Are Immigrants a Threat?

From a new working paper:

The empirical evidence comes down decidedly on the side of immigrants being less likely to commit crimes. A large body of empirical research concludes that immigrants are less likely than similar US natives to commit crimes, and the incarceration rate is lower among the foreign-born than among the native-born (see, for example, Butcher and Piehl 1998a, 1998b, 2007; Hagan and Palloni 1999; Rumbaut et al. 2006). Among men ages 18 to 39—prime ages for engaging in criminal behavior—the incarceration rate among immigrants is one-fourth the rate among US natives (National Academies of Sciences, Engineering, and Medicine 2015).

…There is some evidence that the lower propensity of immigrants to commit crimes does not carry over to immigrants’ children. The US-born children of immigrants—often called the “second generation”— appear to engage in criminal behavior at rates similar to other US natives (Bersani 2014a, 2014b). This 4 “downward assimilation” may be surprising, since the second generation tends to considerably outperform their immigrant parents in terms of education and labor-market outcomes and therefore might be expected to have even lower rates of criminal behavior (National Academies of Sciences, Engineering, and Medicine 2015). Instead, immigrants’ children are much like their peers in terms of criminal behavior. This evidence mirrors findings that the immigrant advantage over US natives in terms of health tends to not carry over to the second generation (e.g., Acevedo-Garcia et al. 2010).

Although immigrants are less likely to commit crimes than similar US natives, they are disproportionately male and relatively young—characteristics associated with crime. Does this difference in demographic composition mean that the average immigrant is more likely than the average US native to commit crimes? Studies comparing immigrants’ and US natives’ criminal behavior and incarceration rates tend to focus on relatively young men, leaving the broader question unanswered. However, indirect evidence is available from looking at the relationship between immigration and crime rates. If the average immigrant is more likely than the average US native to commit crimes, areas with more immigrants should have higher crime rates than areas with fewer immigrants. The evidence here is clear: crime rates are no higher, and are perhaps lower, in areas with more immigrants. An extensive body of research examines how changes in the foreign-born share of the population affect changes in crime rates. Focusing on changes allows researchers to control for unobservable differences across areas. The finding of either a null relationship or a small negative relationship holds in raw comparisons, in studies that control for other variables that could underlie the results from raw comparisons, and in studies that use instrumental variables to identify immigrant inflows that are independent of factors that also affect crime rates, such as underlying economic conditions (see, for example, Butcher and Piehl 1998b; Lee, Martinez, and Rosenfeld 2001; Reid et al. 2005; Graif and Sampson 2009; Ousey and Kubrin 2009; Stowell et al. 2009; Wadsworth 2010; MacDonald, Hipp, and Gill 2013; Adelman et al. 2017). The lack of a positive relationship is generally robust to using different measures of immigration, looking at different types of crimes, and examining different geographic levels.2 Further, the lack of a positive relationship suggests that immigration does not cause US natives to commit more crimes. This might occur if immigration worsens natives’ labor market opportunities, for example.

The few studies that examine crime among unauthorized immigrants have findings that are consistent with the broader pattern among immigrants—namely, unauthorized immigrants are less likely to commit crimes than similar US natives (apart from immigration-related offenses).4 Likewise, studies that examine the link between the estimated number of unauthorized immigrants as a share of an area’s population and crime rates in that area typically find evidence of null or negative effects (pg. 3-5).

Comparatively, the effects of border control on crime is mixed. The authors conclude,

A crucial fact seems to have been forgotten by some policy makers as they have ramped up immigration enforcement over the last two decades: immigrants are less likely to commit crimes than similar US natives. This is not to say that immigrants never commit crimes. But the evidence is clear that they are not more likely to do so than US natives. The comprehensive 2015 National Academies of Sciences, Engineering, and Medicine report on immigration integration concludes that the finding that immigrants are less likely to commit crimes than US natives “seems to apply to all racial and ethnic groups of immigrants, as well as applying over different decades and across varying historical contexts” (328). Unauthorized immigrants may be slightly more likely than legal immigrants to commit crimes, but they are still less likely than their US-born peers to do so. Further, areas with more immigrants tend to have lower rates of violent and property crimes. In the face of such evidence, policies aimed at reducing the number of immigrants, including unauthorized immigrants, seem unlikely to reduce crime and increase public safety (pg. 11).

Does Female Autonomy Lead to Long-Term Economic Growth?

From a new study:

A number of development economists have found higher gender inequality to be associated with slower development. Amartya Sen (1990) estimated a large number of ‘missing women’, which resulted in skewed sex ratios, and argued that this has been one of history’s crucial development hurdles. Stephan Klasen, with various co-authors, used macroeconomic regressions to show that gender inequality has usually been associated with lower GDP growth in developing countries during the last few decades (Klasen and Lamanna 2009, Gruen and Klasen 2008). This resulted in development policies targeted specifically at women. In 2005, for example, UN Secretary General Kofi Annan stated that gender equality is a prerequisite for eliminating poverty, reducing infant mortality, and reaching universal education (UN 2005). In recent periods, however, a number of doubts have been made public by development economists. Esther Duflo (2012) suggested that there is no automatic effect of gender equality on poverty reduction, citing a number of studies. The causal direction from poverty to gender inequality might be at least as strong as in the opposite direction, according to this view.

…In a new study, we directly assess the growth effects of female autonomy in a dynamic historical context (Baten and de Pleijt 2018). Given the obviously crucial role of endogeneity issues in this debate, we carefully consider the causal nature of the relationship. More specifically, we exploit relatively exogenous variation of (migration-adjusted) lactose tolerance and pasture suitability as instrumental variables for female autonomy. The idea is that high lactose tolerance increased the demand for dairy farming, whereas similarly, a high share of land suitable for pasture farming allowed more supply. In dairy farming, women traditionally had a strong role, which allowed them to participate substantially in income generation during the late medieval and early modern period (Voigtländer and Voth 2013). In contrast, female participation was limited in grain farming, as it requires substantial upper-body strength (Alesina et al. 2013). Hence, the genetic factor of lactose tolerance and pasture suitability influences long-term differences in gender-specific agricultural specialisation. In instrumental variable regressions, we show that the relationship between female autonomy and human capital is likely to be causal (and also address additional econometric issues, such as the exclusion restriction, using Oster ratios, etc.). 

Age-heaping-based numeracy estimates reflect a crucial component of human capital formation. Recent evidence documents that numerical skills are the ones that matter most for economic growth. Hanushek and Woessmann (2012) argued that maths and science skills were crucial for economic success in the 20th century. They observed that these kinds of skills outperform simple measures of school enrolment in explaining economic development. Hence, in the new study we focus on math-related indicators of basic numeracy. We use two different datasets: first, we use a panel dataset of European countries from 1500 to 1850, which covers a long time horizon; second we study 268 regions in Europe, stretching from the Ural mountains in the east to Spain in the southwest and the UK in the northwest. 

Average age at marriage is used as a proxy for female autonomy. Low age at marriage is usually associated with low female autonomy. Age at marriage is highly correlated with other indicators of female autonomy, such as the share of female household heads or the share of couples in which the wife was older than the husband. Age at marriage is particularly interesting because of the microeconomic channel that runs from labour experience to an increase in women’s human capital. After marriage, women typically dropped out of the labour market, and switched to work in the household economy (Diebolt and Perrin 2013). Consequently, after early marriage women provided less teaching and self-learning encouragement to their children, including numeracy and other skills. Early-married women sometimes also valued these skills less because they did not ‘belong to their sphere’, i.e. these skills did not allow identification (Baten et al. 2017).

What do they find?

Figure 3 depicts a strong and positive relationship between average age at marriage and numeracy for the two half centuries following 1700 and 1800. Most countries are close to the regression line. Denmark, the Netherlands, Germany, Sweden, and other countries had high values of female autonomy and numeracy – interestingly, many of the countries of the Second Industrial Revolution of the late 19th century, rather than the UK, the first industrial nation. In contrast, Russia, Poland, Slovakia, Italy, Spain, and Ireland had low values in both periods.

In our regression analyses, we include a large number of control variables, such as religion, serfdom, international trade, and political institutions. We find that the relationship between female autonomy and numeracy is very robust.

We also study the relationship between female autonomy and human capital formation at the regional level in the 19th century. Numeracy and age at marriage (after controlling for country-fixed effects and other control variables) yield an upward sloping regression line (Figure 4). 

…In sum, the empirical results suggest that economies with more female autonomy became (or remained) superstars in economic development. The female part of the population needed to contribute to overall human capital formation and prosperity, otherwise the competition with other economies was lost. Institutions that excluded women from developing human capital – such as being married early, and hence, often dropping out of independent, skill-demanding economic activities – prevented many economies from being successful in human history.

 

Age Marriage.PNG
Numeracy.PNG

What Are the Effects of Economic Freedom at the State Level?

A brand new paper from the Mission Foods Texas-Mexico Center at SMU:

In this paper, we examine the relationship between institutional quality and bilateral trade patterns between Mexican states and U.S. states. We are contributing to the small, but growing, literature which uses gravity models to examine economic exchange at the subnational level (see Havranek and Irsova 2017 for a recent review of this literature). We are the first to explicitly incorporate institutional quality into a model of trade between the U.S. states and Mexican states, and the first to examine these sorts of relationships between the U.S. and Mexican states more generally. Poor institutions can be viewed as a cost for potential trading partners, and economic theory tells us that when an action becomes more costly, less of that action will be undertaken. Conversely, when an action becomes less costly, more of that action will be undertaken. We find that states with better institutional environments as measured by the Economic Freedom of North America index do, indeed, realize higher levels of trade. We also contribute to the literature examining trade border effects (Hillberry and Hummels 2002; Chen 2004; Head and Ries 2001) by examining the impact the border has on trade between the U.S. states and Mexican states. Finally, we use our dataset to examine the relationship between trade volume and three measures of economic prosperity (pg. 6).

The authors lay out their key findings and policy recommendations:

mexico trade.png

Economic institutions matter.

Minimum Wage & Low-Skilled Workers: More Evidence

From a recent paper in the Journal of Public Economics:

Our empirical analysis uses the fact that the 2007 through 2009 increases in the federal minimum wage were differentially binding across states. We base our “bound” designation on whether a state’s January 2008 minimum wage was below $6.55, rendering it bound by the entirety of the July 2009 increase. In the states we describe as “unbound,” the effective minimum wage rose, on average, by $1.42 between 2006 and 2012. In the states we describe as “bound,” the effective minimum wage rose, on average, by $2.04. Of the long-run differential, $0.58 took effect on July 24, 2009.

We use monthly, individual-level panel data from the 2008 panel of the Survey of Income and Program Participation (SIPP) to implement a combination of difference-in-differences and triple difference research designs. Because we use longitudinal employment records with data on wage rates, our implementation of these research designs has two key advantages. First, we are able to pinpoint “target” groups more intensely affected by minimum wage increases than the analysis groups in many studies. Second, we are able to pinpoint workers who were not directly affected yet, as evidenced by their wage rates, were only moderately more skilled than the “target” workers. We incorporate this second group of workers into our analysis as a “within-state control” group. That is, we use this group to construct a set of counterfactuals that proxy for otherwise unobserved shocks to the low-skilled labor market (pg. 53).

What do they find?:

  • “We find that increases in the minimum wage significantly reduced the employment of low-skilled workers. By the second year following the $7.25 minimum wage’s implementation, we estimate that targeted individuals’ employment rates had fallen by 6.6 percentage points (9%) more in bound states than in unbound states. The implied elasticity of our target group’s employment with respect to the minimum wage is −1, which is large within the context of the existing literature” (pg. 54).

  • The average monthly incomes of low-skilled individuals decreased. “Relative to low-skilled workers in unbound states, targeted individuals’ average monthly incomes fell by $90 over the first year and by an additional $50 over the following 2 years. While surprising at first glance, we show that these estimates can be straightforwardly explained through our estimated effects on employment, the likelihood of working without pay, and subsequent lost wage growth associated with lost experience. We estimate, for example, that targeted workers experienced a 5 percentage point decline in their medium-run probability of reaching earnings greater than $1500 per month” (pg. 54).

The researchers conclude,

We use data from the SIPP to investigate the effects of the 2007 to 2009 increases in the federal minimum wage on the employment and income trajectories of low-skilled workers. We estimate that the minimum wage increases enacted during the Great Recession had negative effects on affected individuals’ employment, income, and income growth. The SIPP data suggest that this period’s minimum wage increases reduced aggregate employment rates by at least half of a percentage point in states that were fully bound by the federal minimum wage’s rise from $5.15 to $7.25 (pg. 67).

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