Impacts of Border Enforcement on Unauthorized Mexican Migration to the United States
Published on: Sep 26, 2006

Is there a better way?  I have three main recommendations:

First, we should legalize as many as possible of the unauthorized immigrants already here.  That will reduce their vulnerability to exploitation, improve their mobility within the labor market, increase their contributions to tax revenues, and, by increasing family incomes, reduce high school drop-out rates and boost college-going rates among children of unauthorized immigrants.  

Second, we need to reduce the necessity to migrate to the U.S. illegally.  That means providing a temporary-worker option for as many as possible of prospective migrants who do not wish to remain in the U.S. permanently, and substantially increasing the number of employment-based, permanent-resident visas that we issue, especially to low-skilled workers.  Much of today’s unauthorized immigration is manufactured illegality:  It is a direct function of a set of immigration laws and policies that unduly restrict the number of legal-entry opportunities for foreign workers based on their occupations. Currently, only 140,000 employment-based visas are available to people of all nationalities each year.  And of those, only 5,000-10,000 go to low-skilled workers.  Last year, only 3,200 employment-based visas were issued to Mexicans, in a year when more than 400,000 Mexicans were added to the U.S. work force through illegal immigration.  

Third, we need to help create alternatives to emigration for a larger number of potential migrants in Mexico.  Narrowing the U.S.-Mexico wage gap will be a multi-decade project.  Only when the Mexican labor force ceases to grow, sometime after 2015, will there be upward pressure on wages in Mexico.  Apart from changing demographics, narrowing the income gap will require deeper economic reforms in Mexico: improving the tax effort, modernizing labor laws, opening up the state-run energy and electricity sectors to private investment, and so forth.

NAFTA was supposed to have reduced the U.S.-Mexico income gap, but has had the opposite effect.  Per capita GDP has risen in Mexico, but it has risen much faster in the U.S.  Today, annual per capita GDP in the U.S. is more than 6 times that of Mexico. NAFTA created jobs in Mexico’s manufactured-export sector, but competition from cheaper U.S. imports has put millions of small farmers out of work, and the non-agricultural jobs that have been created do not pay enough to enable most Mexican families to lift themselves out of poverty. It is the real wage difference, more than anything else, that drives migration to the United States.

In our research in rural Mexico, we have found consistently that the leading motive for migration is higher wages in the United States than in Mexico.  Only 4-5% of migrants interviewed in most studies reported that they were openly unemployed before going to the U.S.  In our fieldwork earlier this year, we found that only 1% had been unemployed before migrating for the first time.

Micro-development programs, targeted at the areas that send most migrants to the U.S., have the capacity to create better-quality jobs, in the places where they are needed to discourage emigration.  I am referring to programs to support small-business development; to create new a financial services infrastructure that facilitates saving and reinvestment of money remitted by Mexicans working in the United States; and programs to expand physical infrastructure – roads, telecommunications, irrigation facilities, and so forth.  

The U.S. is no longer in the business of “Marshall Plans.”  But a creatively designed and binationally financed program of targeted development, perhaps administered by the World Bank or the Inter-American Development Bank, is an idea that deserves much more serious consideration.  This is the kind of development assistance that the northern EU nations channeled in massive amounts to Spain, Greece, and Portugal, before and after these countries joined the European Union.  It made possible a step-level increase in GDP growth in these countries, reduced the north-south wage differential by half, and eventually turned all of the southern-tier EU countries into net importers of labor.  

This far-sighted approach to immigration control worked in Europe, and it could work in North America, if we would stop treating unauthorized immigration as a matter of crime and punishment and start looking seriously at measures that would actually decrease the supply of would-be migrants. The developmental approach has gotten short shrift in both Washington and Mexico City, but it is the only approach to immigration control that is likely to reduce illegal migration significantly in the long run.  There is virtually complete consensus among academic immigration specialists on this point.  

Immigrant Contributions to U.S. Economic Strength and Fiscal Health

There are numerous potential threats to future U.S. economic strength and fiscal health, but immigration is not one of them. On the contrary, the fact that we are so successful in the global competition for labor is one of our greatest strengths. That competitive edge is perhaps most evident in terms of highly-skilled immigration.  In our ability to attract and retain high-skill immigrants, we currently rank fourth in the world, behind Australia, Canada, and Switzerland, but far ahead of Britain, France, Germany, and Japan.  

We could be doing better in the global competition for highly skilled immigrants if we did not set an artificially low limit on this kind of immigration.  In several recent years, all 65,000 H-1B temporary visas that were made available have been exhausted on the first day of each fiscal year.  The Senate’s immigration reform bill would raise the cap on temporary, high-skilled/professional immigration to 115,000, but most experts consider even that number to be inadequate.  

We are conspicuously successful in attracting low-skilled immigrants, and it is important to recognize that the influx of these workers is making possible higher rates of growth in numerous labor-intensive industries than would otherwise be possible.  Construction, the hospitality industry, and food processing are the most obvious examples.

Most economists believe that large-scale immigration – both low-skilled and high-skilled – is essential to assure robust economic growth, dampen inflationary pressures, and finance intergenerational transfer systems like Social Security and Medicare.  Because of low fertility rates, our total labor force growth has already fallen from 5% a year in the 1970s to less than 1% since 1990.  And without immigration, our labor force would be shrinking by 3-4% a year.   

The contribution of immigration to labor-force growth was most evident during the economic boom of the late 1990s, but even now, with a national unemployment rate of 4.6% — and 3% in Sunbelt cities like San Diego, Las Vegas, and Phoenix – we are below what is conventionally defined as full employment.  If immigrants were not entering our labor force in very large numbers, we’d be seriously overheating the economy.

The longer-term implications of immigration for the U.S.’ economic strength and position in the world should not be underestimated.  Like all other OECD countries, we have a population-aging problem.  We are getting our young, entry-level workers largely from immigration.  The contrasting age pyramids for our immigrant and native-born populations tell the story:  35% of our male foreign-born population in 2000 were in prime working age groups, compared with only 24% of the native-born population.

The “dependency ratio” in developed countries in general is set to rise steeply in the next 10 years and beyond.  By last year, there were 142 potential labor-force entrants for every 100 potential retirees, but in less than 10 years, there will be only 87 labor-force entrants for every 100 retirement-age people.  Europe and Japan have a huge problem, not just because of well-below-replacement-level birth rates but because, for political reasons, they don’t have expansionary immigration policies. There are already very large fiscal imbalances in the health-care and pension systems of these countries.  As UC-Berkeley economist David Card recently observed, “They’re going to end up on the back burner of the global economy,” at least in part because their immigration policies are too restrictive.

Immigration at present levels will save the U.S. from labor force decline in the short-to-medium run, but it won’t be enough eventually, because the birth rate among Latino immigrants – our highest-fertility group – is already falling sharply.  It’s still well above whites and blacks, but the trend is clearly downward.