Immigration, Upward Mobility, and the U.S. Economy

ALISON BEARD: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Alison Beard.

The U.S. is a nation of immigrants. Immigration is part of our melting pot mythology. Historically, it’s helped to create the workforces that built our infrastructure and businesses. It’s also given us science and tech innovators, from Albert Einstein to Sergey Brin. But immigration is a hot button issue nowadays, not just in the US, but in lots of developed countries. Who’s trying to come in and why? Who succeeds? How do immigrants affect cultures and economies? Are they a blessing or a burden?

Our guests today have been investigating these issues for more than two decades. Delving into U.S. immigration data, they’ve followed the trajectory of millions of newcomers and their offspring. They’re with us today to tell us what they found as well as why it matters for business leaders.

Ran Abramitzky is an economics professor at Stanford University and Leah Boustan is professor of economics at Princeton. Together, they wrote the book Streets of Gold: America’s Untold Story of Immigrant Success. Ran, Leah, welcome.

RAN ABRAMITZKY: Thank you. It’s great to be here.

LEAH BOUSTAN: Great to be here.

ALISON BEARD: So let’s get right to it. What exactly did you uncover about immigration in the US that our listeners might be most surprised by?

RAN ABRAMITZKY: We put together this data to see how much of what we think we know about immigration is true and how much is a myth. So we asked questions like is it really true that immigrants today assimilate any less quickly than past immigrants into the economy and society? And is the success of immigrants come at the expense of the US born?

I guess these two findings would be the most surprising to me: immigrants today are just as quick in assimilating into economy and society as in the past. So the immigrant themselves might not go from rags to riches very quickly, but the children of immigrants completely catch up both today and in the past and for nearly every sending country. Then immigrants today are just as quick as joining society, for example, in terms of intermarriage and how they speak English and the names they give to their children.

LEAH BOUSTAN: I think that we’re seeing some of the same anti-immigrant rhetoric today than we’ve seen in the past US history. So we were interested in comparing immigrants that are coming to the U.S. today from all around the world to what we think of as the Ellis Island generation a century ago that faced a lot of anti-immigrant sentiment at the time. But now when we look back with hindsight on that generation, we have a very different view, a nostalgic view that sees those immigrants as contributing to society, building the economy. So we wanted to know are the immigrants that the U.S. is welcoming today on the same path and on the same trajectory as the past?

Honestly, what we find here really surprised both of us because we’ve heard all of the worries and concerns that people all across the aisle, I think, are expressing about immigrants today. That they come from poor countries. That it takes them a while to move up the ladder. So we were really surprised to see this really commonality between the Ellis Island generation and immigrants today. We end up seeing in the data that immigrants from Europe 100 years ago, and immigrants from Asia and Latin America today look like they’re on such a similar trajectory. Despite so many differences between the past and present, we see really a common immigrant story.

ALISON BEARD: And Ran, you suggested though that there a couple myths that do need to be busted. So the first is this difference between immigrants of the past and immigrants today. But then also a positive myth, which was the American dream, Horatio Alger, rags to riches. You’re saying that doesn’t happen in one generation, but it still does happen?

RAN ABRAMITZKY: Rather than this rags to riches story where immigrants come with nothing and they quickly catch up, we find that in fact strong persistence in their earning within the first generation. But then the amazing thing is that by the second generation, the children of immigrants, they all catch up with the U.S. born. Again, this is true for all sending countries, including Mexico today and the Ireland and Italy in the past.

ALISON BEARD: Is there an anecdotal story from this research that really sticks with you?

LEAH BOUSTAN: Our data comes from millions and millions of census records, and behind each one of those records is a real family and a real story. So I thought, in the process of working on our research, why not look into my own family as well. What I found in going to a genealogy website, ancestry.com, which many listeners might have done themselves, is that my family fits the pattern that Ran was just describing.

My great grandfather and great grandmother were immigrants from the Russian empire. They did not move up the economic ladder much in their own lifetime. So we can see them in the census data three times, and each time they say that they’re doing the same thing. They say that they are proprietors of a store, which means they had a little mom and pop shop.

Then if you look at their children, that would be the second generation, the children of immigrants. One of them was my grandfather, and he was living at home, in the census records, with his seven other brothers and sisters. Then we can follow them and see how they’re doing over time. All of his brothers and sisters entered into what we would think of now as white collar jobs. Most of them were working in basic secretarial work – bookkeeping, stenography and that sort of thing. But my grandfather, who was one of the youngest, he ended up being a doctor. So the family was able to invest in one kid to move up into the professions, and that was my grandfather.

RAN ABRAMITZKY: When you think about immigrants today, you mentioned Sergey Brin and Einstein, and they are stories that stick with people as people who did very, very well. But at some level, they are the exception in the generation of immigrants. One of the nice thing about what we can do with the data is that we can look at all the millions of immigrants who came to the United States and we can see them in the census. And because after 72 years, all the information becomes publicly available, we can see their identifying information, like their names and their children and who they married with and where they lived. Then we can follow them over time, follow them and the families, creating genealogies of millions of people. Once we have that, we can follow the average immigrant who arrived to the United States and how they did and how their children did rather than just the famous stories.

ALISON BEARD: Yeah, absolutely. It’s interesting because there is such a huge variety in the work that immigrants have taken on over the decades. You had people coming in 100 years ago to work in shipyards, to build highways. Now you have doctors and tech workers arriving on H-1B visas, as well as people coming to labor and farms and in healthcare facilities. So your findings are the average across all of these people. Were there variations between industries and income levels?

LEAH BOUSTAN: Well, the same pattern we see today, where some immigrants are very high skilled from the beginning and some immigrants are taking more low paid jobs, was also present 100 years ago. We have this image in our mind of people arriving at Ellis Island with just a small sack carrying everything, all of their worldly belongings. That certainly was true for some immigrants and for some countries more than others. But we also, as Ran had mentioned, have immigrants coming in from the UK and Germany, and those were really like the tech leaders of the time. Germany had a much better developed college and university system at the time than the US did. So some of those immigrants were already taking jobs as engineers and high skilled workers in factories, machinists, fixing the technology of the time or inventing new technology.

The same thing is true today. We have a wide range of immigrant backgrounds. So some immigrants, as you mentioned, coming in to do very low paid work, either in the service sector, working as dishwashers or landscapers or childcare workers or in construction or agriculture. We also have a whole set of very high skilled workers as well today in tech and medicine and finance. What ends up happening is that the generation of children looks much more similar than the generation of their parents. So there’s some fear and concern today, what if we’re letting in too many more skilled? What will happen in the next generation? That’s what we see are the children of those immigrants rising.

RAN ABRAMITZKY: And these patterns also help explain another myth that we are able to look at, which is that immigrants take the jobs of the US born. We find that that story is also oversimplified. It’s not the case that immigrants appear on average to crowd out the U.S. born is that immigrants tend to work, especially today, in either the very high skill jobs like in tech and in work that actually create jobs for the US born, or they work in the service sectors, caring for the elderly or cleaning dishes or picking corn. Those kind of occupations that many U.S. born are not willing to work in the wages that are profitable for firms. So at some level, the U.S. born are concentrated in other occupations, the ones that require more English skills rather than in either the very high skill or the very low skill.

ALISON BEARD: Right. But you did mention that the children of immigrants show greater upward mobility than the children of the native born. So what about that argument that sure, the jobs aren’t being taken away in the first generation, but they’re being taken away in the second or third generation?

RAN ABRAMITZKY: So on average, they are catching up to the incomes of the US born. The children of immigrants from poor families are in fact doing even better than the children of the US born. But what is striking is that a lot of it has to do with geography. So somehow immigrants are more foot lose, if you want. If you are born in the US, even if you are born in a place that is relatively doesn’t offer that much mobility, your network is there, your family is there. It’s not that you are just thinking about your earnings when you think about where to live. But immigrants who come here, they tend to move to places where there is a higher demand for them, for their services and where their children can be more successful. S

LEAH BOUSTAN: Let me amplify one of the things that Ran said about the importance of geography. We found a really striking pattern, that the children of internal migrants in the US are doing nearly as well as the children of immigrants. So what does that mean? It means that if your parents left their own state of birth and moved and settled somewhere else, then you, as the child of those parents, actually look very similar to the child of an immigrant who left a foreign country and moved to the United States.

Why would that be? It has to do with where these migrants or immigrants are settling. If you leave your state of birth, you tend to go to a dynamic city, a place like San Francisco or New York, where there are great opportunities to move up into high tech industry. Then your children, being raised in those places of upward mobility, benefit as well. So one way of turning this question around is why don’t more us born families move from their current state of birth or state of residence?

ALISON BEARD: So I want to get into the broader impact on American society. There’s that famous line from Hamilton, immigrants we get the job done. Is that accurate in terms of suggesting that countries need fresh infusions of labor and also ideas to thrive and grow?

LEAH BOUSTAN: Well, we ourselves have looked into what happened to the US the last time that we restricted the border and substantially cut down on immigrant entry, and that was in the 1920s. We were interested in that period because we worry that sort of policy might be back on the table again.

So we were looking at the consequences for the average worker, but one of our colleagues has looked at the consequences for science and technology. This immigration restriction was weighted towards or it was heavily affecting Southern and Eastern Europeans, so Italy, Poland, Russian empire, Central Europe. What our colleague found is that there were over 1000 scientists that did not move to the U.S. over the next decade or two that likely would have come to the U.S. if not for those restrictions. So there’s a whole generation of ideas that either took root somewhere else or may not have happened at all because of these restrictions.

RAN ABRAMITZKY: Moreover, once immigrants scientists came, it’s not that the US born scientist did better. In fact, they did worse. So implying that the collaboration between U.S. scientists and the international scientists is important as well.

ALISON BEARD: Yeah. I reviewed your book along with a few others on immigration for the most recent issue of HBR. This resonates with so many of the other authors thinking. Tim Kane, your colleague at Stanford, Ran, says that we need immigrant brains for innovation, their brawn for labor, their bravery for military service. Another author, Nancy Foner, was pointing to the fact that immigrants and their children make up so much of our economy. They’ve helped rescue sectors like meat packing and caregiving. They’ve revolutionized others like retail and restaurants.

LEAH BOUSTAN: I think the only thing I would add here is that immigrants really are us. It’s very hard to separate the nonimmigrants from the immigrants when we’re thinking about “American” –

RAN ABRAMITZKY: Yeah. So half the population can trace their ancestors to Ellis Island.

LEAH BOUSTAN: A good remaining third are either the immigrants themselves over the past 30 or 40 years, or they’re the children of immigrants that came primarily from Asia and Latin America and now they’re in the second generation. If we’re thinking about politics, sports, art, food, academia, science, and all sorts of other enterprises, large and small. It’s really hard to say where they’ve most impacted because I really feel like immigrants touch every part of the U.S. economy.

ALISON BEARD: Historically, which laws have been most helpful for the U.S. economy and immigrant populations? What specifically are you worried about today?

LEAH BOUSTAN: Well, I think the law that had the biggest effect on shaping the immigration as we see it today is the 1965 reopening of the US border. So the US was almost entirely closed to immigration through the 1920s, ’30s, and ’40s, all through the depression into World War II. The border reopened in 1965, and that really set the stage for the large immigrant populations that we have today. But in recent years, we haven’t had really any watershed moments when it comes to immigration legislation. Instead, what we’ve had is a lot of stalemate at the legislative level. So the last attempt to really have a grand bargain or comprehensive immigration reform was in 2013.

So I know that many in the business community are interested not only in supporting the immigration regulations that we have today, like the H-1B visa program or the H-2A visas or maintaining the existing quota of legal entry, but they’re interested in doing more. What about raising the H-1B visa cap, doubling it maybe? So we did raise the H-1B visa cap once in the past, during the first Bush administration and into the Clinton administration. So this was in the ’90s and we haven’t done it again since. So the numbers of US population are growing, but the number of H-1B visas that we have, that cap has remained steady for decades. Lately we’ve just been treading water.

RAN ABRAMITZKY: A little bit has to do with the children of undocumented immigrants. So if our research is any guidance, then the children of immigrants and those immigrants who come as children are doing very well in the United States. So we think it’ll be nice to have a path for citizenship and for being able to stay and work for those who arrived as children, like the DREAM Act.

ALISON BEARD: So did you look at the difference between legal and illegal immigration. I know some of the hottest debates are over undocumented workers and how we should handle them and their children.

RAN ABRAMITZKY: It’s a good question. So the undocumented immigrants, which is again somewhat of a modern phenomenon because in the past, everybody from Europe was allowed legal entry. It is a bit challenging because a lot of the evidence we have on the present comes from tax records. That will undercount. It will not include the undocumented immigrants, but we also look at the general social surveys and census records that do include undocumented immigrants. The patterns that we find there are similar to the patterns that we find with the tax records. Meaning that the children of immigrants who grew up in poor families are doing quite well. So we think our findings do capture some undocumented immigrants, although admittedly not all of them.

ALISON BEARD: What role do businesses have to play here? How have they guided the immigration policy in the past or worked around it? What do you think that they should be doing right now?

LEAH BOUSTAN: Well, I know that the business voice has been incredibly important in brokering cooperation on immigration policy in the past. In the 1920s when the border was being closed for the first time, it was the voice of business that was holding that border closure back. So there have been attempts to close the border in the 1910s and in the 1900s and the business voice was often there saying, wait a second, immigrants are important for the economy and we should keep the border open.

The same thing has been true in the sixties when the border reopened in the eighties with an amnesty program. I think that it might be true kind of behind the scenes today as well, but I really would challenge the business community to be more vocal in their support of a humane and rational immigration policy these days. I haven’t seen the business voice as front and center over the past few years, despite what I hear from more quiet conversations.

RAN ABRAMITZKY: And if I can add something, for example, when we look with the colleagues here at Stanford, computational linguists at congressional speeches over the last 150 years. We look at what kind of words politicians, both Republicans and Democrats, are using. We see that today, when politicians speak about immigrants, both Democrats and Republicans use quite similar language when they speak about economic issues or about labor or the kind of things that have to do with the business world. It is only when they talk about cultural aspects that Democrats tend to emphasize family and community and Republicans tend to emphasize maybe crime and things like this about immigrants. But when it comes to talk about economic issues, both Democrats and Republicans are talking quite similarly about economic issues.

In surveys, when the public is asked how good do you think immigration is for the economy, something in the order of 70% of the American public is speaking about immigrants in positive terms, thinking that they’re contributing to the economies rather than undermining it. So as Leah says, I think that if that’s what business leaders are thinking, it will be nice to hear them speaking about these issues.

ALISON BEARD: Yeah. In all of the books that I read on immigration, some of the best stories came from Ali Noorani who is executive director at the National Immigration Forum. He writes about specific instances when communities, both native born and immigrant, realize that they have a collective interest in helping an industry. One example that stuck with me was Idaho dairy farmers and they’re Latino workers and then partnering with Chobani, the yogurt company, which happens to be founded by a Turkish born entrepreneur. This idea that they worked together to ensure that policy around immigration, particularly in their area, was working for both the people coming in and the businesses that you know were existing and this new business that the Chobani founder was trying to build. So I do think that more of those examples of how it’s done in practice could be really useful.

Now I know that you’ve only looked at the United States, but do you sense that there are similar trends playing out in other countries? I think of the UK and France where we’ve seen this similar long history of welcoming immigrants, a more recent nativist backlash.

LEAH BOUSTAN: Some of our colleagues have done similar work especially in Canada and in Sweden and in the UK. Wherever people have looked at this question of how the children of immigrants are faring and if they’re able to move up the ladder, in all of those countries they’ve found something pretty similar to the US. So people have asked me, is this the American story and I’m not so sure it is. I actually think it’s an immigrant story.

ALISON BEARD: Absolutely. The fact that in most cases that you and others have found that upward mobility rather than sort of being a zero sum game in which it comes with the expense of others. It doesn’t have to be that way. It can be broaden the economy in a way that’s good for everyone assuming people embrace mobility too, internal mobility.

RAN ABRAMITZKY: Exactly.

ALISON BEARD: So is there any sort of movement nowadays for people to reverse the brain or brawn drain that is being caused by immigration and just stay home to build their own often developing economies?

LEAH BOUSTAN: Well, there are a lot of return migrants actually. So just because someone moves to the US doesn’t mean that they’ll stay here throughout their career. That was true in the Ellis Island generation when around a third of immigrants went back to Europe and it’s true also today. Those numbers are very similar. 30% or so return home.

So what do immigrants get from coming to the U.S. short term? They can build up some savings and they can bring that home to start businesses or buy land. They can learn new things here and they can bring those ideas back home as well. So we’ve seen that happen with a lot of European innovation of the return migrants from 100 years ago. The same thing is true today.

ALISON BEARD: So Ran, we heard Leah’s family immigration story. Do you have one?

RAN ABRAMITZKY: Well yes. So I’m an immigrant myself. So I moved to the United States in 1999 to do my PhD in economics at Northwestern in Chicago. My kids are children of immigrants, but my entire family history is about immigration. So my grandparents lost their family in the Holocaust and then moved to either Palestine at the time, Israel later or to the United States. A lot of my family, my entire family, is about immigration and people moving around either because of persecution or for economic reasons. So that was one thing that I was always drawn to study is the immigration and inequality and the opportunities that immigrants and refugees have in the United States and in other places.

ALISON BEARD: Well, I just wanted to end by saying that one of my favorite lines from your book, and I’m going to paraphrase because I’m not going to get it exactly right, was that immigrants don’t find streets of gold here. They actually pave their own way. I think that’s just a great encapsulation of the research that you found. It is that hard work that Lin-Manuel Miranda talked about in Hamilton and the sort of pulling yourself by the bootstraps, even if it’s not in that first generation, but ensuring that your kids you know.

RAN ABRAMITZKY: And that’s where the title of our book came from. There’s a painting on the wall of Ellis Island Museum that an immigrant, I think around 1903, it’s an anonymous immigrant, I think it might have been Italian who said something like I came to America because I heard the streets were paved with gold. But when I got here, I found out three things. The first was that the streets were not paved with gold. Second, they were not paved at all, and third I was the one expected to pave them.

ALISON BEARD: Ran, Leah, thank you so much for being with me today.

RAN ABRAMITZKY: Thank you so much for having us.

ALISON BEARD: That Stanford’s Ran Abramitzky and Princeton’s Leah Boustan, co-authors of the book Streets of Gold: America’s Untold Story of Immigrant Success. That Stanford’s Ran Abramitzky and Princeton’s Leah Boustan, co-authors of the book Streets of Gold: America’s Untold Story of Immigrant Success.

If you like this show and want to hear more, like my conversation with MIT professor, Zeynep Ton, on good jobs, that’s episode 833, find us on hbr.org or wherever you get your podcasts.

This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Hannah Bates is our audio production assistant and Ian Fox is our audio product manager. Thanks for listening to the HBR IdeaCast. I’m Alison Beard.