1. Financial Education & Economic Inclusion The Immigrant Experience April 22, 2013 Pia Orrenius Federal Reserve Bank of Dallas Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System. Realizing the Gains from Immigration Reform

2. Road map Economic contributions of low-skilled immigrants Likely gains from immigration reform

3. Rising influx of foreign-born, low-skilled workers

4. Over half of migrants from Mexico, Central America lack a high school degree Note: Composition of educational attainment among immigrants by country of origin. Source: 2011 American Community Survey

5. Immigrants fill some of the toughest jobs (low-education)

6. Immigrants go where the jobs are Note: Coordinates indicate deviation from average foreign born population log growth (vertical axis) and from average state nonfarm payroll log growth (horizontal axis) from 1990 to 2009.

7. Economic benefits of immigration Immigrants benefit from higher wages Family, origin from remittances Family, origin from remittances Natives also benefit More workers, lower prices More workers, lower prices Higher productivity through specialization; efficiency through mobility Higher productivity through specialization; efficiency through mobility Higher return to capital boosts investment Higher return to capital boosts investment Immigration surplus $38-$75 billion per year Immigration surplus $38-$75 billion per year Complementary immigration, bigger boost

8. Low-education immigrants have high employment rates compared to natives No High School Diploma

9. Low-education immigrants have low unemployment rates when compared to natives No High School Diploma

10. Immigrants earn 20 percent less than natives Real Median Weekly Earnings

11. LIKELY GAINS Immigration Reform

12. Unauthorized population as large as permanent resident population Source: Pew Hispanic Center

13. Low-skilled: Work visa applications far outstrip number available

14. Immigration reform Legalization for unauthorized immigrants Work visas for low-skilled, non seasonal workers Resolution of the green card queues Currently extend decades for Mexicans Currently extend decades for Mexicans

15. Impacts of immigration reform Migrants Higher wages; better job matches Higher wages; better job matches Restore circularity Restore circularity Youth: better education, socio-economic outcomes Youth: better education, socio-economic outcomes Natives/Previous migrants Expand tax compliance; Even playing field Expand tax compliance; Even playing field Improve working conditions Improve working conditions Any downsides?

16. Concluding thoughts Low-skilled immigration has been large, with high shares unauthorized Outcome of robust labor demand, plentiful labor supply in Mexico Outcome of robust labor demand, plentiful labor supply in Mexico Increasingly costly, disruptive system Increasingly costly, disruptive system Immigration reform likely broadly beneficial Timely too Timely too

18. Low-skilled immigrants earn less Note: Median hourly wages among full-year workers by educational attainment and nativity. Source: 2011 American Community Survey

19. “Immigration Surplus:” The rise in natives’ incomes from immigration Labor force grows, output increases Immigrants account for nearly one-half labor force growth since 1996 Immigrants account for nearly one-half labor force growth since 1996 Prices fall, return to land and capital rise. Efficiency gains Complement native workers at high, low ends of skill distribution Complement native workers at high, low ends of skill distribution Fill jobs natives shun Fill jobs natives shun Move to where jobs are Move to where jobs are High-skilled: Boost innovation, entrepreneurship High-skilled: Boost innovation, entrepreneurship