Transcript Investigating the Impacts of Illegal Immigration

Investigating the Impacts of
Illegal Immigration
Presented by:
Joshua R. Brownstein, Associate Economist
Christopher S. Gerlach, Associate Economist
May 27, 2010
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Outline
State of Affairs
Legislation and Controversy
Modeling Considerations
Texas Comptroller Analysis Overview
Basic Methodology
REMI Inputs
Partial Model Demonstration
Sample Results
Take Aways
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State of Affairs
• 31.1 million foreign-born population in 2000 (19.8 M in 1990)
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Immigrants (legal permanent residents)
Temporary migrants (e.g. students)
Humanitarian migrants (e.g. refugees)
Unauthorized migrants (people illegally residing in the U.S. – includes those w/
expired visas)
• California, New York, Texas, Florida, Illinois and New Jersey account
for more than two-thirds (21.3 M) (U.S. Census Bureau, 2000)
• 8.3 million illegal immigrants working in the U.S. as of March 2008
(Pew Hispanic Center, April 2009)
• Demographic characteristics of undocumented immigrants:
– Adult males
– Less-educated
– Employed in low-paying jobs (service occupations, construction, food preparation,
farming, etc.)
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Legislation and Controversy
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Historical Proposed Federal Legislation
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2004 Guest Worker Program (President G.W. Bush)
2005 Comprehensive Enforcement & Immigration Reform Act (S. 1438)
2006 Comprehensive Immigration Reform Act (S. 2611)
2007 Comprehensive Immigration Reform Act (S. 1348)
Arizona Senate Bill (SB 1070)
– Mandates that law enforcement officials determine immigration status at the time of a
lawful stop if there is reasonable cause to do so
– Makes it a misdemeanor to not carry immigration papers
– Allows legal residents to sue relevant state agencies for non-compliance
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Controversy
– Illegal immigrants are taking jobs away from legal residents, driving down wages, using
public services without contributing taxes, committing crimes and overcrowding prisons
… Federal Government has been unwilling/unable to effectively address this issue …
– Tantamount to state-sanctioned racial profiling … loss of cooperation from immigrant
community … drastic increase in short-term incarceration rates/costs … likely to shift
rather than curtail the flow of illegal immigration …
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Modeling Considerations
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What specific form does the legislation take?
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What are the comprehensive impacts of immigrants?
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Inclusion of descendants … e.g. long-term costs/benefits of public education
Potential lags in labor market responses may lead to fiscal microeconomic insolvency
What is the appropriate scope of analysis?
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Legal … proxy for potential impact of legalization policies
Illegal … specific characteristics of the underground economy
What is the appropriate time-frame of analysis?
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Enforcement … proactive and/or reactive
Legalization … existing and/or new
National vs. regional
Fiscal vs. economic
Regional vs. national … high disparity across regions … impacts more severe at local levels
Other considerations …
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Student visas … higher education as an export and driver of regional/national competitiveness
Travel and tourism … boycotts
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Texas Comptroller Analysis Overview
December 2006 study by the Texas Office of the Comptroller of Public Accounts measuring
the impact of 1.4 million undocumented immigrants on the Texas economy
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Fiscal Impact
State Costs
Education
Health Care
Incarceration
TOTAL COSTS
$967.8 million
$ 58.0 million
$130.6 million
$1,156.4 million
Net Fiscal
Impact to State:
State Revenues
Consumption taxes and fees
School property tax
Etc.
TOTAL REVENUES
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+424.7 M
$866.7 million
$582.1 million
…
$1,581.1 million
Economic Impact … contributions to major economic indicators from 2005 - 2025
2005
2015
2025
Total Employment Loss
298,000
293,800
302,700
Total GRP Loss (Billions of Fixed 2000$)
$17.7
$20.5
$22.6
Personal Income Loss (Billions current dollars)
$18.5
$24.6
$42.9
Labor Force Loss
714,100
340,500
281,600
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Basic Methodology
Scenario: Large Scale Ejection of Undocumented Immigrants
• Economic Variables
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Industry Employment (by sector)
Farm Employment
Exogenous Final Demand (by sector)
State and Local Government Spending
 Compensation Rate / Non-Compensation Labor Costs
 Production Cost
 Labor Access Index
 Capital Cost
• Demographic Variables
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Economic Migration
(Labor Force) Participation Rate
Prison Population
• Alternative Model Specification
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REMI Inputs
• Regional Configuration
– BEA 8-Region; 169-Sector national model
• Baseline Recalibration
– Alternative model specification: “turn off” REMI Economic
Migration Response to Expected Income
• Scenario
– Industry Employment (share)
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Construction
Services to Buildings and Dwellings (janitorial and landscaping)
Accommodation (housekeeping)
Food Services and Drinking Places (food preparation)
– Economic Migrants (number)
• Hispanic, Ages 0-64
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Regional Configuration
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Partial Model Demo
Abbreviated Model Demonstration
Economic Policy Variable
Industry Employment (share)
Construction
Services to buildings and dwellings
Accommodation
Food services and drinking places
2010
-10
-10
-10
-10
2011
-20
-20
-20
-20
2012
-30
-30
-30
-30
2013
-30
-30
-30
-30
2014
-30
-30
-30
-30
2015
-25
-25
-25
-25
2016
-20
-20
-20
-20
2017
-15
-15
-15
-15
2018 2019
-10
-5
-10
-5
-10
-5
-10
-5
Demographic Policy Variable
Economic Migration (number)
Hispanic, Ages 0-64
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-500 -500 -500 0
0
0
0
0
0
0
Sample Results
Decreased employment in undocumented immigrant-dominated
industries …
Decreased economic migration for Hispanic population/labor force …
 Increase in average annual compensation rates
(labor demand > labor supply) …
 Decrease in regional competitiveness …
 Decrease in regional exports …
 Decrease in real disposable income
(employment loss > compensation gain) …
 Decrease in consumption …
 Decrease in GRP …
 Further decrease in Employment …
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Take Aways
• Immigration reform policies are exceedingly complex and will
have a wide range of unique fiscal and economic implications
depending on how they are implemented
• Appropriate modeling of a comprehensive immigration policy
will rely on a nuanced understanding of that policy’s intended
behavioral responses
• The temporal and geographic aspects of the policy and the
analysis are crucial to deriving justifiable output
The REMI model is an effective way of standardizing this type of
analysis and can be a persuasive tool for informing policy
makers of the likely consequences of any given legislation
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Questions/Comments?
District Office:
700 12th St. NW, Suite 700
Washington, DC 20005
Joshua R. Brownstein
Associate Economist
Christopher S. Gerlach
Associate Economist
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Ph: 202.904.2490
[email protected]
[email protected]
www.remi.com
Structural Model
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Structural Model (cont.)
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TX Study Fiscal Detail
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Costs of illegal immigrants (state costs only ... local effects may be greater)
– Education (primary and secondary)
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~135,000 undocumented students in TX public schools
~$7,000 / student / year (excluding federal funds)
~$957 million
~$11 million (higher education)
– Medical expenses ~$58 M
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Emergency Medicaid
State and Local Programs (children with special health care needs, substance abuse services, mental
health services, immunizations, school-based programs
Public Health Programs
– Incarceration ~$130 M
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Law enforcement
Trials and appeals
Corrections
– Impact on wages of legal residents
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Revenues from illegal immigrants
– Sales tax
– User taxes (gasoline, etc)
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TX Study Fiscal Detail (cont.)
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Contributions to employment, wages and revenues (2005-2025)
Contribution to state revenues ~$1,581 M ($999M + $582M)
– Consumption taxes and fees
• Sales tax
• Motor vehicle sales and use tax
• Gasoline tax
• Alcoholic beverage taxes
• Cigarette and tobacco taxes
• Hotel tax
– Lottery proceeds
– Utility taxes (gas, electric, water)
– Court fees
– All other revenues (higher education tuition, state park fees
– Local school property taxes ~$582 M
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Cato Analysis
• Direct Employment (foregone/gained)
 Personal income
 Consumption
 Output
• Compensation Rates (immigrants/U.S. residents)
 Production costs
 Imports/Exports
 Output
• Fiscal Impact (expenditures/revenues)
– Services: Public education, health care, incarceration
– Taxes: Income, property, consumption, visa
• Descendant Impact (short-term/long-term)
– Educational attainment
– Income  Consumption  Output
– Productivity  Production Costs  Output
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