Immigration and Labor Market Outcomes in the Native Elderly Population

George J. Borjas

NBER Retirement Research Center Paper No. NB 08-10
Issued in September 2008

A rapidly increasing fraction of the elderly workforce is foreign-born. This paper uses data drawn from the 1960-2000 censuses and the post-1994 Current Population Surveys to examine the impact of immigration on various economic outcomes in the native elderly population. The analysis suggests that immigration had a depressing effect on the wage of competing native workers, and induced substantial reductions in labor supply and increases in retirement propensities in the native elderly population. The data also suggest that conditions in the labor market for elderly workers exhibit “excess sensitivity” to immigration-induced supply shifts. The wage elasticity typically found in national-level studies of the impact of immigration on the overall labor market lies around -0.3 or -0.4 (in other words, a 10-percent immigrationinduced supply shift in the size of a particular skill group lowers the wage of that group by 3 or 4 percent). In contrast, the wage elasticity in the elderly workforce seems to be twice as high. As a result, immigration had correspondingly large effects on the time allocation of elderly persons. A 10-percent immigration-induced increase in the size of the workforce lowers the employment rate of elderly men by 7 percentage points and increases the probability of receiving Social Security benefits by 6 percentage points.

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