The biggest news of the week, at least regarding politics, came from President Obama’s speech last Thursday night when he addressed the American people and proposed immigration reform. He indicated that, by executive order, he would grant a three-year stay on deportation for certain groups of immigrants who live in the U.S. illegally.
NPR reports that the president’s executive action will temporarily halt the deportation of parents of children who are U.S. citizens or legal residents. It also extends that temporary protection to children who entered the country illegally with their parents — a group referred to as “DREAMers.” Through the order, both groups can now legally work in the U.S. after completing a background check and paying a fee.
Setting aside the debate of the legality of what the president has done, what remains is the question of how the allowance to legally work in the U.S. will affect the labor market throughout the country. For this, readers can turn to a short post in Forbes that cites past research on the effect of immigration policy on immigrants’ wages and speculates on what the temporary measure means in the light of that research.
Forbes references a 2002 paper authored by Sharrie A. Kossoudji and Deborah A. Cobb-Clark of the University of Michigan and Australian National University, respectively. They found that U.S. amnesty of illegal immigrants in 1986 correlated with a wage increase of six percent for those immigrants between the years of 1986 and 1992. What caused this rise? The researchers suggest that the biggest limiting factor to earnings is the inability for illegal immigrants to move between jobs. They can simply never move up the ladder. The removal of that barrier could have led to the higher earnings.
When calculating wage increases across the entire U.S. population or even a single state, an increase of six percent is not as high as it may seem. Forbes shows that a wage increase of six percent for all illegal immigrants in Nevada — which has the largest share, 10 percent, of such persons in the labor market compared to any other state — would only increase aggregate wages for the entire population of the state by 0.6 percent.
The temporary nature of Obama’s executive order complicates matters a little. It is unclear whether or not the previous research will provide a mirror for what could occur across the next several years as immigrants are able to move about the market. Forbes shows that many illegal immigrants already have jobs. Pew Research, it points out, estimates that 72.3 percent of illegal immigrants currently operate in the U.S. work force.
Compare that to U.S. citizens’ participation rate of 62.8 percent; it may appear that there is no room for growth concerning the number of illegal immigrants accepting jobs. Still, their movement about the labor market could increase. As a result of even the temporary measure they have been granted, their wages could increase.
Image courtesy of Nevele Otseog via Flickr