The Mariel Boatlift: An Opportunity for Cubans, and Economists
On April 20, 1980, Fidel Castro announced that Cubans who wanted to emigrate to the United States could leave the island from the harbor town of Mariel. Approximately 125,000 did, and about 50 percent of the Marielitos settled permanently in Miami. The “Mariel boatlift” was an enormous opportunity for Cubans hoping to escape Castro’s communism. Also excited were economists, who were presented with a natural experiment to examine the impact of immigration on native labor markets. The influx of Marielitos swelled Miami’s labor force by about 7 percent and its low-skill workforce by approximately 20 percent. Yet, in a 1990 study, David Card found that the admittance of the Marielitos had “essentially no effect on the wages or employment outcomes of non-Cuban workers in the Miami labor market.”1
George Borjas challenged this finding in a 2017 paper.2 Borjas focused on the wages of Miami’s least-educated male workers (those who did not finish high school) before and after the Mariel Boatlift, and found that they had fallen between 10 and 30 percent. He concluded that the lower wages of high school dropouts in Miami were likely due to the Mariel supply shock. Aside from the Marielitos, it is hard to imagine other explanations.
Yet a new study by Michael Clemens and Jennifer Hunt provides an alternative explanation for Borjas’s finding.3 The impact of the Marielitos on low-skill wages can be attributed to a data collection quirk: in 1980, Miami’s census surveyors sought to improve their coverage of black male Americans. The less-than-high-school sample Borjas analyzed experienced a doubling of black males during this period. The lower wages of black workers, coupled with the entry of low-skill Haitians, were responsible for the differences between the findings of Borjas and Card. While discussions over the “right amount” of immigration may be far from over, it looks like the Marielito ship has sailed. The evidence points to unchanged wage and employment outcomes from the boatlift.
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1. David Card, “The Impact of the Mariel Boatlift on the Miami Labor Market,” ILR Review 43:2 (1990), 245-257.
2. George J. Borjas, “Still More on Mariel: The Role of Race,” Working Paper 23504. NBER Working Papers. National Bureau of Economic Research, 2017.
3. Michael A. Clemens and Jennifer Hunt, “The Labor Market Effects of Refugee Waves: Reconciling Conflicting Results,” NBER Working Paper 23433, National Bureau of Economic Research, 2017.
To sum up, it is possible for immigration to have negative economic effects on existing US workers, particularly teens and recent immigrants. Yet a few key points should be kept in mind. First, even if negative effects fall on previous cohorts of immigrants, those groups are likely still better off for having moved to the United States. Given the large wage benefit they received on arrival, slower subsequent wage growth due to new waves of immigration still leaves them with dramatically enhanced living standards. Second, to the extent that high school dropouts are hurt by unskilled migration, the best way to help such workers is not to restrict immigration; skill upgrading and education would benefit the native population more. Third, there is very little evidence of any negative effects associated with skilled immigrants. Given the large positive contributions of skilled immigrants to the entire economy, it is quite likely that their net effect is also positive for the vast majority of groups.28
Do Immigrants Do Unwanted Jobs?
Opponents of immigration often claim that immigrants take job opportunities from willing Americans, depressing wages in the process. In agricultural labor markets, this claim doesn’t match the reality on the ground. Michael Clemens, Ethan Lewis, and Hannah Postel examine the impact of the 1942 Bracero Program on American farm workers.1 Bracero is Spanish for “manual laborer” or, more literally, one who works with his arms. The Bracero Program consisted of a series of US laws granting about half a million Mexican laborers each year permission to perform seasonal work on America’s fields between 1942 and 1964. During the Kennedy administration, the program was ended, due to fear of reduced native job opportunities. Yet the data show that the program’s termination had no effect on the wages or employment of natives. It did not yield additional job opportunities for native workers; instead, farmers altered their crop mixes in favor of fruits and vegetables that could be picked mechanically, adopting technological innovations that bracero labor had kept at bay.
Today, about half of America’s crop farmworkers are undocumented immigrants. In California’s Central Valley, where annual crop output is worth $35 billion, that share reaches 70 percent. Lately, undocumented worker crackdowns have resulted in labor shortages. Immigration from Mexico is on a downward trend, and growers watch with dismay as their crops rot in place. The shortage presents employment opportunities that very few American workers are willing to take. A 2013 paper by Michael Clemens studied the North Carolina Growers Association (NCGA). Before using the guest worker program (which offers foreign workers seasonal contracts), the NCGA must prove it has made an effort to recruit Americans. In the years 1998 to 2012, when farms needed thousands of workers each season, applications from US-born workers never surpassed 268. And in that peak year, 2011, only seven Americans stayed for the whole growing season—while their Mexican counterparts boasted a retention rate of 90 percent.2
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1. Michael A. Clemens, Ethan G. Lewis, and Hannah M. Postel, “Immigration Restrictions as Active Labor Market Policy: Evidence from the Mexican Bracero Exclusion,” NBER Working Paper 23125, National Bureau of Economic Research, 2017.
2. Michael A. Clemens, “International Harvest: A Case Study of How Foreign Workers Help American Farm Crops Grow—and the American Economy,” Partnership for a New American Economy and the Center for Global Development, 2013; Michael A. Clemens, “The Effect of Foreign Labor on Native Employment: A Job-Specific Approach and Application to North Carolina Farms,” Working Paper, 2013.
Worry Number 2: State and Local Budget Stress
Immigrants tend to be highly concentrated in particular regions of the country. Over the period 2010–2016, 34 percent of all immigrants were destined for just five cities: New York, Miami, Los Angeles, Houston, and Washington, DC.29
Figure 8.5: Immigrants Are Very Concentrated in Some US Cities
Note: The figure “US Immigration Population by Metropolitan Statistical Area (MSA), 2011–2015” was originally published on the Migration Policy Institute’s Migration Data Hub at www.migrationpolicy.org/programs/migration-data-hub. Reprinted with permission from the Migration Policy Institute.
This concentration of immigrant populations can cause budget strains for governments, but figuring out the budget impact of immigrants is harder than it looks. Studies often compare immigrants’ tax contributions with their use of government services, but service use can be difficult to calculate. For example, should one assign to immigrants the typical cost of running the government, including national defense, even if the national defense budget does not rise with population, but depends instead on overall military needs and strategies? Since national defense is very expensive, estimates of the fiscal impact of immigrants will depend on whether one assigns them their per-capita share of spending on defense, or instead the additional spending due to their presence, which is near zero.
Also, if immigrants are a budgetary drain, receiving more in government services than they pay in taxes, but their children are a budgetary boon, paying far more in taxes than they receive in benefits, how should the effect of the immigrants be tallied? Should we assess the contribution of only the immigrants themselves, or acknowledge that their arrivals have long-term effects? This is an important question, since the children of immigrants grow up to earn substantially higher incomes than their parents, and pay a lot more in taxes.
Especially hard to gauge are the fiscal impacts of undocumented immigrants. A recent study concluded that undocumented immigrants generate close to $12 billion annually in state government revenues, mainl
y by paying sales and excise taxes.30 Establishing their use of government services is more difficult, however. Due to their lack of legal status, they are ineligible for many services, but estimating their use of other services remains tricky.
Finally, do we account for the positive effects of immigration on economic growth in these analyses? Immigrants have important effects on productivity and job creation, yet there is no easy way to take these factors into account in budget estimates.
Despite the measurement difficulties, there are a few consensus findings. While immigrants do not appear to have large negative effects on the federal budget (and their impact is often positive if government spending is assigned to residents based on what public services they are actually using), immigrants do appear to have negative impacts on state and local government budgets in the locations where first-generation immigrants are most concentrated.
Children of immigrants ultimately have a more favorable fiscal impact than their parents; the National Academy of Sciences Panel Report estimates a net cost to state and local budgets of $1,600 for a first-generation immigrant, whereas second-generation immigrants provide a net benefit of $1,700.
In general, immigrants have similar budget effects as natives if they are otherwise similar in terms of age and educational attainment. If anything, immigrants have more positive budget impact since their children earn higher incomes and make higher tax payments than the average US-born citizen.31 While the immediate fiscal impacts of low-skilled immigrants are negative due to their lower socioeconomic status, these effects disappear as immigrants assimilate and wages increase for subsequent generations. Meanwhile, for high-skilled immigrants, even the initial negative impact is reduced or eliminated.
Worry Number 3: Cultural Concerns
At root, much of the backlash against immigration often has cultural themes, rather than narrowly economic ones. There are competing narratives regarding how immigrants fit into American society. Traditionally, we celebrate immigrant assimilation into American society with the image of the “melting pot.” One way to interpret this metaphor is to think of America like a large stewpot, where the resulting soup is more delicious due to the combined influence of many ingredients. In that sense, there is no truly American culture other than that which emerges from a combination of all of our constituent parts. Examine an American coin. On it, you will find an early national motto inscribed: e pluribus unum. Out of many, one. Our one American society is the product of many influences, and many would agree that it is stronger and better as a consequence.
For example, is there such a thing as American cuisine? Some foods are particularly popular in the United States, but these foods typically had their true origins elsewhere: pizza from Italy, tacos from Mexico, hot dogs from Germany, and so forth. Even apple pie is not particularly American, despite the slogan. Apples suitable for cooking were not found in North America until they were brought over by later colonists, and pies have been around since the ancient Egyptians at least. Combining them was hardly an American invention.
In 2000, I lived in Brussels, Belgium, at the heart of the European Union. I often shopped at a grocery store which posted little flags to help people find food from different countries, perhaps useful to the many European Union bureaucrats who lived nearby. One day, I caught sight of the stars and stripes, and I eagerly approached the flag in the aisle to see what truly American food awaited me. What was there? Mexican food. Tortillas, beans, salsas, peppers, and so on—all of which I did indeed miss from home.
The four largest cities in the United States at present, and the only cities with more than two million people, are New York City (population 8.6 million), Los Angeles (4 million), Chicago (2.7 million), and Houston (2.3 million). These are also cities with huge immigrant populations. Foreign-born residents make up 38 percent of Los Angeles’s population, 37 percent of New York City’s, 29 percent of Houston’s, and 21 percent of Chicago’s—all far above the national average of 13 percent.32
What would these cities be like without immigrants? It is impossible to imagine. Part of what makes these cities such wonderful engines of economic activity and cultural offerings is their incredibly diverse immigrant populations. So much of our art, music, food, fashion, design, and innovation come from the vibrant mix of immigrants and natives in our biggest cities.
Areas with more immigrants also tend to be fond of their immigrant populations, whereas areas where immigrants are thinner on the ground are more skeptical. The states with the highest immigrant concentrations are California (27 percent), New York (22 percent), New Jersey (21 percent), Florida (19 percent), Hawaii (18 percent), Texas (16 percent), and Massachusetts (15 percent), whereas mountain, plains, and southeastern states have lower concentrations.33 In public opinion polls, immigrants are viewed more favorably precisely in the places where they live, even among the native-born population.
Figure 8.6: Immigrants Are Least Popular Where They Are Rarely Found
Source: PRRI 2015 American Values Atlas. Reprinted with permission from Public Religion Research Institute.
Yet there are several cultural worries about immigrant populations. Some worry that they will not assimilate, keeping to themselves and not learning English. There are concerns that they will bring cultural norms from their home countries that will weaken US institutions and rule of law. Some worry about crime, due to the low socioeconomic status of some immigrant populations and the fact that some immigrants are here illegally. (This presumably shows that they are willing to break laws, although their lack of legal status may generate more reluctance to commit crimes due to concerns of detection and deportation.) Increasing terrorism, while an extremely low-incidence threat, produces its own set of anxieties.34
In reality, there is little evidence of negative effects of immigrants on the quality of American institutions (such as property rights, the rule of law, and so on); if anything, the relationship between the immigrant share of the population and measures of institutional quality is positive.35 Also, immigrants are less likely to commit felonies; immigrants have half the share of felonies relative to their population as the US population as a whole.36 And indicators point to, if anything, faster assimilation by immigrants than a century ago.37
Immigration, the Global Economy, and International Relations
Immigration may encourage international trade and international business between countries.38 There is much evidence that international trade and finance are less globally integrated than one might expect. Distance and transportation costs are not the only inhibitors of trade and investment. Poor information and communication are also impediments. Immigrants may increase trade and foreign investment by strengthening ties and information flows between their origin and destination countries. Immigrants may also have preferences for different goods; this contributes to the flow of new goods into the destination country, often influencing the tastes of natives.
International business may also be a driver of migration flows. Multinational firms often post workers outside of their home countries; in fact, several prominent global companies employ half their workforces outside of their countries of origin. Skilled workers are particularly likely to be sent abroad, and innovation often involves global teams of knowledge workers.39
Immigration flows strengthen ties between the United States and other countries. When immigrants leave their origin countries to seek new lives in the United States, they continue to communicate with their home countries, talking to friends and family, sending money home, and sometimes visiting in person. Immigrant experiences in the United States affect perceptions of the United States abroad, and personal relationships across borders generate groups of people who understand multiple societies.
Immigrants also bring American society into contact with other countries and cultures. There are new ideas, new cultural events, and new foods; American traditions expand to include Chinese New Year, Diwali, and Cinco de Mayo celebrations. In the classroom, foreign students help Ameri
can students understand the world beyond their borders. In my economics teaching, I see this often. As foreign-born and domestic students share their experiences and ideas, viewpoints widen and become more thoughtful.
These sorts of ideas drive the Fulbright Program, established in 1946. The program enables scholarly exchanges between the United States and other countries. Its alumni testify to how the experience of living and studying abroad expands minds and fosters mutual understanding. About 8,000 Fulbright grants are awarded each year, allowing students and scholars in 160 countries to pursue educational opportunities and cultivate cultural understanding. Alumni have gone on to win Nobel Prizes (59), MacArthur Foundation Fellowships (71), and Pulitzer Prizes (84). Thirty-seven have become heads of state. There was a political calculation involved in the program’s creation, as early advocates hoped awardees would absorb and broadcast American values. Still, scholars attest to the ever-mutualistic nature of international exchange.
More generally, the growing international mobility of people helps develop a common sense of humanity and shared interest as global citizens. Ultimately, people who understand each other better help to create commonalities among governments and nations, furthering peace and prosperity.
What Immigrants Leave Behind
One worry about immigration is that high-skilled immigrants may reduce the success of their origin countries by creating a “brain drain.” At first glance, this seems a highly plausible concern. Since the United States benefits from the talents of these capable people, surely their talents are missed in their home countries. Yet some key considerations may allay this concern.
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