“Immigration and Job Creation at the State Level”
Mike Kimel continues his discussion on how Immigration impacts Job Creation.
In this post, I am looking at how the percentage of a state’s population that is made up of immigrants affects job creation. After all, we hear from some quarters that immigrants create jobs, and from others that immigrants take away jobs that would otherwise go to Americans. Obviously, the truth is sometimes one and sometimes the other, and mostly somewhere in between. It depends on many factors, including the nature of the immigrants themselves, who, like anyone else, vary in attitude, capability, sociability, etc. Even so, understanding whether in aggregate, immigrants help or hinder, and under what conditions, is worth knowing.
As I was pulling data, it occurred to me that I had phrased the question poorly. The relevant issue is not whether immigrants create jobs. It is whether immigrants create jobs for the native population. If you doubt that, I’ve got an experiment for you to perform. Go to Chetumal. From the pictures I’ve seen, it seems like a very pretty town in Mexico on the border with Belize. Meet with the mayor, and tell him (at this time the mayor is a man) you will renovate a factory and put 100 people to work in his town. I bet he will be ecstatic. Now explain that your plan involves hiring 110 Belizeans and firing 10 Mexicans who are currently employed. My hypothesis is that the mayor’s mood will noticeably sour at this point. You don’t actually have to go with Chetumal to run this experiment. Pretty much any jurisdiction not run by a US politician will probably do.
Having established the question, here’s how I tackled it.
1. I found data on the immigrant share of each state from Pew Research. Data is available in 10 year increments from 1960 to 2010, and then for 2014. Pew references the American Community Surveys, so I am 99.97% certain that all of the data originates with the Census, but I couldn’t find it there.
2. I found data on monthly reports containing, among other things, “employees on nonfarm payrolls by state” for every month going back to December 1993 at the BLS
3. There are three years for which the immigrant data can be matched to employment data: 2000, 2010, and 2014. For each of those years, I used employment figures for December and the immigrant share of the population to calculate the “native born employment.” That is, the number of jobs held by native born people.
3a. Note the implicit assumption that the native born share of employment was equal to the native born share of the population. That may be an underestimate in places where immigrants are go-getters and bring strong competitive advantages. Conversely, it will be an over-estimate where the immigrants are less industrious and less competitive than the natives. I believe this effect will be small.
4. I computed the growth rate in native employment from 2000 to 2010, and from 2000 to 2014.
5. I computed the correlation between the immigrant share of the population in 2000, and the growth rate from 2000 to 2010 as well as the growth rate from 2000 to 2014. They were -0.047 and 0.032, respectively. In other words, very close to zero.
So, at first glance, immigrants today don’t affect the job market tomorrow. But the problem is, this analysis lumps Texas with West Virginia. That’s like comparing oranges and bicycles. So how do we do this differently? One way is to use geographic groupings developed by the Census. For each of those regions, I found the correlation between immigrant share of the population in 2000, and the growth from 2000 to 2014, and also the median immigrant share for the states in the region. And since a picture is worth a thousand words, I overlaid that on a reasonable looking map showing the Census regions that I found here.
So what do we see here (click on the picture for larger size)? The red numbers, which are the correlation between the immigrant share of the population in 2000 and the growth rate from 2000 to 2014 are positive in the three Census regions that mostly correspond to the old Confederacy, and negative everywhere else. That is to say, in the old Confederacy, the more immigrants there were in a given state in the year 2000, the more jobs were created over the next 14 years. But, in general, outside that region, the more immigrants there were in the year 2000, the fewer jobs were created over the next 14 years.
Why might that be? Assuming the relationship is not spurious, I can think of a few reasons for the relationship. One scores OK on my personal self-censorship index (i.e., the ratio of how well an explanation fits the facts divided by the expected amount of trouble I will get into for pointing it out) so that’s the one I’m sticking with. The gray highlighted numbers shows the median percentage of immigrants for the states in each Census region. And it does seem there is a rough correspondence between the likelihood that regions with a smaller share of immigrants are those most likely to benefit from more of them. Put another way – like just about any other variable, there is an optimal number of immigrants. If you have too few, added some will generate benefits. But there is a converse to that statement too – if you have above the optimal percentage of immigrants, adding more immigrants can put locals out of work.
Normally this would be the end of the post, but I feel I should add a few additional comments below.
Comment 1: Frankly, I don’t think the Census geographic divisions are the right way to do this analysis. Sure, the Great Lakes states (a.k.a., East North Central) makes sense. And we aren’t comparing Texas and West Virginia, but we are comparing Florida and West Virginia, which is just as bad. And worse, we are weighting Florida and West Virginia the same. Personally, I’d like to see “Large Coastal Economic Powerhouses” – California, Texas, Florida, and New York – which make up a third of the country’s population (correlation = -0.59) and other logical groupings.
Comment 2. This analysis biases down the negative effect of immigration on jobs, and biases up the positive effect of immigration on jobs. Assume for simplicity that any state that manages to crack the nut will generate jobs for a 15 year period, no matter what else happens. If a state pulls that stunt off in 1997, by 2000 its share of the immigrant population will be up, but it will continue generating jobs for at least a decade. The way I set up this analysis, the newly arrived immigrants “get the credit” for job generation.
Comment 3. Perhaps this analysis shouldn’t be on the immigrant share of the population as much as on newly arrived immigrants as a share of the population. After all, most immigrants who have been here at least X years have fully assimilated and are part of “us.”
Comment 4. As always, I will mail a copy of my spreadsheet to anyone who wants it provided they email within two weeks of the date this post goes up. You may be in luck beyond that point, but as time goes on, I may switch computers, die, etc. If you want my spreadsheet, I am at my first name (that is “mike”), dot, my last name (that is “kimel” with only one m) at gmail dot com.
Comment 5. This one is mostly irrelevant, but provides a bit of the background to this post. A few weeks ago I had a post using national level data which showed a a negative correlation between the immigrant share of the population and the growth in jobs over the next decade going back to 1950. In a more recent post I tried to provide a few explanations for why. The comment section got rather testy and led to what is, as far as I can see, a rather odd post.
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I unblocked this against our usual principles. The one piece of advice I would give all rookie blog writers is not to spam other blogs with a variation of “I’m thoroughly enjoying your blog, now please link to mine”. Especially if the purpose of your blog is something more commercial than just pushing quotes. We have literally thousands of comments in our Spam filter that are some variant on this, only the most benign actually survive long enough to make it to moderation and then to Trash. I suspect your first long comment went to Spam.
If you have something to say then say it. Then welcome. Otherwise it was nice meeting you.
I don”t know — just saying — if the 110 Belizeans are going to make their homes on the Mexican side of the border (and not send too much money back to Belize), then, maybe they might create enough extra economic activity to support 10 more Mexican worked jobs.
The big factor to consider here is of course labor union density — of course.
Of course, if labor’s price is pretty much everywhere set by collective bargaining, then, there might not be any financial motivation (cheap labor) to hire the 110 Belizeans in the first place. ???
Conversely, if labor’s price is set by collective bargaining, then, there would probably be an advantage to hire local Mexican labor which would be at least somewhat more in tune with management (when different languages are involved like US/Mexico, a bigger advantage).
I’m certainly no economist, but what hit me about your 110-new-Belizean-workers-replacing-10-Mexican-ones-in-a-small Mexican-town hypothetical is that a net gain of 100 wage earners in a small town surely would have a positive multiplier effect (I read Krugman’s blog!) on overall employment in the town. They would be buying goods and services in the town, paying taxes that probably would support the maybe two additional teachers needed, and probably would require additions to the town’s housing stock.
The 10 laid-off Mexican workers probably would become employed elsewhere in the town very quickly.
Do you mind not editing Mike’s post???
Thanks for the memories, Run. In the early 60’s I took a year off and went south rather than what my friends did touring Europe. The Mexican, Belize (then British Honduras), border was seminal to my switching from pure math to economics on my return.
No disrespect but I should have stayed with pure math.;-) Far less BS that can be manipulated to whatever one pre-decides. By the way I agree with your post..
Actually, run, after reading Tonu’s comment I tried to put a note at the top saying that Mike is the post’s author, not you.
But …. whatever.
Both Bruce and I are editing while Dan is away. Three times I tried to make a change and three times you over rode what I was doing. There is a notice which pops up each time you go into editing and some one is there. You ignored it. I was fixing it so back off.
Well, I didn’t KNOW you were trying to edit it at the very same time (and for the very same reason) that I was. I didn’t know anyone was trying to edit it then.
And I’m NOT HAPPY that you edited the title of my post so that it suggests that the point of my post was the opposite of what it was. Go look at that title NOW.
For what it is worth I thought the specific split in editing Bev’s title was not the right approach. Rather than split the 4 sentences into 1 and 3 I was going to suggest 2 and 2. Which would have preserved Bev’s Thesis/Antithesis thing even as the Synthesis got put in the main post. But didn’t want to get in the middle once Dan weighed in. Life being too short. But since I am here:
Four sentences in a title is too much. Isolating the one sentence did do violence to Bev’s overall thesis. Further affiant sayeth naught.
You swore under oath to that. You said under penalty of perjury that run was partly right. But that’s obviously a lie. Run is not partly right. Run is completely wrong.
Were we in Court some time that I forgot? Maybe I was deposed in a lawyer’s office somewhere? Oath? Penalty of perjury? Can you point me to the thread and time post in question? Because I am baffled. Also torn somewhere between amusement/bemusement and alarm.
No, no satire. Absolute fact. You said, “Further affiant sayeth naught.” Obviously you were attesting under oath–to something that clearly is not true. Run is wrong. Run is always wrong when he disagrees with me. Which is often.
Bev this is fun but. Look at my testimony and its verbs: “I thought” “I was going to suggest” “Which would have preserved” ” didn’t want to get in the middle”. Three interior statements and one counter-factual. Unless you are a mind reader and know I didn’t so think, intended to suggest, or didn’t want to interfere none of those can be perjury. And the counter-factual did not agree with what Run proposed or did so is neither here nor there for this purpose. Then I laid down the hammer:
“Four sentences in a title is too much. Isolating the one sentence did do violence to Bev’s overall thesis.” The first sentence is an opinion about efficacy in blog titles. The second essentially agrees with your position. So I am not seeing a lot of agreement with Run, leaving aside the question of whether he never, ever gets anything right in his disputes with you. Which kind of triggered the joking quote of something you would never hear in a U.S. court today (if this was a court) “further affiant sayeth naught”. Which in context means “please leave me out of something I never wanted to be part of”. But literally means a statement by someone who swore to an affidavit. Okay. But where is the positive statement I gave that was in fact untrue? The ones about my state of mind? The assertion that the edit did do violence to your thesis? Is that something you are disputing?
Let me rephrase that “affiant” thingie with another quote from a few hundred years ago: “Exit, pursued by a bear” A Winters Tale, Act 3
I do deserve the chide for not reading the headers carefully.
No, actually that header was added after your comment was posted, at about the same time that I was trying to add an explanatory header saying that the post was written by Mike Kimel as the third in a series of posts on this subject.
As originally posted, it appeared to be run’s post, not someone else’s.
What is it about the central time zone that makes immigrants not want to live there?
Or, is it even right? My only experience living in that area was in large cities which didn’t seem to have any particular shortage of immigrants.
Texas is in the central time zone. Lots of immigrants there. Lots in northern Illinois, too; lots and lots of Eastern European, Korean, Mexican and Central American immigrants in metro Chicago.
Lots of immigrants in Iowa. Two words: industrial pork.
Any place you have ag industry work that requires stoop labor or unremitting piece work or rapid and dangerous cutting and packing of meat products for shit wages you will find immigrants.
Which fact supports both Mike and Bev’s arguments BTW.
A multiplier is just a mathematical variable. A correlation is also just a mathematical relationship. We can look at the same data several ways. The map shows we have a significant part of the country where there is a negative correlation between the percentage of the population that is made up of immigrants and job creation.
J Goodwin & Beverly,
As I noted toward the later stages of the post, I think Texas should be grouped differently. I’d put it with California, New York, and Florida.
According to Pew, 3.1% of Iowa residents in 2000 were foreign born. The figure was 5% in 2014. But to follow in Dennis Drew’s footsteps upthread, I would guess the immigrants in Iowa, at least the low income immigrants, tend to be geographically clustered.
Imagine if the Belizians remitted most of their pay back to Belieze and rarely purchased anything new, except food and possibly diapers, instead consuming used Mexican clothing, cast off appliances and bought up all the formerly cheap used vehicles in southern Mexico? How would that help the local economy of Mexico?
In addition, many would rely on whatever public health services and welfare as well as church charity they could get and might qualify for.
What would be the net benefit to Mexico versus Belieze?
Welcome to Angry Bear. Everyone goes through moderation once.