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17 Historical Perspectives on the Economic Consequences of Immigration into the United States Susan B. Carter and Richard Sutch TODAY IS NOT the first time that high and rising levels of immigration into the United States have brought the economic consequences of immigration to the forefront of both policy and scholarly debate. Figure 17.1 displays the official figures on the number of immigrants admitted into the United States between 1820 and 1996. In the long view afforded by this table, current flows, high as they are, only now are approaching the record levels reached in the period before World War 1.1 Having been there before, there may be something to gain by reviewing the scholarship on the economic impacts of immigration during this earlier period. Then as now, there was public concern that immigration would lower wages of the resident population, particularly the wages of the least-skilled Americans. Connected to this concern was and is the fear that immigration, or at least too much immigration, fragments society and leads to social and political unrest. This chapter contrasts the last great episode of immigration to the United States with our current experience. Because of the temporal distance , issues connected with the earlier experience can be examined in a relatively dispassionate way. Moreover, since the implications of the earlier episode have had time to work themselves out, a comparison of the two episodes can assist in placing the current situation within the context of our country's long-run growth and economic development. As we will show, the consensus of scholarly opinion reached in the 1960s was that the mass immigration into the United States during the three-quarters of a century before World War I had, on the whole, profoundly positive economic and social effects. In this consensus view, immigration enhanced the rate of economic growth, improved the welfare of resident workers, moderated the business cycle, and had no impact on the distribution of income. Those conclusions of the historical scholarship were frequently cited by supporters of immigration liberalization in the 1960s and may have played a role in the abolition of the restrictive quota system in 1965. By contrast, empirical studies employing data spanning the last twenty-five years have tended to emphasize the negative impacts of immigration and to support restrictionist policies (Borjas 1996; Frey 1995b). Of course, there are many reasons why scholarly views about the impacts of the earlier and the current immigration flows might differ . Here we highlight the distinctive features of the theoretical approach taken by scholars who achieved the earlier consensus. It emphasized the interconnectedness of various sectors within the economy and the far-reaching effects of immigration -induced increases in the size of the labor force. It is an approach that is in very little evidence today. ECONOMIC GROWTH MODELS AND THE IMPACTS OF IMMIGRATION Mass immigration into the United States occurred during a period of very rapid economic growth and America's ascendancy to international industrial leadership (Abramovitz 1993; Abramovitz and David 1973, 1996; Paul Romer 1996; Wright 1990). Most of the historians and economic historians who have studied that earlier immigration tried to assess its relationship to these positive economic developments. To do so, they relied explicitly or implicitly on a model of economic growth and of factor mobility. Because some readers may be unfamiliar with this literature, we begin with some key definitions and a simple version of the model. 320 The Handbook ofInternational Migration FIGURE 17.1 Immigrants to the United States, 1820 to 2000 Thousands 1,500 Including persons granted permanent residence under the Immigration Reform and Control Act of 1986 2000 ~I, '. II " I, II II II , I I, I \ I I f I I 1980 1960 1940 1920 1900 1880 1860 1840 I 1820 o 250 500 750 1,000 1,250 Fiscal Years Defining Economic Growth There is little doubt that immigration caused the American population and the American labor force to grow more rapidly than they would have in its absence. Figure 17.2 shows the contribution of net immigration to American population growth.2 During the period of mass immigration preceding World War I, immigration accounted for somewhere between one-third and one-half of U.S. population growth. More people meant more output. Population, after all, is fundamental to production, not only because people supply the required labor, but because the population's demand for goods and services provides an incentive for production. Thus, mass immigration made the late...

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