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The Shortand Long-Run Effects of Immigration During the Age of Mass Migration

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The Shortand Long-Run Effects of Immigration During the Age of Mass Migration A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Sequeira, Sandra; Nunn, Nathan; Qian, Nancy Article Migrants and the Making of America: The Shortand Long-Run Effects of Immigration During the Age of Mass Migration ifo DICE Report Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Sequeira, Sandra; Nunn, Nathan; Qian, Nancy (2017) : Migrants and the Making of America: The Shortand Long-Run Effects of Immigration During the Age of Mass Migration, ifo DICE Report, ISSN 2511-7823, ifo Institut - Leibniz-Institut für Wirtschaftsforschung an der Universität München, München, Vol. 15, Iss. 3, pp. 30-34 This Version is available at: http://hdl.handle.net/10419/181246 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu RESEARCH REPORT Sandra Sequeira, Nathan Nunn and ties with more historical migration are poorer today, it Nancy Qian might have been that migrants were only able to settle Migrants and the Making in more marginal locations, with poorer future eco- nomic growth, where land and rents were cheaper. In of America: The Short- fact, the historical evidence seems to point in this direc- and Long-Run Effects of tion. There are substantial historical accounts of con- gestion, legislation and discrimination keeping Immigration During the migrants from well-paying attractive jobs and occupa- Age of Mass Migration tions. This may have induced immigrants to settle in neighbourhoods and counties with lower future growth potential. For example, legislation in the mid-1890s in both New York and Pennsylvania excluded all foreign aliens from jobs in state and local municipal public works (Muller 1993). Legislation from Pennsylvania “Between 1880 and 1920 America became the industrial required residence and language requirements for for- and agricultural giant of the world… This could not have eign-born, while in Idaho legislation prevented compa- been done without the hard labour, the technical skills nies from hiring aliens who had not declared their and entrepreneurial ability of the 23.5 million people who intention to stay permanently in the United States came to America in this period.” (Handlin 1948; McGouldrick and Tannen 1977, Hannon John F. Kennedy 1982). To overcome this challenge, we exploit two facts The current American political discourse is heavily cen- about immigration during the Age of Mass Migration in Sandra Sequeira tred around the impact that immigrants have on the our analysis. The first important fact is that after arriv- London School of communities into which they settle. While this topic has ing into the United States, immigrants tended to use Economics and CEPR. received significant attention to date, most of the focus the newly constructed railway to travel inland to their has been on the short-term effects of immigrants. And eventual place of residence. Therefore, the timing of a yet, an equally important question is the long-run county’s connection to the railway network affected impact immigrants can have in the locations into which the number of immigrants that settled in the county. they settle, particularly since the short- and long-term The second fact is that the total inflow of immigrants impacts may be different. fluctuated greatly during this period (see Figure 1). This We contribute to the study of the impact of immi- means that in some decades, immigration was signifi- gration by taking a historical perspective. In particular, cantly higher than average (e.g., 1850s, 1880s, and we examine migration into the United States between 1900s) while in other decades it was significantly lower Nathan Nunn 1850 and 1920 – during America’s Age of Mass Migration than average (e.g., 1860s, 1870s, and 1890s). Harvard University, – and estimate the causal impact of immigrants on eco- If a county was connected during periods of high NBER, and BREAD. nomic and social outcomes today, approximately 100 immigration then it would tend to have more immigrant years later. This immigration period is important for settlement. During this time, once a county became several reasons. First, it was the largest in the history of connected to the railway network it almost always the United States. Second, the wave of “new” immi- stayed connected. Our analysis therefore compares grants that arrived during this period was not just an counties that became connected at approximately the extension of the previous waves of immigrants. Earlier same point in time, but some counties were connected immigrants were primarily of French, Irish and English just prior to an immigration boom and others just prior origin, but the new wave also included immigrants to an immigration lull, and thus ended up with higher from southern, northern, and Eastern Europe who and lower levels of immigration respectively. Nancy Qian spoke different languages and had different religious Our estimates suggest that immigration, meas- Yale University, NBER, practices. ured as the average share of migrants in the population and BREAD. Empirically studying the long-run impacts of immi- between 1860 and 1920, generated significant eco- gration poses several challenges. A simple comparison nomic benefits today. It resulted in higher incomes, less of counties with and without historical immigration can poverty, less unemployment, more urbanization, and be misleading since there could be omitted factors, higher educational attainment. Moving a county with such as geographic or climatic characteristics, that no historical immigration to the 50th percentile of our may have affected whether immigrants settled in a par- sample of counties results in a 20% increase in average ticular location. These characteristics may then have per capita income today, a 3% decrease in unemploy- independently had an impact on the outcomes of inter- ment and a 3% decrease in the share of the population est. If we observe that counties with more historical living in poverty. We also identify a 31% increase in the migration are richer today, it might have been that rate of urbanization and an increase in 0.6 additional migrants were attracted to locations with more growth years of schooling. potential. These areas would have grown faster, even in One important concern with our analysis is that the absence of the migrants. If we observe that coun- the long-term economic benefits of immigration may 30 ifo DICE Report 3 / 2017 September Volume 15 RESEARCH REPORT Figure 1 medium- or long-run. The immigration backlash and the Annual Flow of Immigrants to the United States, 1820–1940 rise of social and political nativist movements at the Number of immigrants in millions time suggest that there may 1.5 have been immediate costs to immigration. However, we find that the benefits of immigra- 1.0 tion may have been felt imme- diately. During the early stages of industrial development, immigration appears to have 0.5 provided a large supply of labour that was necessary for the take-off of industry and for 0.0 sustained modern economic 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 growth. In fact, several histori- Source: Migration Policy Institute. © ifo Institute ans have documented that immigrants were dispropor- tionately represented in the have come at a high social cost, such as the erosion of industrial workforce (Engerman and Sokoloff 2000, social cohesion, civic mindedness or an increase in Alexander 2007). For example, in 1880, despite only crime. However, we find no such effects. Historical accounting for approximately 10% of the total popula- immigration does not appear to be associated with any tion, immigrants already accounted for 57% of the changes in long-term social outcomes. manufacturing workforce. From the commercial trades We then examine the potential mechanisms that of the Genoese Italians to the abilities of the Eastern underlie our findings. It is possible that the long-term European Jews and Armenians, immigrants brought economic benefits that we estimate arise due to the with them different sets of experiences and skills that relocation, as opposed to creation, of economic pros- allowed them to specialize in particular occupations. perity. In practice, this requires understanding how Consistent with these historical accounts, our analysis immigration into a county might have affected eco- shows that the presence of immigrants caused a large nomic outcomes in neighbouring
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