THE MORE THE MERRIER

Places in the US that took in more immigrants in the 19th century still benefit economically from it

In the late 19th century, immigrants came to the United States in droves. The absolute number of immigrants in the country rose from less than 2.5 million in 1850 to more than 13.5 million in 1910. That boosted immigrants as a share of the population to 15%, from 10%, over the period.

That group of immigrants was similar in many ways to those entering the US today. Most did not speak English, followed different religious practices than the natives, and were fleeing politically or economically treacherous situations. The majority were unskilled laborers, though a small number were highly educated.

According to a recently published study, the immigrants of the late 19th and early 20th century have had a remarkably positive and long-lasting impact on the places where they settled. The research by economists from Harvard, Yale, and the London School of Economics found that, today, US counties that received more immigrants from 1860 to 1920 have “significantly higher incomes, less poverty, less unemployment, more urbanization and higher educational attainment.” For example, they estimate that a 5% increase in the share of immigrants to a county during this period led to a 20% boost to average incomes in 2000.

It’s not just that immigrants went to the most economically promising places, but that the presence of immigrants led to increased economic growth. The researchers demonstrate this through a cleverly identified natural experiment.

At the time, immigrants to the US travelled to their new homes in the interior of the country primarily by railroad. If a town was connected to the railroad, immigrants were more likely to settle there. And although migration was high throughout this period, there were certain years when events, usually political or weather related, made even more people want to leave their home country and come to the US. If a county was first connected to the railroad during one of these boom years, it received an unusually high number of immigrants. Places that were first connected in more subdued years received fewer immigrants. Whether a county was connected to the railroad during a boom year was pure happenstance, the researchers establish, making this a perfect natural experiment to understand the long-term effects of immigration.

The researchers believe the late 19th and early 20th century immigrants stimulated growth because they were complementary to the needs of local economies at that time. Low-skilled newcomers were supplied labor for industrialization, and higher-skilled arrivals helped spur innovations in agriculture and manufacturing.

The data also show that the long-term benefits of immigration did not come at short-term cost to the economy as whole. More immigrants almost immediately led to more vibrant economies. The study has little to say, however, on the short-term impact of immigrants on the wages of natives, a debate that continues to rage today in the US and elsewhere.

Of course, the current economic and political circumstances are quite different from the late 19th century, but there are enough similarities to suggest that the benefits of immigration would hold true in the 21st century and beyond. Even if increasing immigration reduces some local workers’ wages in the short-term, the evidence suggests that descendants of these workers would end up better off.

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