opportunity costs: the fiscal cost of (not) educating immigrant
TRANSCRIPT
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Opportunity costs: The fiscal cost of (not) educating immigrant minors
in the U.S.
Alma Vega & Iván Mejía-Guevara
University of California, Berkeley
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• Education is one of the greatest costs associated with immigration (National Research
Council 1997)
• Limited English Proficient (LEP) students increased 105% between 1990 and 2000 => only 12% among general school population (Kindler 2002)
• First-generation students are 1.22 as expensive as average student (National Research Council
1997)
Background
Immigrant minors in the U.S.
Methods Results Discussion
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• Most immigrants arrive at working ages (Batalova
2007) => U.S. uses their labor but doesn’t pay for their education
• 42 billion spent on K-12 schooling for immigrants and their children in 1994 (Lee and
Miller 1998)
Background
Fiscal cost
Methods Results Discussion
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• Positive externalities to education = > Everyone is more productive when a labor force is more educated (T.P. Schultz, Handbook of
Development Economics Volume I)
• Proven empirically by Rauch (1993), Moretti (2004)
Background
Education as a social good
Methods Results Discussion
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“The United States may not care about the children of the barrios, but it must start to address their problems now. If it lets them fail, there will be a great price to pay.” – Roberto Suro, Strangers Among US: Latino Lives in a Changing World
Background
Social Cost
Methods Results Discussion
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• How much does the U.S. pay to educate immigrant minors relative to overall education spending?
• What is the cost of not educating immigrant minors in terms of lost productivity?
Background
Research questions
Methods Results Discussion
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Foreign-born Second Generation Natives
Definition Born abroad 1+ parents born abroad
Born in U.S. AND both parents born in U.S.
N 27,897 23,079 156,945
Background
Data
Methods Results Discussion
Current Population Survey (2009)
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• Age profiles of total spending on education provided by Gretchen Donehower using NTA methodology
• For immigrants, multiply by 1.22 based on National Research Council 1997
Background
Cost of educating immigrant minors in 2009
Methods Results Discussion
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Background
Present value of all education spending
Methods Results Discussion
tE (x) Educational expenditure at time t
for age x
t,sE (x) Present value of educational expenditure
at time t for age x adjusted for t - s years
Productivity growth 0.02
t,sE (x) tE (x)*
(r )( ts)
e
year.in that education her in )(E)(E spending
old,year - wasindividual theyear when
)(
ts
stexx
xs
0.05ratediscount real r
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Background
Present value of all education spending
Methods Results Discussion
tE (x) Educational expenditure at time t
for age x
t,sE (x) Present value of educational expenditure
at time t for age x adjusted for t - s years
Productivity growth 0.02
t,sE (x) tE (x)*
(r )( ts)
e
year.in that education her in )(E)(E spending
old,year - wasindividual theyear when
)(
ts
stexx
xs
0.05ratediscount real r
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Background
Externalities I
Methods Results Discussion
0.02natives ofgrowth ty Productivi
eEEstr
tstxx
))('(
,*)()(
0.015immigrants ofgrowth ty Productivi'
' :Assumption
Gain in wages – cost of educating immigrants minors
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Background
Externalities II
Methods Results Discussion
t,E Productivity at year t for an individual
with level E of education.
eEEstr
tst
Etxx))((
,
,*)()(
t,E is defined as follows:
At year t, we estimate the share by level of education.
For every 1% increase in the share of collage educated individuals,
we increase the productivity by (Moretti, 2004):
-1.9% for high-school drop-outs,
-1.6% for high-school graduates,
-1.2% people with some college, and
-0.4% for college graduates.
)( ,Et
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• Education starts at age 5
• Education is continuous, i.e. if started schooling at age 5 and ended at age 15, received 10 years of education
Background
Assumptions
Methods Results Discussion
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Background
Results
Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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Background Methods Results Discussion
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• Immigrants represent about 7% of all educational spending in one year
• The 2nd generation adds substantial costs to educational spending
• Immigrants in the U.S. complete most of their schooling abroad
• A small increase in education of immigrants increases total population productivity quite a bit
Background
Conclusions
Methods Results Discussion