Where are the Pakistani Kings? (part II)

In the previous post we discussed the impact of an immigrant group's level of education and training (and not national origin) in determining their economic and social output. The vast majority of research that seeks to ascertain the costs and benefits provided by immigrants, focus on the 1st generation. This is clearly a limited and short sighted approach, because the effect of each individual spans several generations via the economic and social costs and contributions of their offspring to the United States. Conventional wisdom dictated that a multi-generational analysis was not necessary, because the offsprings of immigrants would thoroughly assimilate and economically advance according to their individual merits, as demonstrated by the stellar rise of the children and grandchildren of so many poor immigrants.

In his book "Heaven's Gate," the Harvard economist George Borjas presents strong evidence that "many of the cultural and economic differences that exist among immigrant groups - as well as between immigrants and natives - are transmitted to their children, so that the diversity found among today's immigrants becomes the diversity found among tomorrow's ethnic groups." (pg 126) Or to put it simply "there is a strong positive correlation between the socioeconomic outcomes experiences by ethnic groups in the immigrant generation and the outcomes experienced by their children and grandchildren." (pg 128)

For example, in 1970 a 1st generation worker from Mexico earned -27.6 % less that the average native worker and in 1998 their children earned -19.7 % less. In contrast a 1st generation immigrant from Germany earned 21.9 % more and their children earned 17.6 % more than the average American worker. On average 67% of the wage differences between native and immigrant workers were transmitted to the second generation. So, although we are witnessing a regression towards the means, it's at a much slower rate than previously anticipated.

Borjas also found a surprisingly strong correlation between the literacy rate of the first generation and the number of years of schooling that the third generation achieved. Interestingly, but not surprisingly, the education level of the first generation had a strong bearing on the income level, incarceration rate and use of welfare of the third generation. However, there are many cases that defy predictive logic. For example, only 12% of first generation immigrants from the Dominican Republic utilize welfare, whereas nearly 40% of the second generation does. And (in 1970) the wages of first generation Greek immigrants was -3.9% less than those of native born Americans, however the second generation enjoyed wages 31.8% greater than that of their American counterparts.

It's also worth noting that in the period of 1940 - 1970 the inter-generational correlation in income between the 1st and 2nd generation was 0.45 and between 1970 - 1998 the correlation increased to 0.69; in other words the rate of assimilation has decreased over time. Of course this is the predictable outcome of the shift of governmental and educational elites away from an ideology of assimilation towards one of multiculturalism. And also noteworthy is the fact that the level of assimilation and achievement of immigrants who resided in neighborhoods with lower demographic concentrations of their compatriots were generally superior to those who resided in heavily immigrant neighborhoods.

So, what are the policy implications can we draw from the work of Borjas? The starting point is to embrace intellectual honesty and put facts before feelings and economics before feel good narratives. Next we must acknowledge that the skill and educational level of each immigrant offers benefits or imposes costs for three generations or more. From there we can analyze the success rate of the third generation to determine the relative success or failure of our initial immigration policy. And as stated in part I of this post, the issue is not the race of origin of the immigrant, it's what segment of the population they represent. So, the very high rate of welfare use among second generation immigrants from the Dominican Republic implies that we need to encourage a very different segment of the said nation to immigrate to the United States, particularly individuals with a higher rate of educational and professional achievement. And to facilitate greater assimilation and achievement we should encourage a smaller and more diverse influx of immigrants, rather than a large population with an over-representation of several key nations. But, in this age of political correctness, intellectual honesty is a scarce resource, so don't expect real change anytime soon.

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