Economic Assimilation of Mexican and Central American … · 1985-89arrivals -0.670 -0.445 (0.0463) (0.0342) 1995-99arrivals -0.674 -0.423 (0.0225) (0.0262) 2005-11arrivals -0.732

Economic Assimilation of Mexican and CentralAmerican Immigrants in the US: 1965-2017

Giovanni Peri and Zachariah Rutledge

University of California, Davis

October, 25th, 2019

Giovanni Peri and Zachariah Rutledge Assimilation of Mexican and Central Americans October, 25th, 2019 0 / 24

Key Question

I This paper analyzes the convergence in weekly earnings andemployment probability of Mexicans and Central Americans to USnatives, starting with the cohort that arrived in 1965-69 to the one thatarrived in 2005-11.

• This is the immigrant group with lowest socio-economic status• Recent studies (e.g. Borjas 2015) argue that immigrant economic

assimilation has worsened with recent cohorts.• Is the US becoming worse at assimilating immigrants?• Can we find some economic-location features associated with faster or

slower convergence?


Comparison with Europe and Reference Group

I US immigrants have higher employment rates relative to immigrants inmost European countries. Many US immigrants have higheremployment rate than natives.

I But income convergence for some low-skilled groups has been slow.Has it slowed over time?

I As low skilled natives have performed poorly in terms of earnings, lowskilled immigrants may have performed bad relative to average.

I Important:• We need to compare immigrants to similar natives to isolate specific

immigrant-convergence.• We need to keep immigrants comparable over time.


Importance of Measuring Assimilation/Convergence in theRight Way

I Both initial gap and convergence are important. Need to follow acohort, and look at following cohorts (Borjas (85) vs Chiswick (78)).

I Very important to choose comparable cohorts over time. If theircomposition changes a lot, we are mixing assimilation and selection.

I Very important to compare with natives with same education andage , and not with average natives, otherwise we mix incomeinequality and its dynamic with immigrants’ assimilation.


Earning Convergence: Pooling Together All Immigrants

I Appearance of increased initial gap and lower convergence.I But...changed composition and comparison with average US.


Comparison with Same Age Average US Born

I Very important to choose comparable cohorts over time. If theircomposition changes a lot, we are mixing assimilation and selection.Focus on Mexicans and Central Americans.

I In each cross-section, compare with average American with sameage, and estimate a cohort-of-arrival specific gap:

Y`τ � β0 + βC` + ΓX`τ + ε`τ (1)

Y`τ ∈ {ln(w`τ), Emp`τ} is log weekly earnings or employment rate.

X`τ is a third-order polynomial for the individual’s age.

C` is a vector of fixed effects representing each immigrant cohort ofarrival in the sample being considered and native workers.


Comparison with Same Education-Age Group

I Pool all the cross sections and allow for age-education-year effects, socomparing both arrival gap and growth on average with thecorresponding US-born group:

Y`τ � ΓX`τ + αy`τ + βC` + θ(y`τC`) + S`τ + ε`τ (2)

C` is a vector of dummy variables identifying each immigrant cohort.

y`τC` identifies a cohort-specific linear experience trend.

S`τ is a vector of education group-age group-survey year fixed effects.


Earning Convergence for Mexicans and CentralAmericans Relative to Same Age Natives

Great Recession Decade


Employment Convergence for Mexicans and CentralAmericans Relative to Same Age Natives


Earning Convergence for Mexicans and Central Americans Relativeto Same Age-Same Education Natives (High school or less)


Both Initial Earnings Gap and Growth Much Better WhenCompared to Similar Natives

Table 1: Age-Education Adjusted Weekly Earnings, Initial Gap and Convergence of Mexicans and Central Americans in First 10 Years

Panel A: Relative Entry Wage1965-69 arrivals -0.523∗∗∗ -0.449∗∗∗

(0.0439) (0.0283)1975-79 arrivals -0.626∗∗∗ -0.437∗∗∗

(0.0418) (0.0284)1985-89 arrivals -0.670∗∗∗ -0.445∗∗∗

(0.0463) (0.0342)1995-99 arrivals -0.674∗∗∗ -0.423∗∗∗

(0.0225) (0.0262)2005-11 arrivals -0.732∗∗∗ -0.427∗∗∗

(0.0159) (0.0272)2012-17 arrivals -0.530∗∗∗ -0.237∗∗∗

(0.00379) (0.0260)Panel B: Relative Wage Growth in First 10 Years1965-69 arrivals 0.081 0.221∗∗∗

[0.202] [.000]1975-79 arrivals 0.088 0.216∗∗∗

[0.162] [0.001]1985-89 arrivals 0.109 0.198∗∗∗

[0.102] [0.002]1995-99 arrivals 0.099∗∗ 0.181∗∗∗

[0.031] [0.000]2005-11 arrivals 0.189∗∗∗ 0.239∗∗∗

[0.000] [0.000]Basic Specification X –Educ-Age-Year FE – X


Caveat from Measurement Error

I Likely recall error, and systematic pre-dating.I Will cause attenuation of convergence.

Table 2: Population Estimates for Mexican and Central American Immigrant Cohorts

Survey YearCohort 1970 1980 1990 2000 2010 2017

1940-49 arrivals 38,733 33,260 13,254 4,146 492 . . .1950-59 arrivals 56,767 83,900 57,218 33,719 14,272 3,7511960-64 arrivals 36,000 68,420 74,964 49,038 27,804 14,5681965-69 arrivals 32,100 97,180 114,667 111,418 55,955 31,8221970-74 arrivals . . . 161,180 224,832 268,519 170,338 83,3751975-79 arrivals . . . 126,680 297,287 403,498 312,422 204,8261980-84 arrivals . . . . . . 312,513 546,356 507,870 369,4681985-89 arrivals . . . . . . 240,531 742,257 755,060 631,7161990-94 arrivals . . . . . . . . . 556,445 720,128 700,4741995-99 arrivals . . . . . . . . . 522,375 956,681 912,8232000-04 arrivals . . . . . . . . . . . . 951,031 1,020,2052005-11 arrivals . . . . . . . . . . . . 558,886 732,4002012-17 arrivals . . . . . . . . . . . . . . . 360,896

Note: These figures estimate the population of Mexican and Central American males between the age of 25 and 64 who had between 1and 40 years of potential work experience, were not in school or living in group quarters, had positive earnings, worked at least one weekduring the survey year, and whose year of entry into the U.S. is able to be identified.


Can We Identify Features Associated with FasterConvergence?

Table 3: Percent of Workforce Comprised of Mexican and Central American Immigrants by Sector and Location

Survey Year1970 1980 1990 2000 2010 2017

Panel A: By SectorAgriculture and Farming 1.5 4.7 10.5 19.6 27.8 23.8Construction 0.4 1.1 2.8 7.5 13.1 15.1Manufacturing 0.8 2.7 4.4 8.5 9.7 7.5Service 0.7 2.1 4.3 7.5 9.3 7.2All Sectors 0.4 1.1 2.1 4.4 6.0 5.4

Panel B: By LocationRural 0.2 0.4 0.6 1.8 2.8 2.5Urban 0.5 1.5 2.8 5.2 6.9 6.1Enclave 1.6 4.2 6.9 11.7 13.3 11.5Non-Enclave 0.2 0.2 0.5 1.8 3.3 3.1

Note: These figures only include US-born, Mexican, and Central American males between the age of 25 and 64 who had between 1 and40 years of potential work experience, were not in school or living in group quarters, had positive earnings, worked at least one weekduring the survey year, and (for immigrants) entered the U.S. at the age of 18 or older.


Earnings Convergence for Mexicans and CentralAmericans in Four Sectors

A: Agriculture and Farming B: Construction

C: Manufacturing D: Services


Comparing with Same-Education Natives Across Sectors

Table 4: Relative Entry Wage and Wage Growth of Mexican and Central American Immigrants In First 10 Years by Sector

Agriculture Construction Manufacturing Misc. Services(1) (2) (3) (4) (5) (6) (7) (8)

Panel A: Relative Entry Wage1965-69 arrivals -0.753∗∗∗ -0.606∗∗∗ -0.449∗∗∗ -0.339∗∗∗ -0.478∗∗∗ -0.409∗∗∗ -0.654∗∗∗ -0.570∗∗∗

(0.033) (0.020) (0.047) (0.036) (0.032) (0.025) (0.037) (0.025)1975-79 arrivals -0.733∗∗∗ -0.500∗∗∗ -0.534∗∗∗ -0.325∗∗∗ -0.592∗∗∗ -0.393∗∗∗ -0.816∗∗∗ -0.612∗∗∗

(0.034) (0.021) (0.041) (0.034) (0.031) (0.024) (0.036) (0.025)1985-89 arrivals -0.803∗∗∗ -0.490∗∗∗ -0.581∗∗∗ -0.337∗∗∗ -0.686∗∗∗ -0.448∗∗∗ -0.779∗∗∗ -0.536∗∗∗

(0.036) (0.022) (0.041) (0.031) (0.038) (0.030) (0.036) (0.024)1995-99 arrivals -0.833∗∗∗ -0.489∗∗∗ -0.605∗∗∗ -0.317∗∗∗ -0.702∗∗∗ -0.423∗∗∗ -0.746∗∗∗ -0.481∗∗∗

(0.020) (0.013) (0.020) (0.017) (0.017) (0.013) (0.018) (0.012)2005-11 arrivals -0.872∗∗∗ -0.461∗∗∗ -0.746∗∗∗ -0.368∗∗∗ -0.641∗∗∗ -0.289∗∗∗ -0.817∗∗∗ -0.459∗∗∗

(0.014) (0.013) (0.014) (0.017) (0.015) (0.011) (0.013) (0.012)2012-17 arrivals -0.860∗∗∗ -0.424∗∗∗ -0.562∗∗∗ -0.149∗∗∗ -0.506∗∗∗ -0.209∗∗∗ -0.609∗∗∗ -0.262∗∗∗

(0.002) (0.008) (0.003) (0.013) (0.002) (0.003) (0.003) (0.007)Panel B: Relative Wage Growth in First 10 Years

1965-69 arrivals 0.010 0.147∗∗∗ 0.079 0.207∗∗∗ 0.072 0.243∗∗∗ 0.041 0.184∗∗∗[0.854] [0.000] [0.161] [0.000] [0.162] [0.000] [0.457] [0.000]

1975-79 arrivals -0.026 0.114∗∗∗ 0.082 0.209∗∗∗ 0.086∗ 0.237∗∗∗ 0.094∗ 0.224∗∗∗[0.618] [0.002] [0.122] [0.000] [0.093] [0.000] [0.093] [0.000]

1985-89 arrivals 0.022 0.117∗∗∗ 0.105∗ 0.197∗∗∗ 0.134∗∗ 0.253∗∗∗ 0.076 0.169∗∗∗[0.679] [0.003] [0.060] [0.000] [0.021] [0.000] [0.166] [0.000]

1995-99 arrivals 0.046 0.129∗∗∗ 0.094∗∗ 0.176∗∗∗ 0.118∗∗∗ 0.227∗∗∗ 0.006 0.099∗∗∗[0.245] [0.000] [0.016] [0.000] [0.003] [0.000] [0.862] [0.000]

2005-11 arrivals 0.161∗∗∗ 0.201∗∗∗ 0.261∗∗∗ 0.313∗∗∗ 0.107∗∗∗ 0.165∗∗∗ 0.099∗∗∗ 0.120∗∗∗[0.000] [0.000] [0.000] [0.000] [0.000] [0.000] [0.000] [0.000]

Basic Model X – X – X – X –Educ-Age-Year FE – X – X – X – X


Earning Convergence for Mexicans and CentralAmericans in Rural/Urban Locations

A: Rural B: Urban


Comparing with Same-Education Natives, Rural/Urban

Table 5: Relative Entry Wage and Wage Growth of Mexican and Central American Immigrants In First 10 Years by Rural/Urban Status

Rural Urban(1) (2) (3) (4)

Panel A: Relative Entry Wage1965-69 arrivals -0.720∗∗∗ -0.625∗∗∗ -0.481∗∗∗ -0.413∗∗∗

(0.0433) (0.0298) (0.0449) (0.0291)1975-79 arrivals -0.722∗∗∗ -0.521∗∗∗ -0.612∗∗∗ -0.425∗∗∗

(0.0451) (0.0306) (0.0422) (0.0289)1985-89 arrivals -0.714∗∗∗ -0.447∗∗∗ -0.663∗∗∗ -0.441∗∗∗

(0.0514) (0.0357) (0.0466) (0.0344)1995-99 arrivals -0.704∗∗∗ -0.406∗∗∗ -0.668∗∗∗ -0.419∗∗∗

(0.0229) (0.0169) (0.0228) (0.0249)2005-11 arrivals -0.647∗∗∗ -0.320∗∗∗ -0.743∗∗∗ -0.434∗∗∗

(0.0152) (0.0124) (0.0163) (0.0255)2012-17 arrivals -0.512∗∗∗ -0.147∗∗∗ -0.531∗∗∗ -0.243∗∗∗

(0.00284) (0.00513) (0.00363) (0.0236)Panel B: Relative Wage Growth in First 10 Years

1965-69 arrivals 0.047 0.207∗∗∗ 0.073 0.213∗∗∗[0.476] [0.000] [0.257] [0.000]

1975-79 arrivals 0.093 0.232∗∗∗ 0.084 0.212∗∗∗[0.188] [0.000] [0.183] [0.000]

1985-89 arrivals 0.097 0.193∗∗∗ 0.107 0.197∗∗∗[0.184] [0.001] [0.110] [0.000]

1995-99 arrivals 0.079∗ 0.171∗∗∗ 0.098∗∗ 0.180∗∗∗[0.092] [0.000] [0.034] [0.000]

2005-11 arrivals 0.067∗∗∗ 0.170∗∗∗ 0.204∗∗∗ 0.249∗∗∗[0.001] [0.000] [0.000] [0.000]

Basic Model X – X –Educ-Age-Year FE – X – X


Earnings Convergence for Mexicans and CentralAmericans in Enclave/Non-Enclave Locations

A: Enclave B: Non-Enclave


Comparing with Same-Education Natives, Enclave/Non-Enclave

Table 6: Relative Entry Wage and Wage Growth in First 10 Years of Mexican and Central American Immigrants by Enclave Region Status

Enclave Non-Enclave(1) (2) (3) (4)

Panel A: Relative Entry Wage1965-69 arrivals -0.536∗∗∗ -0.448∗∗∗ -0.494∗∗∗ -0.452∗∗∗

(0.054) (0.035) (0.024) (0.017)1975-79 arrivals -0.650∗∗∗ -0.450∗∗∗ -0.480∗∗∗ -0.362∗∗∗

(0.043) (0.029) (0.040) (0.028)1985-89 arrivals -0.698∗∗∗ -0.461∗∗∗ -0.581∗∗∗ -0.379∗∗∗

(0.048) (0.035) (0.041) (0.029)1995-99 arrivals -0.705∗∗∗ -0.445∗∗∗ -0.629∗∗∗ -0.369∗∗∗

(0.025) (0.023) (0.017) (0.015)2005-11 arrivals -0.751∗∗∗ -0.434∗∗∗ -0.711∗∗∗ -0.393∗∗∗

(0.017) (0.019) (0.012) (0.019)2012-17 arrivals -0.570∗∗∗ -0.270∗∗∗ -0.484∗∗∗ -0.176∗∗∗

(0.003) (0.015) (0.002) (0.018)Panel B: Relative Wage Growth in First 10 Years

1965-69 arrivals 0.086 0.226∗∗∗ 0.096∗ 0.208∗∗∗[0.224] [0.000] [0.057] [0.000]

1975-79 arrivals 0.103 0.228∗∗∗ 0.024 0.167∗∗∗[0.124] [0.000] [0.653] [0.000]

1985-89 arrivals 0.126∗ 0.211∗∗∗ 0.056 0.161∗∗∗[0.077] [0.000] [0.304] [0.001]

1995-99 arrivals 0.119∗∗ 0.202∗∗∗ 0.062∗ 0.147∗∗∗[0.019] [0.000] [0.075] [0.000]

2005-11 arrivals 0.195∗∗∗ 0.240∗∗∗ 0.182∗∗∗ 0.242∗∗∗[0.000] [0.000] [0.000] [0.000]

Basic Model X – X –Educ-Age-Year FE – X – X


What About Other Immigrants Groups?

I The two other largest groups, Indian and Chinese, much bettereducated.

I Was the performance of recent cohorts better than previous ones?I Did they also show higher employment rates than natives?


Better Selection in Terms of Education

Table 7: Percent of Immigrants with High-School and College Education

Survey Year1970 1980 1990 2000 2010 2017

Panel AWith a High School Diploma or Less

Mexicans and Central Americans 89.4 89.9 87.3 86.4 84.5 81.6Chinese 49.4 40.6 36.5 31.8 32.1 28.0Indians 10.7 12.3 17.5 16.9 13.1 12.6Natives 69.2 55.2 44.2 39.1 35.4 33.2

Panel BWith At Least Some College


Panel CWith a Bachelor’s Degree or Higher


Note: These figures only include males between the age of 25 and 64 who had between 1 and 40 years of potential work experience, werenot in school or living in group quarters, had positive earnings, worked at least one week during the survey year, and (for immigrants)entered the U.S. at the age of 18 or older.


Earnings and Employment Rate for Chinese

A: Earnings B: Employment

I Improved earnings for recent cohorts, similar employment probability.I Overtake native performance after 20 years.


Earnings and Employment Rate for Indians

A: Earnings B: Employment

I Similar earnings for recent cohorts, better employment probability.I Overtake native performance after 10 years.


Discussion and Conclusions

I Mexican and Central Americans come to the US to do low skilled jobs.I Their performance and assimilation relative to similar natives has been

constant over the last 50 years.I High rate of employment, but some earning gap. This look significantly

better for urban immigrants in construction sector.


Implications

I US is still great destination for working immigrants.I All this in spite of the very large share of undocumented. Legalization

would increase wages.I Recent immigrant may have done better than earlier, once we account

for initial skills and country of origin.I Census data, always used for this analysis, may contain very large

measurement error.


Documents

Economic Assimilation of Mexican and Central American … · 1985-89arrivals -0.670 -0.445 (0.0463) (0.0342) 1995-99arrivals -0.674 -0.423 (0.0225) (0.0262) 2005-11arrivals -0.732