Estimating the Economic Impact of Undocumented Workers in the South Bend Area

Prof. Kasey BucklesProf. Abigail WozniakGenevieve DempseyJamie GrebowskiSean Smith

Main Research Question

What is the net economic impact of an undocumented worker on the South Bend economy?

*or*

What would be the economic impact of deporting an undocumented worker?

Motivation

-- Conversations between Father Chris Cox of St. Adalbert’s parish, and Professor Abbie Wozniak

-- Policy implications: local, state, and national

-- Academic research scarce and inconclusive

The Research Process

1. Formulate the initial question

2. Secure funding

3. Review previous research

4. Develop strategy and survey design

5. Collect data

6. Analyze results and write report

7. Distribute results

The Research Process

1. Formulate the initial question

2. Secure funding

-- Rodney F. Ganey, Ph.D. Collaborative Community-Based Research Mini-Grant from the Center for Social Concerns, $6,000.

3. Review previous research

4. Develop strategy and survey design

5. Collect data

6. Analyze results and write report

7. Distribute results

3. Review Previous Research

A. Labor Market Effects of Immigration* Immigrants displace native workers and decrease wage rates

Friedburg & Hunt, 1995: Small effect of immigrationBorjas, 2003: A 10% increase in supply decreases native

wages by 3-4% * Immigrants may be complements in production to natives and

therefore increase native wage ratesPeri, 2007

B. Net Impacts* Utilization of services: Piehl, 2006; Bertrand, Luttmer, and

Mullainathan, 2000* Local studies: Germany, North Carolina

4. Develop Strategy and Survey Design

*** Importance of Objectivity ***

A. Construct a balance sheet

-- List all economic transactions an immigrant might conduct, based on Consumer Expenditure Survey and Survey of Income and Program Participation

4. Develop Strategy and Survey Design

*** Importance of Objectivity ***

A. Construct a balance sheet

-- List all economic transactions an immigrant might conduct, based on Consumer Expenditure Survey and Survey of Income and Program Participation

B. Design survey to allow us to assign dollar values to each item

-- Hour-long survey, with questions about income, consumption, savings, personal and family characteristics, other open-ended questions

-- Administered to parishioners at St. Adalbert’s parish in South Bend, with the aid of Spanish-language translators

4. Develop Strategy and Survey Design

C. Issues related to conducting survey through St. Adalbert’s

-- Is this a representative sample of the immigrant population in South Bend?

For Hispanics, yes; for others, no.

-- Among St. Adalbert’s parishioners, are survey respondents randomly selected?

* Randomly select individuals from Church registry

* Try to increase participation by ensuring anonymity, offering $5 gift card to Wal-Mart, conducting surveys after Mass

-- Advantage: respondents were likely more willing to participate and to answer truthfully because of our relationship with

St. Adalbert’s

5. Collect Data

• Took about one month• Administered 62 long surveys, about 40 to undocumented• To increase sample size, administered shorter surveys (15

questions long) at the beginning of six Mass services, yielding 127 surveys

• Challenges: time, translation, literacy• Code results and enter into Stata

Short slide, long and difficult process!

6. Analyze Results and Write Report

• Divide sample into income quartiles• Calculate means by quartile, fill in balance sheet• Compare results to other available figures

With an estimate of between 675 and 3,400 undocumented workers in South Bend, this would imply that their total net contribution is between $2,124,097 and $10,699,154 per month.

This figure does not include unquantifiable contributions and costs, such as crime (immigrant rates are lower than for natives), loss of native jobs or wages, cultural vibrancy, etc.

6. Analyze Results and Write Report

Challenges• Small sample size, especially when divided into

quartiles• Missing values• Misinterpretation, especially with units

Successes• Reasonable results that are comparable to

estimates available elsewhere• Depth of study• Publication!

7. Distribute Results

• Beyond Politics• Bound copies to be provided to Fr. Cox• Immigration forum in April with community leaders• Contacts with Indiana legislature, local Chamber of

Commerce, other civic leaders and community organizers

• Media: within ND and outside

Policy Implications

Important: What is the counterfactual?Our study estimates the impact of deporting an undocumented worker. It does NOT estimate the impact of legalization. We would expect legalized immigrants to have a different economic impact (different utilization of services, possible higher wages, etc.)

Results suggest that deporting an undocumented worker from South Bend results in an economic loss to the community. May generalize to other similar cities.

There are many elements to the immigration debate—legal, political, ethical, cultural, economic. This study speaks only to the last of these. However, we believe the contribution is very important, given that the economic impact of undocumented workers in not well understood.