In a relatively short period of time, immigration became an important force of
demographic and economic change in the United States. In the 1950s, approximately 250
thousand legal immigrants were admitted to the United States each year, and there was
little illegal immigration. By 2000, nearly one million legal immigrants were being
admitted to the country each year, with another half a million entering illegally (Passel,
2006). As a result of these trends, nearly half of population growth is now due to
immigration, and the foreign-born share of the U.S. population more than doubled, from
5 to 12.5 percent, between 1970 and 2007.
The resurgence of large-scale immigration sparked the development of an
extensive literature that examines the performance of immigrant workers in the labor
market, including their earnings upon entry and their subsequent assimilation toward the
earnings of native-born workers (see Borjas, 1999; and LaLonde and Topel, 1996, for
surveys). An important finding of this literature is that, over the period 1960-1990, there
was a continuous decline in the relative entry wage of new immigrants.
The skill composition of the immigrant population—and, particularly, how the
skills of immigrant workers compare to those of native workers—is the key determinant
of the economic impact of immigration on the United States. For instance, it determines
which native workers are more likely to feel an adverse impact of immigration on their
labor market opportunities (Borjas, 2003; Card, 2001; Friedberg and Hunt, 1995).
Similarly, the relative skills of immigrants determine the economic benefits from
immigration (Borjas, 1995b). Economic theory suggests that the receiving country
benefits from immigration because it can import workers with scarce qualifications and
abilities.