Immigrant Earnings and Out-Migration from the United States

The Issue:

Immigrants currently make up about one out of every six workers in the U.S. civilian labor force. While the share of immigrants in the labor force has grown over the past few decades, immigration is not a one-way flow into the United States: There is significant turnover, with many of the foreign-born who work in the United States leaving the country after some time. Studying the characteristics of immigrant workers who leave the country and those who stay can give us a better understanding of how work trajectories might impact immigrant selection and assimilation.

There is significant turnover among foreign workers who come to the United States, with a high share leaving the country within a relatively short time.

The Facts:

• The role of immigrants in the U.S. labor force has grown over the past four decades. The share of foreign-born persons in the U.S. labor force rose from 13.3 percent in 2000 to 17.1 percent in 2017, according to Bureau of Labor Statistics, and more than tripled since 1970, when it was 5 percent. These foreign-born workers include people in different categories of immigration status — which can be temporary or permanent: They are a combination of legally admitted immigrants; refugees; temporary residents such as students and temporary workers; and undocumented immigrants (see here). The growing importance of immigrants in the labor force is a result of immigration trends, but it is also a reflection of the increasing retirement of the baby boom generation and low U.S. birth rates.
• While the U.S. has historically been an important destination for immigrants, very little is known about the return migration of these same individuals over time. In recent research co-authored with Maggie Jones of the U.S. Bureau of the Census, we follow immigrant workers between the ages of 25-45 from the year they arrive to the United States for up to a decade, to better understand how those who stay differ from those who leave. To do this, we linked earnings information from the IRS with immigrants' characteristics, as recorded in the nationally representative American Community Survey, for a recent cohort of working-age immigrants who arrived in the U.S. between 2005 and 2007. This allows us to follow individual immigrant workers over time in the U.S. and observe the ones that leave the data (presumably as return migrants).
• Almost 40 percent of the documented immigrants who arrived in the U.S. in our sample had left within the decade. Because this research considers the experiences of immigrants who received W2 and/or 1099 forms, it likely excludes undocumented immigrants and those who were employed in the informal labor market. We find that there is a pronounced drop for both men and women after the first year in the United States. The decline in the number of immigrants with reported W-2 or 1099 data continues at a more moderate rate after that and, by 2015, there is earnings data for only slightly more than 60 percent of persons from the initial arrival cohort. While the period of our study included the Great Recession, which may have made it particularly difficult for immigrant workers to remain employed in the United States, there is evidence from prior research that emigration rates can be substantial. For instance, researchers who followed legal permanent residents to the U.S. in the 1970s found that on average, about 50 percent of the cohort had left the United States over an eight-year period. And substantial emigration rates have also been found for the United Kingdom.
• The average earnings of immigrants who entered the United States in 2005-2007 was about 40 percent lower than those of native-born Americans with similar levels of education in that year. But there is a subsequent divergence in average earnings between immigrants who stay long-term and those who leave within the ten-year window we observe. For instance, when we separate out the immigrant men who stayed in the United States over the decade from those who had left by 2015, we find significantly different earnings trajectories with respect to native-born Americans (see chart). The earnings of these immigrant men in the United States are initially well below those of native-born Americans with similar levels of education at the time of arrival. However, there is a relatively quick “catch-up” phase that occurs in the first few years after arrival for those that end up remaining in the U.S. The average earnings of the group who remained in the United States continued to rise relative to the average level of the native-born, eventually exceeding that average level. In contrast, the average earnings of those immigrants who subsequently leave the U.S. only reaches 80 percent of the earnings of native-born Americans with similar levels of education after three years, and then decreases over the remainder of the decade. These statistics are for men who are not enrolled in school and are between 25 and 45 years old at the time of their arrival. A similar analysis exists for women and shows qualitatively similar results as well.
• A decline in earnings for several consecutive years is a strong predictor of return migration for an immigrant. This suggests that poor labor market experiences as manifested in a downward earnings trajectory contributed to the decision to leave the United States, either to return to the home country or to emigrate to another country. This is a novel finding of our analysis, since previous research has not been able to identify and determine the earnings and characteristics of those documented immigrants who left within a decade after entering the United States. While we are unable to identify the cause of the drop in earnings, it is possible that it could be associated with job loss or transition to a different employer. Future work will investigate some of these potential explanations.
• Highly-educated immigrants were the most likely to leave the United States within a decade of arriving in our study. Given that our analysis only covers a single decade it is not clear whether this is a general phenomenon or one driven purely by effects of the Great Recession. For instance, the earnings differential between the U.S. and home country wages may have diminished during and after the Great Recession, which made it more attractive for immigrants to return home. On the other hand, highly-educated immigrants may arrive to the United States with some regularity with a goal of acquiring a certain amount of U.S. labor market experience or savings and return migrate over time.
• Out-migration rates vary by country of origin, but not by some other characteristics. There are high return migration rates for immigrants from Canada and low return migration for immigrants from the Philippines; these findings mirror those of previous researchers. On the other hand, we find that English language and marital status do not appear to be important determinants of return migration either for men or for women.