Tied to the Business Cycle: How Immigrants Fare in Good and Bad Economic Times

While the long-run trend has been one of economic progress for immigrants, their short-run economic outcomes show a closer correlation to the fluctuations of the business cycle when compared to native outcomes. In this report, the authors analyze employment and unemployment patterns from 1994 to 2008, and offer possible explanations as to why labor market outcomes for immigrants have been more cyclical—immigrants are overrepresented in education groups that experience the greatest job losses during downturns and are more likely to work in cyclical occupations and sectors; and booming industries disproportionately hire unauthorized immigrants during periods of economic growth.

This report also proposes possible public policy solutions for mitigating immigrants’ vulnerability to the business cycle. These include modifying Earned Income Tax Credit (EITC) programs, targeting children of immigrants through existing and expanded programs, and providing more federal resources to communities with large numbers of immigrants. In addition, the authors consider the benefits of restructuring immigration policies such that employment-based immigration quotas mirror changes in the labor market.