THE IMMIGRANTS: Counterfactual Density Estimates

Summary

A powerful visual impression one receives from the densities in Figures 2a.-3b is that over time, men’s and women’s distributions changed in very different ways, in part because of the minimum wage. As for men, the gap between recent immigrants and natives is spreading at the same time that the distribution is is widening.

Although the big changes in immigration law were in effect for recent immigrants in 1980 and 1990, the summary statistics in Tables 1 and 2 do not tell a simple story about a uniform decline among immigrant women and men, in the characteristics that are rewarded in the United States labor market. Rather, the visual evidence from the simple density functions is consistent with the important impact of the minimum wage, wrhich is more binding for women than men. This suggests that trends in the immigrant /native wage gap differ in ways directly attributable to changes in wage structure instead of changes in “skills.” Any simple story about the changes in immigrant /native mean wages that relies solely on changes in admission criteria has difficulty encompassing the differences in results for men and women presented here.

Counterfactual Density Estimates

LaLonde and Topel (1992) discuss the role of the changing wage structure in comparisons between immigrants and the native-born. Although their analysis is substantially different in form, they make a similar point. If immigrants have always been concentrated in the lower part, of the earnings distribution, and the distribution of earnings becomes more dispersed, then immigrants will look w^orse relative to natives, even without a change in immigrants’ characteristics. Although immigrants overall are not concentrated in the very bottom of the distribution, their emphasis on the importance of w^age structure changes is consistent with our findings in the previous section.

Additionally, since recent immigrants are, and have always been (during the time periods covered in this paper), much younger and in ethnic/racial groups that are disadvantaged relative to natives or immigrants overall, they are more likely to be concentrated at the lower end of the earnings distribution in each year of our data (as seen in figures 3a and 3b). For this group, the changes in the wage structure are likely to be particularly important.

In this section wTe take the analysis one step further: we can investigate how the distribution of earnings for recent immigrants in the past would look if they faced the wage structure of the 1990s. Recall that the United States changed its immigration law in 1965, and the changes in these laws took effect in the late 1960s. This change in criteria is widely cited as a primary cause of the “deterioration” in the characteristics of immigrants. While recent immigrants in 1960 were clearly admitted under the old criteria, since the law was not effective immediately, most of the recent immigrants in 1970 were admitted under the old criteria as wrell. As Tables la and lb show, their mean wages are higher than in the other years. Electronic Payday Loans Online