Immigrants ; Emigration and immigration ; Labor supply - United States

Christopher J. Martinek

Rubén Hernández-Murillo

English

Research Papers in Economics

By Rubén Hernández-Murillo and Christopher J. Martinek
working in the u .     s .
I
n a previous Regional Economist article, 
we remarked that in order to assess the 
costs and benefits of immigration (both legal 
and illegal) one has to consider the distribu-
tion of skills in the foreign-born population 
and compare it with the distribution of skills 
among U.S.-born workers.
1  Although an 
influx of low-skilled immigrants tends to 
negatively affect the wages of similarly skilled 
U.S.-born workers, this influx could increase 
the productivity of medium-skilled workers, 
who comprise the majority of U.S.-born work-
ers, if their skills complement each other’s.
Not only is the distribution of skills among 
the foreign-born population widely different 
from that of their U.S.-born counterparts, 
but the choices these immigrants make when 
deciding where to live in the U.S. also differ 
considerably from those choices made by 
natives.  Furthermore, for similar levels of 
skill or education, immigrant workers tend 
to choose different occupations than native 
workers do.
Identifying the differences in the composi-
tion of skills across local markets can help 
analyze the impact of immigration because 
an increase in the number of immigrants 
may have different effects across locations.  
There may also be effects unrelated to the 
effects on wages.  For example, low-skilled 
immigrants have had a positive impact on 
the labor supply decisions of high-skilled 
U.S.-born women.  For another example, 
high-skilled immigrants have boosted the 
innovation rate in the U.S. 
Geographic Distribution 
A recent report by the Brookings Institu-
tion that uses data from the 2009 American 
Community Survey summarized the skills 
composition among the foreign-born and 
U.S.-born populations across the 100 larg-
est metropolitan statistical areas (MSAs).  
Foreign-born workers have, for the most part, 
either low or high levels of skills; therefore, 
the ratio of high-skilled individuals (those 
with a bachelor’s degree or higher) to low-
skilled individuals (those with less than high 
school education) of working age provides a 
concise, representative measure of their skills 
distribution.  Across the largest 100 metro-
politan areas, the study found, the ratio of 
high-skilled to low-skilled individuals among 
the foreign born varied considerably. 
The table presents a list of the top and 
bottom 10 MSAs ranked in terms of the skill 
ratio among the foreign-born population for 
2009.  The average skill ratio among the top 
metro areas was 275, indicating that high-
skilled workers outnumbered low-skilled 
workers by 2.75 to 1.  Among the bottom 
10 metro areas, the average ratio was 29.  
Among the top metro areas, St. Louis, Mo.-
Ill., with a skill ratio of 305, ranked in third 
place.  Its ratio indicates that a very large pro-
portion of foreign-born workers in this city 
are high-skilled and outnumber low-skilled 
immigrants by about 3 to 1.  Immigrants, 
however, represent only a small propor-
tion of the overall population in the top 10 
MSAs, 5.4 percent on average.  The bottom 10 
MSAs, in contrast, have a substantially larger 
proportion of immigrants, 19.4 percent on 
average.  The 10 MSAs with the lowest skill 
ratio among the foreign-born are almost all 
located in California, New Mexico or Texas, 
while the 10 MSAs with the highest skill ratio 
among the foreign-born are scattered mostly 
across the Northeast and Midwest. 
The skill composition of immigrants 
does not necessarily line up with the skill 
composition of U.S.-born workers.  Among 
the bottom 10 MSAs, the skill ratio among 
the foreign-born population is substantially 
lower than that for the native population, while 
among the top 10 MSAs, the ratios are more 
similar.  Also, the 10 metropolitan areas with 
the lowest skill ratios among foreign-born 
workers had larger population growth overall 
than areas with higher skill ratios.
Occupational Choices 
The skill ratios discussed above were 
computed in terms of educational attainment 
levels, but immigrant workers differ from the 
native population also in terms of their occu-
pation choices.  Even within similar educa-
tion levels, foreign-born workers choose very 
different occupations than native workers do.
A recent study by economist Todd Schoell-
man analyzed the connection between  
immigrants’ skills and their occupational 
choices.  He defined skills broadly in terms  
of education, training and experience,  
cognitive ability, physical skills, and language 
and communication skills.  Immigrants are 
more likely than natives to work in manual 
occupations that are intensive in physical 
ability skills; immigrants are also more likely 
than natives to work in occupations that are 
intensive in cognitive ability, particularly in 
science and engineering.  In contrast, natives 
are more likely to work in communications-
intensive occupations, such as management, 
and in experience- and training-intensive 
occupations, such as repair services. 
A similar study by economists Giovanni 
Peri and Chad Sparber focused only on 
immigrants and native workers with gradu-
ate degrees.  Categorizing skills into two 
broad types, they found that immigrants 
and native workers choose different occupa-
tions.  Highly educated immigrants special-
ize in occupations that require quantitative 
and analytical skills, while highly educated 
natives specialize in occupations that require 
interactive and communication skills. 
Immigrants: Skills, 
Occupations and Locations
© Getty imaGes
18   The Regional Economist  |  October 2011Unexpected Effects of Immigration 
Economists Patricia Cortés and José 
Tessada recently found that the rise in 
low-skilled immigration during the 1980-
2000 period increased the hours that highly 
educated U.S.-born women devote to work 
outside the home and decreased the amount 
of time that these women devote to house-
hold work (and consequently increased the 
amount they spend on housekeeping services 
contracted in the market).  
The reason for this effect is not too 
surprising:  Low-skilled immigrants work 
disproportionately in sectors that provide 
services that are close substitutes for services 
that would otherwise be produced in the 
home (such as gardening, housekeeping and 
child care).  The recent waves of low-skilled 
immigration have caused the prices of these 
services to fall.  This price decline, in turn, 
has led women to reduce their own time 
spent producing these services at home and 
to instead purchase them in the market at 
reduced prices.  It turns out that women at 
the top quartile of the wage distribution are 
most likely to benefit from the exchange 
because their time in the workplace is more 
valuable than what it costs them to hire out 
household services.  In fact, the authors 
found only reduced effects for women with 
wages above the median wage but below the 
top quartile and no effect for women with 
wages below the median.
Looking at the opposite end of the skill 
spectrum, economists Jennifer Hunt and 
Marjolaine Gauthier-Loiselle assessed the 
impact of high-skilled immigrants on the 
rate of innovation in the U.S., as measured 
by the count of patents for each person in 
the U.S.  Understanding this connection is 
important because the rate of innovation 
has been linked in other studies to the rate 
of technological progress, productivity and, 
ultimately, economic growth.  The authors 
analyzed the rise in the share of population 
of college-graduate immigrants during the 
period 1990-2000 and found that it led to 
an increase in patents per capita of up to 21 
percent.  Focusing only on the rise in the 
share of population of immigrant scientists 
and engineers with post-college degrees, 
the authors found an increase in patents per 
capita of up to 32 percent.  Their estimates 
account for the possibility of positive and 
negative spillover effects.
The ways high-skill immigrants increase 
the patent rate include direct effects, through 
the greater concentration of the foreign-
born in science and engineering occupations 
relative to U.S.-born individuals with similar 
levels of education, and via indirect effects, 
by making natives move innovative through 
collaboration.  Even immigrants who do not 
get patents themselves, the authors explain, 
may provide support to U.S.-born scientists 
by providing complementary skills or by 
founding high-tech companies.  Of course, a 
larger presence of immigrant scientists may 
have negative effects if it discourages natives 
from working in science and engineering, 
but that does not seem to be the case. 
Rubén Hernández-Murillo is an economist and 
Christopher J. Martinek is a research associate, 
both at the Federal Reserve Bank of St. Louis.  
For more on the former’s work, see http:// 
research.stlouisfed.org/econ/hernandez/
ENDNOTE
 1  See Hernández-Murillo, 2006.
REFERENCES
Cortés, Patricia; and Tessada, José.  “Low-Skilled 
Immigrations and the Labor Supply of Highly 
Skilled Women.”  American Economic Journal: 
Applied Economics, Vol. 3, No. 3, July 2011,  
pp. 88-123.
Hall, Matthew; Singer, Audrey; De Jong, Gordon F.; 
and Graefe, Deborah Roempke.  “The Geography 
of Immigrant Skills: Educational Profiles of Met-
ropolitan Areas.”  State of Metropolitan America 
Series.  Washington, D.C.: Brookings Institution, 
June 2011.
Hernández-Murillo, Rubén.  “Adding Up the Effects 
of Immigration.”  The Regional Economist.  Octo-
ber 2006, Vol. 14, No. 4, pp. 12-13.
Hunt, Jennifer; and Gauthier-Loiselle, Marjolaine.  
“How Much Does Immigration Boost Innova-
tion?”  American Economic Journal: Macroeco-
nomics, Vol. 2, No. 2, April 2010, pp. 31-56.
Peri, Giovanni; and Sparber, Chad.  “Highly Educated 
Immigrants and Native Occupational Choice.”  
Industrial Relations: A Journal of Economy and 
Society, Vol. 50, No. 3, July 2011, pp. 385-411.
Schoellman, Todd.  “The Occupations and Human 
Capital of U.S. Immigrants.”  Journal of Human 
Capital, Vol. 4, No. 1. Spring 2010, pp. 1-34.
         
MSA  
Population 
Size  
Ranking
Percent 
Foreign-
born 
Population
 
Native Skill 
Ratio
 
Foreign-born 
Skill Ratio
MSA Total 
Population 
Growth:  
2005-2009
Top 10 MSAs by Skill Ratio of Foreign-born
Pittsburgh, Pa.  22 3.01% 305.8 391.3 1.73%
Dayton, Ohio 61 3.02 212.7 330.2 2.17
st. Louis, mo.–ill. 18 4.03 257.7 304.9 3.69
Baltimore–towson, md. 20 8.28 294.1 278.8 4.14
Cincinnati–middletown, Ohio–Ky.–ind. 24 3.76 226.7 274.9 7.14
madison, Wis.  88 6.26 808.5 259.1 9.76
Virginia Beach–Norfolk–Newport News, Va.–N.C.  36 5.84 260.1 231.7 5.70
Harrisburg–Carlisle, Pa.  96 4.49 255.2 230.7 7.31
Jacksonville, Fla.  40 7.99 233.4 223.4 8.49
albany–schenectady–troy, N.y.  57 6.92 367.2 221.8 5.09
Average for the Top 10 5.36% 322.1 274.7 5.52%
Bottom 10 MSAs by Skill Ratio of Foreign-born
Providence–New Bedford–Fall River, R.i.–mass. 37 12.54% 247.4 42.1 2.21%
albuquerque, N.m.  58 9.69   336.5 38.8 9.22
Riverside–san Bernardino–Ontario, Calif.  14 21.32 169.1 38.6 8.23
Lakeland–Winter Haven, Fla. 87 10.25 121.4 37.0 10.05
stockton, Calif. 78 23.74 134.5 32.6 4.43
el Paso, texas 68 25.35 175.4 26.3 6.07
Fresno, Calif. 54 21.43 149.5 22.5 6.56
modesto, Calif. 100 20.90 119.7  21.3 2.53
mcallen–edinburg–mission, texas 70 28.98 90.2 18.1 10.30
Bakersfield, Calif. 63 19.72 95.6 13.3 11.49
Average for the Bottom 10 19.39% 163.9 29.1 7.11%
Data are from the 2005 and 2009 american Community survey.  the skill ratio is defined as the ratio of those with a bachelor’s degree or higher to those with 
less than a high school degree, multiplied by 100.
Skill Ratios in the 100 Largest  
Metropolitan Statistical Areas (MSAs)
The Regional Economist  |  www.stlouisfed.org   19

Immigrants: skills, occupations and locations

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