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The impact of business cycles on immigrant labor market outcomes.

Employment prospects for both immigrants to the United States and native-born Americans have improved during recent economic expansions and have worsened during recent recessions. In their article titled "Immigrants' Employment Outcomes over the Business Cycle" (Staff Papers, Federal Reserve Bank of Dallas, September 2011, http:// ments/research/staff/staff1104. pdf), Pia Orrenius and Madeline Zavodny conduct an analysis of 1994-2009 employment and unemployment rates and suggest that the labor market outcomes of U.S. immigrants are more sensitive to the business cycle than are those of native-born Americans.

To support their premise, the authors cite employment and unemployment rates experienced by foreign-born and native-born workers from the end of 2006 to the first half of 2009, a period that encompasses the most recent recession. During that time, the unemployment rate among immigrants increased from a low of 3.4 percent to a high of 9.2 percent, while their employment rate fell by 4.6 percentage points. Among the native born, the unemployment rate rose from a low of 4.1 percent to a high of 8.3 percent, and their employment rate declined by 3.3 percentage points.

Immigrants appear to be more vulnerable than native-born workers during recessions because immigrants tend to have fewer skills, and low-skilled workers are often the first to be laid off. Their low-skilled jobs are likely a function of educational attainment; foreign-born workers are concentrated at the low and high ends of educational attainment while native-born workers are concentrated in the middle to high ends of the spectrum. Current Population Survey data for 2009 show that 30 percent of immigrants do not have a high school diploma, compared with 10 percent of native-born Americans. However, among people who had not completed high school, the employment rate for immigrants ranged from 50 to 60 percent from 1994 to 2009, more than 20 percentage points above that for native-born Americans. During the 2000s, native-born workers with low educational attainment had higher unemployment rates than did similarly educated immigrants.

The authors' regression analysis shows that employment and unemployment are more sensitive to the business cycle for the foreign born than for the native born. Unemployment among immigrants, however, is not as sensitive to the business cycle as employment.

Although immigrants with low skill levels may be at a greater disadvantage than native-born workers during recessions, immigrants may have certain advantages regarding employment. When looking for work, immigrants tend to be more mobile, pursuing work in other parts of the country or in different industries and occupations. Immigrants are also more likely to lower their job expectations--pay, location of work, type of work, benefits, etc.--in pursuit of employment. Also contributing to shorter unemployment spells for immigrants is that immigrants are often ineligible for unemployment benefits, reducing their incentive to remain unemployed members of the labor force; instead, they may opt to either leave the labor force, possibly even leaving the country, or be more flexible about the kind of job they accept. However, these factors only partially offset immigrants' sensitivity to cyclical changes.

The authors suggest that U.S. immigration policy can be reformed to lessen immigrants' vulnerability to the business cycle and reduce the need for expanded government assistance programs during economic downturns. By synchronizing immigration inflows with business cycles, the United States would reduce the burden of increased competition on existing workers during recessions and increase opportunities for immigrants during economic expansions.
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Title Annotation:Precis
Publication:Monthly Labor Review
Geographic Code:1USA
Date:Sep 1, 2012
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