Abstract
This analysis examines the effects of reducing the supply of foreign-born labor on the Idaho economy. Estimates of labor usage by industry sector are obtained from governmental and non-governmental data sources and are incorporated into a 14-sector nested computable general equilibrium (CGE) model with five primary factors of production consisting of capital and four different labor groups (foreign-born less educated, native-born less educated, foreign-born more educated, and native-born more educated). The results of the model indicate that at the expected elasticities of substitution between similarly educated native-born and foreign-born labor, the reduction of the foreign-born less educated labor supply modestly increases the demand for native-born less educated labor while causing reductions in state GDP, total economic output, and household utility. The importance of the elasticities of substitution between the various labor groups in influencing the impact results is discussed and a sensitivity analysis performed. The CGE results are then compared to those of an input-output model: the differences are discussed.
Highlights
Immigration is the subject of considerable policy debate and action, especially at the state and local levels (Downes, 2012)
The supply of FBLE labor in the model was reduced by 10 percent, 25 percent, and 50 percent, respectively
If Passel and Cohn’s (2009) method is used for assigning our undercounted population to these two categories, the estimated number of people in Idaho working without proper documentation roughly corresponds to 50 percent of the supply of FBLE labor
Summary
Immigration is the subject of considerable policy debate and action, especially at the state and local levels (Downes, 2012). In 2010 Arizona passed the most stringent immigration legislation in the nation at the time, attracting national media attention (Archibold, 2010). In 2011, more than 30 states introduced bills similar to part or all of SB 1070 (Downes, 2012) and in 2009 48 states enacted 222 new laws dealing with immigration (Archibold, 2010). Not all new state immigration legislation restricts the rights of immigrants. In 2007, bills that expanded the rights of immigrants were passed at a higher rate than those that contracted their rights (Laglagaron et al, 2008)
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