Abstract
Using Current Population Survey data, this paper shows that between 1994 and 2008 the poverty rate of immigrants fell three times faster than that of natives. This suggests that during the last business cycle the rising tide lifted immigrants’ boat higher than that of the natives. The paper also shows that the odds of experiencing poverty for both natives and immigrants depend on individual characteristics and on business cycles in the US economy. The findings support the view that the benefits of a strong economy in the form of poverty rate fall applies to all racial/ethnic groups regardless of their nativity status.
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Notes
Because all residents of the US are represented in the CPS, undocumented (or illegal) immigrants are probably included in the CPS data. Moreover, the CPS does not ascertain the legal status of any person interviewed, so these individuals cannot be identified from CPS data. For details on this issue see http://www.census.gov/population/www/cps/cpsdef.html.
Race and ethnicity are also strongly related to the poverty incidence. The CPS data used in this study show that the 2008 poverty rates of the US population 16 year and older among African Americans, Puerto Ricans and Mexicans are 19.7 percent, 18.7 percent, and 20.1 percent, respectively. These rates are more than twice as high the poverty rates of Whites and Asians (9.1 percent and 8.7 percent, respectively).
For a comprehensive discussion on this matter see Card [2005] and Chapman and Bernstein [2003].
The tragic attack in September 11, 2001 also did not significantly influence the influx of immigration. Between 2001 and 2002, the total number of immigrants who obtained permanent resident status fell by less than 0.5 percent. The composition of the US immigration since September 11 has shifted away from labor and humanitarian categories toward the family reunion. The dominance of the family component “assures a high degree of stability in immigration to the United States” [Migration Policy Institute 2003, p. 4].
Available at http://cps.ipums.org/cps.
Despite these strengths, the CPS cannot capture the duration and persistence of poverty since it only reports income in a given year without providing information about respondents’ income history. Panel Study of Income Dynamics (PSID) and Survey of Income and Program Participation (SIPP) data are longitudinal and capture the persistence of poverty. However, the PSID is not useful for studying the foreign-born population in the United States before 1998 when a representative sample of 491 immigrant families was added to the survey. The SIPP, along with the PSID, also face attrition bias problem. The SIPP can only track households for 2–4 years, making it impossible to examine long poverty spells.
The US Citizenship and Immigration Service, formerly known as the US Immigration and Naturalization Service, defines an immigrant as an alien admitted to the United States as a lawful permanent resident. The Immigration and Nationality Act (INA), however, broadly defines an immigrant as any alien in the United States, except one legally admitted under specific non-immigrant categories. Therefore, an illegal alien who entered the United States without inspection, for example, would be defined as an immigrant under the INA but is not a permanent resident alien. Since the CPS does not ask respondents if they are illegal aliens, the data we use in this paper include both legal and illegal immigrants. Therefore, we use the term “immigrant” as synonymous with foreign-born individuals (not born of US parents).
See the US Census Bureau website (http://www.census.gov/hhes/www/poverty/povdef.html) for a detailed discussion regarding the “official” poverty line. Health and Human Services Poverty Guidelines for first person in 2008 (1994) was $10,400 ($7,360). For each additional person, $3,600 ($2,489) is added [United States Department of Health & Human Services, at http://aspe.hhs.gov/POVERTY/figures-fed-reg.shtml].
Meyer and Sullivan [2009] find sharp differences in recent years between different income poverty measures and between income and consumption poverty rates. For example, a substantial effect on poverty rate change was found over the last two decades between the official pre-tax income poverty measure and the disposable income measure that incorporates taxes, transfers, and fringe benefits.
Scaling factors to transform the Logit estimates into marginal effects are as follow: 0.0663, 0.0654, 0.0655, 0.0654, 0.0655, 0.1112, and 0.1134, respectively, for each column of Table 6. We also estimated a Linear Probability Model (LPM). The LPM results are consistent with those of the Logit estimates and are available upon request.
The Business Cycle Dating Committee of the National Bureau of Economic Research (http://www.nber.org/cycles/) determined that a peak in economic activity occurred in the US economy in December 2007. The peak marked the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months since 2001 fourth quarter: the previous expansion of the 1990s lasted 120 months from 1991 first quarter to 2001 first quarter. Because the CPS data used in this study are collected in March of each year and to conform with the NBER economic cycles, three categories of “Period” variables were created (Period 1 for year < 2001, Period 2 for years=2001 and 2002, and Period 3 for years >2002) to account for the breaks of the US business cycles.
In the second column of Table 6, the sum of estimated coefficients of college degree and self–employed is −0.0418=−0.0669+0.0251.
Although this result is encouraging as it shows a pattern of declining poverty incidence as immigrants stay longer in the United States, this finding is unable to explain the persistency of poverty or the lack thereof. One of the drawbacks in using CPS data is that we were unable to see the persistency of poverty, since it only asks about respondents’ income in a given year and does not include information on income history.
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We thank the participants of the 2009 Eastern Economic Association Conference and three anonymous referees for their helpful comments on a previous version of this paper.
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Kim, J., Tebaldi, E. The Immigrants' Odds of Slipping into Poverty: Double Jeopardy?. Eastern Econ J 37, 530–552 (2011). https://doi.org/10.1057/eej.2010.6
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DOI: https://doi.org/10.1057/eej.2010.6