Immigrants and The Labor Market

NORC at the University of Chicago
Immigrants and the Labor Market

Author(s): James P. Smith
Source: Journal of Labor Economics, Vol. 24, No. 2 (April 2006), pp. 203-233
Published by: The University of Chicago Press on behalf of the Society of Labor
Economists and the NORC at the University of Chicago
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Immigrants and the Labor Market
James P. Smith, RAND Corporation
This article examines skill gaps between immigrants and native-born

Americans and generational progress achieved by different immigrant
ethnic groups. Evidence of a widening skill gap is not strong. While
wage data show a pronounced fall in relative wages of “recent” im-
migrants, significant independent contributors to that decline are a
widening age gap and the increasing price of skill. When attention
shifts to legal migrants, the evidence is that legal migrants are, at a
minimum, keeping up with native-born Americans. I find that the
concern that educational generational progress among Latino immi-
grants has lagged behind other immigrant ethnic groups is unfounded.
I. Introduction
The once-again rapidly expanding numbers of immigrants in the Amer-
ican labor market have not escaped the attention of labor economists. In
this article, I deal with two issues concerning immigrants on which labor
economists have made significant contributions over the last few decades.
The first question concerns what has happened to the skill gap between
immigrants and native-born Americans (see Borjas 1995; Jasso, Rosen-
zweig, and Smith 2000). This “What happened?” question is followed by
“Why did it happen?” and I will offer my answers to why. The second
question concerns what has happened to the education dimension of the
skill gap for descendants of immigrants—assimilation across generations.
This article was originally prepared for the Al Rees Lecture at the Society
of Labor Economics (SOLE) annual meeting May 2004, San Antonio, TX.
This research was supported by grants from the National Institutes of Health.
I would like to thank Jeffrey Passel for his advice and guidance and David
Rumpel for excellent programming assistance. Contact the author at Smith@
rand.org.
[ Journal of Labor Economics, 2006, vol. 24, no. 2]

䉷 2006 by The University of Chicago. All rights reserved.
0734-306X/2006/2402-0001$10.00
203
204 Smith
Fig. 1.—Schooling disparity of foreign-born ages 25⫹ (foreign-born ⫺ all native-born)
An important form in which this question has been asked is how the
recent waves of ethnic immigrants compare with the reality of the gen-
erational success of European immigrant experience, a success that has
shaped much of the mythology surrounding the American immigrant
experience.
II. The Changing Labor Market Quality of Immigrants

Immigrants may not come with much, but they do bring their human
capital. Schooling is the most basic index of skill, and how much
education migrants had when they arrived may be critical in deter-
mining their eventual economic success or failure. Immigrants are gen-
erally thought to have much less schooling than native-born Ameri-
cans—a disparity that, it is often claimed, has been growing over time.
To see the reasons for this claim, examine figure 1, which plots trends
in the education gap between migrants to the United States and native-
born Americans for selected years between 1940 and 2002.1 The line
with triangles represents the total population over age 24, while the
line with squares provides the same comparison for “recent” immi-
grants of the same age—that is, those who arrived within the last 5
1
Data for figs. 1–3 were obtained from the six decennial censuses between
1940 and 1990 and the 1996 and 2002 Current Population Surveys. Recent
immigrants are those who came to the United States in the last 5 years before
the survey. There is no such variable in the 1950 census, which identifies
immigrant status but not length of stay. The comparison group is always the
comparable native-born population. For the precise definition of years of
schooling in each survey, see the appendix.
Immigrants and the Labor Market 205
years, the conventional definition of “recent immigrants” used by labor

economists in a wide variety of applications.
Basically, the “all” line describes changes in the stock, while the “recent
immigrant” line plots trends for the new inflows; the two messages could
not be any more different. Since 1940, mean education levels have, of
course, risen rapidly over time for all groups—by 4.4 years for the native-
born, by an even larger 5.3 years for all foreign-born, and by 3.4 years
for recent migrants. But it is the education disparity by nativity on which
the literature has placed its focus. For the stock—that is, the education
gap between the typical adult foreign-born person and the typical adult
native-born American in any of these years represented in this figure—
the education disadvantage of migrants has actually been declining over
time while the schooling gap by nativity has been simultaneously rising
when one examines only new “recent” immigrant inflows.
These opposing trends are not a contradiction. The stock of migrants
is weighted heavily by the history of the volume and character of past
migration flows. The negative age gradient to mean schooling combined
with a much older immigrant population than the native-born population
due to the long historical stall in migration to the United States before
1960 implies that, as some of the older immigrants (many of whom had
very little schooling) die off, the mean education of those remaining will
rise. This is especially the case when the pace of migration quickens,
thereby placing higher weight on younger, more educated migrants. It is
not at all clear why the stock concept is not the more relevant statistic
for describing what is happening to the average migrant and native-born
person over time. Nor is it even clear why measures of flows only count
new entrant inflows while ignoring new exit outflows—older migrants
who die off.
Another outflow that may also be quite important but one that is
ignored in the concentration on “recent” immigrants is that of recent
immigrants from any entering cohort who returned home either per-
manently or temporarily to the sending countries. It is difficult to gauge
the precise magnitude of this effect, since other forces are also operating
here as well, including continuing schooling advances among recent mi-
grants and the general tendency of education inflation that characterizes
even closed cohorts in census and Current Population Survey (CPS) data
over time. However, it is most likely that the migrant outflow is less
educated than those who remained in the United States. One reason for
this is that the outflow is undoubtedly more concentrated in that subset
of recent migrants who are undocumented, a less-educated group of mi-
grants engaged in more temporary or circular migration.
Thus, even if we ignore the stock-flow distinction, the common use of
data on “recent immigrants” overstates the extent of the labor market
206 Smith
Fig. 2.—Schooling disparity of males ages 25⫹ (foreign-born ⫺ all male native-born)
quality differences between immigrants and the native-born.2 First, it ig-

nores the substantial education and skill investments immigrants make
postmigration. Second, it does not weight immigrants by the duration of
their stay in the United States. Even among new inflows, it is the quality
of stayers who should be of more interest. This issue may be quantitatively
important. For example, in the 1996 CPS, Mexican “recent” immigrants
who entered between 1990 and 1996 had 7.9 years of schooling. In con-
trast, in the 2002 CPS, Mexican immigrants who reported that they en-
tered during those years had 8.8 years of schooling. Focusing only on
migrants during their first 5 years of stay is portraying them at their
worst. Moreover, given the growing numbers of undocumented among
recent migrants, it is likely that this bias has grown over time so that the
improvement in education of stayers within a given immigrant cohort has
grown over time.
Data on recent immigrant inflows alone clearly do not accurately de-
scribe what is happening to the average quality (as indexed by years of
schooling) of migrants compared to the native-born. However, the existing
literature has in fact emphasized cohort inflows, and I will follow that
practice in this article as well. Perhaps more to the point, no matter
whether one uses the stock or inflow of recent migrants, these changes
in the education gap may appear small relative to the attention this issue
receives in the literature. For example, even if we use only recent migrant
inflow as the reference group, the end-point-to-end-point deterioration
in the migrant schooling gap was only about a year of schooling.
One question to be considered is whether these overall trends are the
same for male and female immigrants. To examine this issue, figure 2
2
The same argument implies that ignoring this outflow overstates the
amount of labor market wage assimilation that takes place within an entering
cohort as duration of stay increases. This should be especially true for Latino
and Mexican immigrants.
Fig. 3.—Schooling disparity of females ages 25⫹ (foreign-born ⫺ all native-born)
presents data for trends in the schooling gap for male migrants, while
figure 3 plots similar data on education deficits of female migrants. The
direction of trends in the stocks is quite similar for men and women, with
a narrowing of the migrant schooling gap compared with the native-born.
In contrast, among recent migrant inflows, while the slowly expanding
education deficit with the native-born characterizes both men and women,
the education gap increases at a slower rate among women than among
men. In fact, among recent female migrant inflows, the education gap is
actually slightly smaller in 2002 than it was in 1970. This is largely because
the typical historical advantage new male immigrants have had over new
female immigrants has been gradually eroding. By 2002 recent female
migrants actually had slightly more schooling than did recent male mi-
grants to the United States—12.4 years of schooling for women compared
to 12.2 years for men.
If all we knew were these trends in schooling differences by nativity,
the expanding skill gap of migrants would be less of a concern.3 But the
3
An important caveat to that statement is that my description of the school-
ing gap is limited to mean differences only. Differences in schooling distri-
butions between recent immigrants and the native-born are much bigger than
the mean difference alone would imply. For example, consider the 1-year
difference in mean schooling between recent immigrants and the native-born
in fig. 1 in calendar year 2002. That relatively small difference in means cam-
ouflages large counteracting differences in the tails of the distribution. To
illustrate, 27% of recent immigrants did not graduate from high school com-
pared to 12% of the native-born, while 14% of recent immigrants had more
than a college degree compared to 10% of the native-born. The relatively
small difference in means in that year certainly does not imply that the large
differences in the bottom tail are of little consequence and should be ignored.
I will argue below that the large difference in the lower tail is mostly due to
undocumented migrants, while the large difference in the upper tail of the
schooling distribution is due to legal migrants.
208 Smith
Fig. 4.—Wage gap of recent male immigrants (comparison group: all male native-born)
main evidence in favor of a growing skill gap comes from wages, not
schooling. To see this, figure 4 plots trends in the percent wage gap
between recent male migrants and male native-born workers among men
between the ages of 25 and 54.4 Starting at about an 18% wage gap in
1970, the average migrant wage gap grew steadily larger, reaching a peak
at 30% in 1996. While there apparently has been some recovery in recent
years, it remains the case that a story of declining relative skills of new
migrants appears to have considerable support from wage data.
However, in addition to any effect changing labor market quality of
immigrants may have had on observed labor market outcomes, there are
three other forces that should be examined first to assess their impact on
the expanding wage gap of recent immigrants. These three forces are age,
prices, and illegal immigration.5 I will deal with each one of these in
4
As is usually the case, the focus turns exclusively to men when wages and
labor market data are used. Bringing in women raises many complicating issues
about labor force participation and the selectivity of the wages based on labor
force participants only. Income is defined as wage and salary income. Percent
wage differentials are computed as the natural logs of the ratio of the arith-
metic means of recent immigrants compared to the native-born. All male
recent immigrants are compared to all male native-born, both between the
ages of 25 and 54. See the appendix for details on the construction of weekly
wages.
5
One issue that has received considerable attention in the recent literature
on the racial wage gap concerns the importance of the exclusion of the in-
stitutionalized population from the CPS files. For the age groups I am ana-
lyzing, the incarcerated population make up most of those who are institu-
tionalized. However, this is most likely to be a far less serious issue among
immigrants. For example, among male prison inmates between the ages of 18
and 54, in 1991, 5.4% were noncitizens. In contrast, noncitizens make up
about 7% of the population of this age group (see Smith and Edmonston
1997, table 8.6). In a similar vein, using the 1980 and 1990 censuses, Butcher
Fig. 5.—a, Age difference of foreign-born (with native-born); native-born ⫺ foreign-born.

b, “Age-adjusted” wage disparity of recent immigrants.
isolation to determine how much of the trend in the recent immigrant

wage gap each can explain.
The first of the three forces is age. Over the last 60 years, as figure 5a
documents, there have been large changes in the age disparity between
immigrants and the native-born. In 1940 the average migrant was actually
older than the typical native-born American—today that average migrant
is much younger. This chart shows that for all migrants as well as for
recent migrants there has taken place a steady widening of the age gap
between the native-born and the foreign-born—for example, over the full
and Piehl (1997) report that immigrants are much less likely to be institu-
tionalized than the native-born. Their table 2 reports, e.g., that in 1990 rates
of institutionalization for men ages 18–40 were 1.5% for immigrants, 2.2%
for the native-born, and 8.1% for native-born blacks.
210 Smith
span of years represented in this chart, this age gap for recent migrants
has expanded by more than 6 years.
Two distinct demographic forces have acted to expand the age gap
between migrants and the native-born over the last 50 years. First, as the
pace of immigration quickens, the average migrant necessarily becomes
younger. Second, the aging of the baby boom cohorts has made the typical
native-born in the workforce older. Given the well-established curvature
in age earnings profiles, this growing age gap by nativity affects the ob-
served average wage gap of immigrants. While one could argue that age
is simply another dimension of skill, I think that an increasing immigrant
wage gap that is simply due to the fact that American workers are getting
older or immigrants are getting younger is not what we should mean by
an expanding skill gap of immigrants.
To age-adjust the time series wage gap between recent migrants and
the native-born, for men between the ages of 25 and 54, I estimated
separately for the native-born and for recent immigrants a series of year-
specific standard Mincerian log weekly wage equations with years of
schooling and an age quadratic as controls. In the recent immigrant mod-
els, ethnic dummies for European, Asian, and Latino ancestry were also
included. Using the estimated quadratic age profiles, the log weekly wages
of both the native-born and recent migrants were then adjusted in each
year (represented in fig. 5b) so that the log wages of both groups would
be evaluated at the same age. The age I chose was 38, since it is close to
the age of the current average male native-born worker. These age-adjusted
log wages are the data used in figure 5b.
The results of this age adjustment on the recent migrant wage gap are
displayed in figure 5b. This age adjustment alone not only dampens the
expanding wage gap of recent immigrants since 1970 but also leaves us
at a point in 2002 that is not all that different from where we started in
1970.6
While age is one factor leading to an increasing migrant wage gap, it
is certainly not the only one. Another factor involves the effect of changing
prices. Wages are the product of prices and skills, and we should always
be wary of assigning all observed wage trends to skills. This is particularly
the case over the last 30 years and especially so in this application where
labor economists have convincingly established that skill prices have
changed a great deal over the period in question (Katz and Murphy 1992;
Murphy and Welch 1992).
The big price movement involved the rapidly expanding skill price of
6
Borjas (1995) also does an age adjustment for wage trends for recent im-
migrants and finds little effect. But, as fig. 5a shows, this is the time period
when the trends in differences in ages between the native-born and recent
immigrants are quite small.
Fig. 6.—a, Male native-born percentage wage growth by percentiles (1970–2002). b, Matched
wage percentiles of recent immigrants with native-born, 1970.
labor. Starting in the mid-1970s, continuing with considerable force

throughout the 1980s, and never adjusting back much since then, real
wages of those at the top of the wage distribution have risen rapidly
relative to those toward the bottom of the wage distribution. Figure 6a
illustrates this phenomenon by showing what has happened to real wages
between 1970 and 2002 at each percentile of the native-born male wage
distribution. While median wages were roughly constant in real terms,
the gap between real wages at the 90th and 10th percentile increased by
almost 40% over this period.
212 Smith
When two populations start off at very different initial conditions in

terms of their relative placement of their real wage distributions, this type
of changing wage structure can have quite large impacts on the subsequent
repositioning of the relative placement of different groups in the wage
distributions (Juhn, Murphy, and Pierce 1993). Figure 6b documents that
the starting points of the two populations of interest—the native-born
and recent immigrants—were quite different in 1970. Using data from the
1970 census, this figure maps percentiles of the weekly wage distributions
of recent male migrants onto the weekly wage distribution of native-born
men. For example, in 1970 the weekly wage of the median recent male
migrant was about the same as the weekly wage of a native-born male at
the 30th percentile of his wage distribution. Similarly large location dif-
ferences exist throughout the two weekly wage distributions.
Given these large differences between recent immigrants and the native-
born in 1970 and in light of the subsequently large increase in the skill
price of labor by wage percentiles in 1970, the wage gap between these
two populations would have expanded even if their relative skill distri-
butions had remained the same. With this in mind, I eliminated from the
observed time series trends that component of the increase in the migrant
wage gap that was a consequence of the rising price of skill since 1970.7
Figure 7 documents what would have happened to the recent migrant
wage gap over the last 30 years if skill prices had not risen so dramatically.
Similar to the results from the age adjustment discussed earlier, taking
out this “price effect” significantly dampens the increase in the immigrant
wage gap. In fact, we are left with a recent migrant wage gap in 2002 that
is no different from what it was in 1970.8
7
These wage inequality adjustments were done for men between the ages
of 25 and 54. Using 1970 as the base year, the first step involved computing
at each percentile of the native-born male weekly wage distribution the ratio
of real weekly wages in each subsequent year relative to the same wage per-
centile in 1970. In the second step, in each year percentiles in the weekly
wage distributions of recent foreign-born immigrants were matched to per-
centiles of weekly wages of native-born men so that at each percentile weekly
wages were the same for both groups. The comparable native-born wage
percentile wage growth tells us what would have happened to immigrant real
weekly wage at every wage percentile if recent immigrants were treated the
same as the native-born in terms of real wage growth as a consequence of a
rising skill price. Mean wages of this hypothetical weekly wage distribution
of recent immigrants was used to adjust the data to obtain the wage inequality
adjusted wage gaps in fig. 7.
8
Similar conclusions were reached by LaLonde and Topel (1992) and Butcher
and DiNardo (2002). Using only the 1970 and 1980 decennial censuses, LaLonde
and Topel adapt an analytical strategy similar to that used in this article. They report
that for low-skilled immigrant groups—those with 10 years of schooling or less or
Mexican immigrants—rising inequality did affect the relative wages of immigrants,
in some cases by a substantial amount. Similarly, using constructed hourly wage
Fig. 7.—“Inequality-adjusted” wage disparity of recent immigrants
The final factor I consider involves the impact of illegal immigration.

Labor economists have been mostly silent on the distinction between legal
and illegal migrant flows in part because our main data sets used in anal-
yses—the CPS and the census—are unable to distinguish between them.
But legal and illegal migrants turn out to represent very different
populations. One way that they differ—documented in table 1—is by
ethnicity. Among recent legal immigrants, Asians are the most numer-
ous, making up almost 40% of that category; this is followed by Latinos,
who make up less than a third of that total. Overall, 57% of the legal
recent migrants arrived from Asia and Europe, where the average skills
of migrants are quite high. In very sharp contrast, more than three-
quarters of all undocumented migrants are Latinos, and about 60% are
from a single country—Mexico. While there certainly are undocumented
migrants among them, most recent Asian and European migrants are,
in fact, legal, and the majority of recent Latino migrants are not. Given
the well-established labor market skill differences between these groups,
country-of-origin differences alone would imply large differences in
skills and wages between legal and illegal migrants.
To show how big those differences are, I use data from two sources.
The first is the New Immigrant Survey-Pilot (NIS-P), a nationally rep-
resentative sample of new legal migrants who received their green cards
in 1996. Based on probability samples of administrative records of the
data from the 1970 and 1990 decennial censuses, Butcher and DiNardo apply the
1990 price structure to the 1970 data. They report that there was substantial overlap
in the two wage distributions of recent immigrants when they faced the same prices.
More specifically, they state that, at the mean for men, 50% of the change between
1970 and 1990 is due to changing wage structure, a number quite consistent with
the data presented in fig. 7. For a contrary view, Borjas (1995) reports that only
one-sixth of the change between 1970 and 1990 is due to rising inequality.
214 Smith
Table 1
Country of Origin Distribution of “Recent
Immigrants” in 1995 (% Distribution)
Legal Undocumented
Europe 19.1 4.3

Asia 38.3 11.6
Latin America 31.2 76.5
Mexico 8.9 59.8
Other 11.4 7.5
Source.—Passel (1999).
U.S. Immigration and Naturalization Service (INS), the NIS-P links sur-
vey information about immigrants’ pre- and postimmigration labor mar-
ket, schooling, and migratory experiences with data available from INS
administrative records, including the visa type under which the immigrant
was admitted (see Jasso et al. [2000] for details). The second is the 1996
CPS, which represents all recent migrants (legal and illegal alike). With
these two surveys from the same calendar year, we are able to describe
three distinct populations as follows: (1) all recent migrants from the CPS,
(2) legal migrants only from the NIS-P, and (3) the residual group—the
difference between the first two, that is, recent undocumented migrants.9
Table 2 documents the mean education of these three groups. Education
means for legal migrants are provided in column 2, while CPS-based mean
schooling levels for two definitions of all recent immigrants are listed in
columns 4 and 5. The implied average schooling of the illegal immigrant
group is in column 3. This table documents two key facts. First, on
average, legal immigrants have much higher levels of schooling than we
would think by only looking at the recent foreign-born population in a
CPS or census file. Second, if education is a reasonable guide, recent legal
immigrants are far more skilled than recent undocumented migrants. Nor
are these skill differences produced only by the country of origin of
immigrants. Even among Latino immigrants, the subgroup who came to
the United States legally have much more schooling than the subgroup
who arrived as undocumented migrants.
Given these large differences between the legal and undocumented pop-
ulations, the question remains as to what impact undocumented migrants
may have had on trends in the immigrant wage gap. The following formula
tells us what factors determine secular changes in the relative wage of all
recent migrants (which can be observed in the CPS and the census files)
9
More precisely, the residual group includes temporary legal migrants, i.e., those
who reside in the United States legally but on a temporary visa. However, the
dominant group in the residual category is the undocumented.
Table 2
Education Levels (Average Years of Education) of Recent Male Immigrants:
Legal and All Recent Foreign-Born
Foreign-Born
Native-
Legal Illegal CPS ! 3 years CPS ! 5 years Born
All 12.64 10.79 12.33 11.73 12.99

All Hispanics 10.12 6.90 8.99 8.41 11.52
Note.—Data for recent legal immigrants are obtained from the New Immigrant Pilot Survey (NIS-P,
1996). Data for recent foreign-born are obtained from the 1996 Current Population Survey (CPS). These
immigrants came to the United States either less than 3 years ago (col. 4) or less than 5 years ago (col. 5).
compared to the wage of legal migrants, which is what we would like to

know:
D ( Wage of Recent Foreign-Born

Wage of Recent Legal Immigrants ) p Dl (1 ⫺ g) ⫹ (1 ⫺ l) Dg,
where l is the fraction of immigrants who are legal and g is the wage
rate of illegals to legals. Two parameters provide the answer to this ques-
tion—levels and changes in levels in both the fraction of migrants who
are undocumented and the wage gap between legal and undocumented
migrants. What do we reasonably know about these two parameters?
Fortunately, we know much more than we used to know about them.
Consider, first, the wage difference between legal and illegal migrants.
The enormous differences in ethnicity and in education between these
two populations, documented in tables 1 and 2, suggest that undocu-
mented migrants earn much less than legal migrants do. For example, the
2.5-year difference in mean education between illegals and legals with an
8% return to schooling would by itself imply that wages of illegals would
be 20% less than those of legals. Similarly, if legals and illegals within the
same ethnic group were paid the same, the differences in ethnic distri-
butions would indicate that illegals would earn 70% of the wages of legal
migrants. These two hypotheticals both understate the actual wage dis-
parity since, even within the same education class or ethnic group, un-
documented migrants surely earn significantly less than their legal
counterparts.
Additional evidence is provided in table 3, which shows earnings in
the home country as well as in the United States for a random sample of
legal migrants who came to the United States in 1996. These now legal
migrants are separated into those who previously had illegal work ex-
perience in the United States and those who did not. The wage disparity
between these two groups is quite large. In their jobs in the United States,
in this sample, undocumented migrants earned 74% as much as legal
migrants. Once again this wage disparity is most likely an understatement
of the wage gap between all recent legal and illegal migrants. While these
216 Smith
Table 3
Comparative Skills of 1996 Legal Immigrants
Those with No Prior Those with Prior
Illegal Experience Illegal Experience
in the United States in the United States
Schooling 13.0 10.5

Male earnings ($):
Country of origin 17,059 7,513
United States 26,359 19,566
Source.—New Immigrant Pilot Survey.
legal immigrants may be representative of all recent legal recent migrants,

the undocumented migrants in this sample are quite unique in that they
eventually made the transition to legal status, a process that favors the
more skilled. Those undocumented migrants who never transited to legal
status (the majority) most likely earned less than those who successfully
made that transition.
For the purpose of the simulation of the impact of illegal migrants on
wage trends on migrants, I will use the assumption that undocumented
migrants earn 60% of what legal migrants do. Moreover, I will also assume
that this wage ratio has not changed over time, making the second term
in equation (1) equal to zero. This assumption will understate the extent
to which the wages of legal and illegal migrants grew apart over the last
30 years, since it is far more likely that the wage disparity between legals
and illegals grew in light of the proskill bias in changes in the legal im-
migration policy (Jasso et al. 2000).
What about the other parameter—the changing fraction of migrants
who are undocumented? Over the last 30 years, there has been a quite
dramatic increase in the fraction of new immigrants who are illegal. Using
data from Passel and his associates (Passel 1999; Passel et al. 2004), table
4 documents the changing fraction of undocumented migrants in the total
recent immigrant population since 1970. For example, among recent mi-
grants, 5% were illegal in 1970; in 2002 almost half of all recent immigrants
were undocumented. It is important to note that these are estimates of
the fraction of this population who are undocumented migrants in the
CPS and the census files.
Given the magnitude of this trend in rising fractions of undocumented
migrants, figure 8 provides an estimate of what has been happening to
the wage gap of legal migrants only. This is a very different type of story
than that observed for all recent immigrants. Instead of an expanding
immigrant wage gap, over the last 30 years the wage gap of new legal
migrants has been becoming smaller. This should not be surprising, since
the main revisions to immigration law governing legal immigrants during
the last few decades have had a strong proskill bias (see Jasso et al. [2000]
Table 4
Estimated Fraction of “Recent Immigrants”
Who Are Undocumented
Year Percent
1970 5
1980 28
1996 40
2002 45
Source.—Passel (1999, personal communication); Passell et
al. (2004).
for details). Similarly, using INS data on new legal migrants alone, Jasso
et al. (2000) demonstrate that wages of legal immigrants have been rising
relative to those of native-born Americans.
The education gap between migrants and the native-born can also be
adjusted for the changing fraction of migrants who are illegal. To do this,
the education of legal migrants is obtained from the 1996 New Immigrant
Pilot Survey. Assuming that the education gap between undocumented and
legal migrants has remained constant over time (a conservative assumption
for this purpose), figure 9 describes trends in the education gap between
legal immigrants and native-born Americans. Instead of an increasing gap,
there apparently is no trend at all. Since the schooling gap between legal
and illegal was almost certainly growing over this period, it is most likely
that there was a small widening of the education gap with native-born
Americans but that it is one tilting in favor of legal immigrants.
What can be concluded from all this? First, the evidence in favor of a
widening skill gap between immigrants and the native-born may not be
as strong as many of us, myself included, used to think (Smith and Ed-
Fig. 8.—“Illegal-adjusted” wage disparity of recent immigrants
218 Smith
Fig. 9.—“Illegal-adjusted” education disparity of recent immigrants
monston 1997). While wage data show a pronounced fall in the relative
wages of recent immigrants, significant independent contributors to that
decline are due to a widening age gap or the increasing price of skill.
Moreover, when our attention shifts to legal migrants, the evidence
seems, if anything, the reverse. Legal migrants appear on average to be
as least as skilled as the average American worker, and they are, at a
minimum, keeping up with native-born Americans. The distinction be-
tween trends for legal and undocumented migrants is important, since the
policies that produce the flows are quite different. Explanations for the
declining labor market quality of immigrants have often focused on eth-
nicity (the increasing numbers of Hispanics) and see it as a consequence
of changes in legal immigration laws. This analysis argues, instead, that
any decline largely reflects the increasing numbers of undocumented mi-
grants, most of whom are Latinos. Getting this straight is important not
only for understanding our migration history but also for not confusing
the policy response. For example, if this analysis is correct, then reducing
the flows of legal immigrants due to a concern about the declining relative
labor market quality of immigrants could have the opposite effect. This
is both because we have restricted the more skilled component of im-
migration but also likely encouraged additional undocumented migration
(the less skilled component).10
10
See Jasso et al. (2000) for details about this type of substitution.
III. Immigrant Education and Generational Assimilation

Successful economic mobility across immigrant generations was a deeply
held belief about American immigration history. However, the actual doc-
umentation of the speed at which different immigrant ethnic groups were
able to secure a better economic lot for their heirs is under renewed debate.11
The conventional and current view is that, in terms of generational assim-
ilation, the waves of European immigrants who arrived at the end of the
nineteenth century and the beginning of the twentieth century were an
enormous success. Some of the progeny of these European immigrants have
become CEOs of major corporations, professors at leading American uni-
versities, and presidents of the United States.
The success of more recent waves of immigrants, which were dominated
by Asian and especially Latino immigrants, is often seen as more prob-
lematic (Glazer and Moynihan 1963; Bean et al. 1994; Trejo 1997). This
concern is particularly strong with Latino immigrants, where the existing
demographic and economic literature adopts a quite pessimistic tone about
the extent of generational progress within the Hispanic population
(Huntington 2004). In this section, I will document the differential ability
of European, Asian, and Hispanic immigrants to secure a better economic
lot for their children and grandchildren. In an earlier paper, I presented
some generational progress for Hispanic men (Smith 2003). This meth-
odology is extended here to the other two main immigrant groups, Eu-
ropeans and Asians; also, for all three ethnic groups, data are similarly
presented for women.
One problem in studying generational assimilation concerns the am-
biguity in defining generations and ethnicity across different census and
CPS files. In this research, generations are defined as follows: first gen-
eration—born outside the United States; second generation—at least one
parent was born outside the United States; third generation or more—
both parents were born in the United States. Thus, when reference is
made to the third generation, due to the form in which the data come,
it actually includes all generations beyond the second.
Due to conceptual and data reasons, defining ethnicity is more difficult.
For example, there were two ways that someone was identified as Asian.
The first method used the race question regularly asked in the census and
the CPS and counted all those who self-identified as Asian in response
11
Some intriguing recent work by labor economists has focused on the “inter-
generational assimilation rate”—one minus the coefficient estimated from a regres-
sion of children on parents’ schooling. See Card, DiNardo, and Estes (2000) or
Borjas (1994) for some good examples. These issues are important, but even if the
estimated education coefficients were the same for all ethnic immigrant groups, one
group could have larger education gains across generations through the constant
term.
220 Smith
to that question. I then defined the specific Asian generation by place of

birth—if they were foreign-born, they were first-generation Asian; if one
parent was foreign-born, they were second-generation Asian; and if nei-
ther the parents nor the respondent was foreign-born, then they were
counted as third-generation Asian. Alternatively, for the first and second
generations only, I used a specific list of Asian countries of birth to assign
Asian ancestry. Fortunately, the overlap between these two methods was
very large. For example, using the 1996 CPS, 94% of the foreign-born
who said that they were of Asian race were also born in the list of Asian
countries used, and 90% of those who were born in the selected Asian
countries also said that their race was Asian. The analyses reported here
were simultaneously conducted for both the race and country definitions
of Asian, and none of the conclusions were affected. In the tables below,
I use country of birth to define the first two Asian generations.
Similarly, determining first- and second-generation Hispanics was rel-
atively straightforward, since place of birth or self-reported ethnicity is
available and either can be used to assign Hispanic ethnicity.12 The main
problem concerns the third generation, where the type of information
available to assess if someone was of Hispanic descent differs across the
various censuses and CPSs. For example, the 1940, 1950, 1960, and 1970
censuses asked respondents whether they had a Spanish surname.13 As an
additional source of Hispanic ancestry, the 1940, 1960, and 1970 censuses
asked if Spanish was spoken in the home. In all of the other data sources
used, I defined Hispanic ethnicity in the third generation by respondent
self-identification. In all analyses of Latinos reported in this section,
Puerto Ricans are excluded given their special status that technically ex-
cludes them as immigrants.
Finally, when the race question was used to categorize, Europe was the
residual category. That is, one was of European ancestry if one did not
claim being Hispanic, Asian, black, or Native American. The generations
were then assigned with the same algorithm used for Asians. Alternatively,
a specific list of countries of birth of a respondent or his or her parents
was used to say that one was a first- or second-generation European. By
12
Once again, there is little practical difference between these two methods. For
example, the 1980 census contains both self-identification and country-of-birth
questions, and the correspondence between these two methods is extremely high.
For example, in 1980, 97% of those born abroad who self-identified as Hispanics
were born in the list of countries I used to identify Hispanic immigrants. Once
again, in this section, the list of countries was used to define first- and second-
generation Latinos.
13
The 1960 census asked whether a person in one of the five Southwestern states
(Arizona, California, Colorado, New Mexico, and Texas) had a Spanish surname.
When the Spanish surname questions were asked for all states in 1950, 92% of all
Mexicans in the third generation lived in these five southwestern states.
necessity, third-generation Europeans always had to be defined using the

residual race method, but this is not much of an issue given immigration
history to the United States. Once again, the overlap in the two methods
was quite high—95% of those from the country list were also defined as
Europeans using the residual race method, and 85% of those on the
residual race method had a country of birth on the European list. Once
again, the substantive conclusions of this article did not depend on which
method of assigning ethnicity was used for Europeans.14 The country list
is used in the tables that follow for the first and second generations.
No matter which procedure is used, constructing this generational data
requires that information on country of birth exists for both respondents
and their parents and that some method is available for identifying eth-
nicity. These requirements are met by the 1940–70 decennial censuses
inclusive, but, after 1970, generations beyond the first were not distin-
guished in the censuses. Because of this limitation, other sources had to
be used to obtain generational data for the last two decades. Starting in
1994, March Current Population Surveys incorporated a number of
changes that made these surveys much more useful for immigrant research.
In particular, questions were added concerning immigrant status (and that
of the parent), the number of years since immigration, and ethnicity. While
containing much smaller sample sizes than the decennial census files, these
recent CPS innovations make that data useful for the more recent periods.
For this research, I use an average of the 1994, 1995, 1996, and 1997 CPSs
to represent the mid-1990s and an average of the 1999, 2000, 2001, and
2002 CPSs to represent 2000.
It is the alleged inability of successive Hispanic generations to close
their schooling gap that has led to pessimism about generational assim-
ilation. To illustrate where that pessimism comes from, table 5 documents
the pattern of education accomplishments by immigrant generation that
one would obtain from a typical cross-sectional survey, in this case the
1996 Current Population survey. The first two panels list education levels
for three generations of Hispanics, and the next two panels the corre-
sponding information for those of European descent, while the last two
panels contain the generational schooling data for Asians. For each of
these three ethnic categories, mean education by generation is first pre-
sented for men followed by a parallel set of generational data for women.
Any other CPS or census year would show patterns by generation ba-
sically similar to those displayed in table 5.
If one considers only the cross-sectional schooling levels by generation
for Latino men and women, one can see the origins for the pessimism
14
Since there was no way of excluding them from the third plus generations,
Canadians were included in the list of European countries for the first two gen-
erations. Excluding Canadians had little effect on the results.
222 Smith
Table 5
Immigrants’ Average Years of Education by Generation
Age
25–30 31–40 41–50 51–60 All
Hispanic male education:

First generation 9.99 9.49 9.59 7.78 9.27
Second generation 12.98 12.60 12.97 11.99 12.14
Third generation 12.56 12.26 11.98 11.16 11.63
Hispanic female education:
European male education:
European female education:
Asian male education:
Asian female education:
Source.—1996 March Current Population Survey.
about the alleged inability of successive Hispanic generations to close

their schooling gap. For both men and women, Latino education levels
do rise by almost 3 years between the first and second generation, but in
every age group listed the mean education of the third generation is ac-
tually less than that of the second. Moreover, across all three generations,
Latino schooling gains among men were only about 2.5 years and for
Hispanic women only 2.1 years. Since these generations span at least 50
years, at this pace, generation progress could rightly be labeled as being
slow, especially given beliefs about the considerable progress made by the
children and grandchildren of the European immigrants and the common
perceptions about the educational accomplishments of Asian migrants.
Cross-sectional data such as that contained in table 5 have been re-
peatedly used to evaluate generational assimilation among Hispanics. Of
course, data arrayed as in table 5 are methodologically inappropriate and
have little to do with generational assimilation. The easiest way of seeing
this is to examine the patterns among Europeans, the gold standard of
generational success among American immigrant groups.
Not surprisingly, table 5 confirms the well-established fact that mean
education of contemporary male and female European immigrants is far
in excess of that of recent Hispanic immigrants. For men (women), the
typical European immigrant had about 4 years (3.5 years) more schooling
than the average Latino immigrant. However, for our purposes, the key
patterns in table 5 concern the implied generational increases in education
among Europeans. If we judged only by these cross-sectional patterns,
as the educational history of Hispanics is often assessed, the generational
story for Europeans would actually be more pessimistic than it is for
Latinos. To illustrate, the total mean schooling increase across all three
generations in table 5 is less than a year for European men (the supposed
comparative immigrant success story) and less than half a year for Eu-
ropean women.
The story for Asians is, if anything, even more dramatic. While mean
schooling among contemporary Asian migrants is even higher than for
the Europeans, average education increases by only one-twentieth of a
year between the first- and third-generation Asian men. If cross-sectional
education levels by generation had any validity as a measure of genera-
tional progress, ironically, it is Latino immigrants who would be judged
as faring the best. But what the European and Asian data are telling us
is that there is something seriously wrong with using data arrayed in this
way to draw any conclusions about generational assimilation.
These data do not speak to intergeneration assimilation, since we should
not be comparing second- and third-generation workers of the same age
in the same year. For example, the 40-year-old third-generation Asians
in table 5 are not sons of 40-year-old second-generation Asian men in
the same year, and they are certainly not the grandsons of the first-gen-
eration immigrants who were 40 years old in the same year. To correctly
evaluate generational assimilation, the data must be realigned to match
up the children and grandchildren of each set of ethnic immigrants.
To obtain a single estimate for each 5-year birth cohort cell, mean
education by birth cohort and generation across all census and groups of
CPS years were averaged (i.e., the 1994–97 CPSs form one group, and
the 1999–2002 CPSs form another group). To track generation progress,
the data in tables 6–9 are indexed by immigrant generation birth cohorts.
With an assumed 25-year lag between generations, education of the second
generation refers to second generations born 25 years after the birth years
indexed for immigrants in the first column. A similar 25-year offset is
assumed between the third and second generations.
To the extent that schooling is an adequate proxy for labor market
quality, reading down the column for the first generation is another way
of monitoring secular changes in the “quality” of immigrants. Among
both Asian and European immigrants, there is a steady improvement over
time in the average education of immigrants. The rate of improvement
seems somewhat higher among Asians compared to Europeans and
slightly higher among women compared to men. While there exist secular
increases in schooling among Latino immigrants as well, these increases
224 Smith
Table 6
Hispanic and Mexican Men’s Average Years of Education by Birth Year
of Immigrants
Hispanic Mexican
First Second Third First Second Third
Year of Birth Generation Generation Generation Generation Generation Generation
1830–34 3.17 2.80

1835–39 4.34 4.61
1840–44 3.69 3.49
1845–49 5.30 5.47
1850–54 5.27 5.43
1855–59 6.34 5.97 5.50 5.68
1860–64 5.19 6.62 3.75 6.32
1865–69 4.46 7.56 3.72 7.28
1870–74 5.26 8.26 3.70 8.08
1875–79 4.77 8.92 4.77 8.95
1880–84 3.12 5.65 9.33 2.67 5.08 9.16
1885–89 3.62 6.22 10.63 2.79 5.66 10.38
1890–94 4.98 7.71 10.95 4.56 7.22 10.56
1895–99 4.68 8.15 12.29 3.80 7.72 12.10
1900–1904 4.55 8.34 12.86 3.81 7.88 12.61
1905–9 5.06 9.07 12.60 4.27 8.66 12.46
1910–14 6.10 10.99 12.35 5.02 10.78 12.24
1915–19 7.44 11.89 12.43 5.96 11.54 12.34
1920–24 7.61 12.52 12.60 6.02 12.19 12.57
1925–29 8.08 12.51 5.81 12.05
1930–34 8.70 12.61 6.20 12.11
1935–39 8.61 12.87 6.38 12.16
1940–44 9.32 12.97 7.25 12.68
1945–49 9.80 12.92 7.83 12.41
1950–54 9.30 7.82
1955–59 9.95 8.53
1960–64 10.01 8.78
1965–69 10.14 9.45
1970–74 9.95 9.28
are definitely smaller than those of either European or Asian migrants

(for either sex), a disadvantage that is larger among more recent birth
cohorts of migrants.
Reading across any of the rows in tables 6–9 documents the extent of
education advances made by the descendents of immigrants.15 The values
in this index of education generation progress are much higher and far
15
Since these are blended means across as many as five surveys, the underlying
sample sizes can be quite large. Consider the critical cohorts where all three gen-
erations are present. For example, among European men, the smallest first-gener-
ation sample size is 3,700 and the largest is over 10,000. Sample sizes are even larger
in the second and third generation. For Hispanic males across the same cohorts,
first-generation sample sizes are as low as 181 and as high as 1,026. Once again
sample sizes are larger for the second and third generations. Sample sizes are lowest
for Asian immigrants, ranging from about 100 to about 500 for these cohorts. Given
the regularity of the patterns in these tables, these sample sizes appear to be more
than sufficient.
Table 7
Hispanic and Mexican Women’s Average Years of Education by Birth Year
of Immigrants
Hispanic Mexican
1830–34 5.04 3.67

1835–39 5.00 2.96
1840–44 4.73 3.06
1845–49 5.32 4.18
1850–54 6.24 4.88
1855–59 5.82 6.35 4.62 5.04
1860–64 3.47 7.35 2.00 6.63
1865–69 5.64 7.95 2.96 7.08
1870–74 6.54 8.25 4.37 7.96
1875–79 5.42 8.98 4.09 8.76
1880–84 3.65 5.88 9.28 3.15 4.50 9.22
1885–89 3.64 6.93 10.14 3.19 5.22 10.26
1890–94 4.60 7.61 11.03 4.01 6.31 10.96
1895–99 4.76 8.10 11.74 3.89 7.13 11.41
1900–1904 4.58 8.25 12.22 3.94 7.52 11.95
1905–9 5.56 8.83 12.33 4.56 8.36 12.19
1910–14 6.48 9.93 12.41 5.18 9.37 12.28
1915–19 7.20 11.20 12.70 5.50 10.78 12.66
1920–24 8.19 11.51 12.63 5.89 10.59 12.54
1925–29 7.92 12.62 5.84 12.16
1930–34 8.30 12.53 6.02 12.02
1935–39 8.22 13.09 6.55 12.64
1940–44 8.96 13.55 7.40 13.01
1945–49 8.89 12.87 6.91 12.37
1950–54 9.68 7.67
1955–59 10.01 8.36
1960–64 10.24 8.99
1965–69 10.24 9.38
1970–74 10.52 9.82
more plausible than those implied by the cross-sectional comparison in

table 5. To take the 1905–9 immigrant birth cohorts as an illustrative
example, the increase in mean years of schooling across three generations
was 4.6 years for European men and 6.6 years for Asian men. For the
same birth cohort, the comparable male education advance was 7.5 years
among all Hispanic men and 8.2 years among Mexican males. Similarly,
for this birth cohort, European women achieved a 5.1 years of schooling
increment, Asian women had a 5.3 year advance, while the mean education
of Latinas improved by 6.8 years and that of Mexican women increased
by 7.6 years.
To generalize across all birth cohorts, figure 10 (for men) and figure 11
(for women) highlight the relative educational progress across generations
of the three ethnic groups. In these graphs, the vertical axis represents the
number of years of additional schooling among the generations, while the
horizontal axis indexes the year of birth of immigrants. As is apparent from
226 Smith
Table 8
European and Asian Men’s Average Years of Education by Birth Year
of Immigrants
European Asian
1830–34 8.13 5.00

1835–39 8.43 4.00
1840–44 8.69 NA
1845–49 9.09 2.00
1850–54 9.26 8.08
1855–59 8.22 9.79 4.75 10.78
1860–64 8.46 10.15 5.67 8.54
1865–69 8.69 10.71 9.10 11.15
1870–74 9.14 11.14 6.85 10.05
1875–79 9.42 11.46 8.13 10.72
1880–84 6.21 9.91 11.79 6.48 10.43 11.99
1885–89 6.27 10.32 12.61 7.42 11.16 12.90
1890–94 6.66 10.99 13.20 7.27 11.60 13.98
1895–99 7.19 11.52 13.94 6.60 12.32 14.52
1900–1904 8.32 12.01 13.96 6.68 12.44 14.52
1905–9 9.10 12.57 13.66 7.45 13.15 14.01
1910–14 9.78 13.43 13.54 7.91 13.56 13.98
1915–19 10.51 14.00 13.65 9.37 14.02 13.95
1920–24 10.88 14.69 13.70 11.62 14.33 13.89
1925–29 11.10 14.68 12.38 14.60
1930–34 11.55 14.36 14.08 14.57
1935–39 12.50 14.25 14.36 14.46
1940–44 12.86 14.37 14.48 14.65
1945–49 14.08 14.28 14.32 15.23
1950–54 13.89 14.23
1955–59 14.05 14.30
1960–64 14.41 14.65
1965–69 14.46 14.60
1970–74 14.43 15.23
Note.—NA p no sample available.
the previous tables arrayed by generation, these educational advances can

be measured sometimes across all three generations and sometimes only
across two generations because the story of the third generation is not yet
complete. However, whether measured across all three generations or across
just two, for men and women alike, the education advances made by Latinos
are actually greater than those achieved by either European or Asian mi-
grants. There is certainly no evidence from these data that Latinos have
lagged behind these other large immigrant groups in their ability to transmit
education accomplishments to their children and grandchildren.16
16
The interesting debate between Borjas (1994) and Alba, Lutz, and Vesselinov
(2001) uses literacy as the first-generation measure and education as the third-
generation measure. They estimate a regression between group literacy rates in 1910
and third-generation mean education in the period 1986–94. Using this metric, both
studies suggest that intergenerational progress was less for Mexicans than for Eu-
ropeans in that Mexicans lie below the fitted equation. But literacy is highly cor-
Table 9
European and Asian Women’s Average Years of Education by Birth Year
of Immigrants
European Asian
1830–34 8.61
1835–39 8.70
1840–44 9.16 12.00
1845–49 9.42 NA
1850–54 9.71 9.40
1855–59 8.53 10.21 11.13
1860–64 8.56 10.48 9.01
1865–69 8.77 10.84 10.02
1870–74 9.16 11.10 8.00 10.40
1875–79 9.42 11.40 7.88 10.92
1880–84 6.04 9.85 11.56 6.82 10.40 11.90
1885–89 6.03 10.21 12.25 5.94 10.44 12.96
1890–94 6.07 10.66 12.77 6.87 10.56 13.57
1895–99 6.83 11.19 13.53 7.75 11.39 14.01
1900–1904 7.77 11.59 13.74 7.17 12.05 14.42
1905–9 8.55 11.96 13.63 8.96 12.48 14.27
1910–14 9.31 12.75 13.62 9.55 13.47 14.00
1915–19 10.31 13.33 13.71 9.79 13.68 13.95
1920–24 10.58 13.87 13.94 10.90 14.38 13.86
1925–29 10.61 14.27 10.42 14.64
1930–34 10.64 14.17 11.24 14.28
1935–39 11.81 14.21 12.19 14.86
1940–44 12.39 14.25 12.87 15.03
1945–49 13.28 14.50 12.93 15.37
1950–54 13.67 13.26
1955–59 13.73 13.38
1960–64 13.98 13.75
1965–69 14.21 14.28
1970–74 14.71 14.70
Note.—NA p no sample available.
This stronger educational transmission among Latinos between the first

generation and second generation should not be surprising, since these
Latino immigrants, who have relatively low levels of schooling, are send-
ing their children to American schools where the norm is the completion
of high school. When comparably educated European immigrants sent
their children to American schools many decades earlier, the education
completion norms at that time were not as high.
However, even when I examine the education transmission between
the second generation (children of immigrants) and third generation
(grandchildren of immigrants), the size of transmission, at a minimum,
does not indicate that Latinos lag behind other immigrant groups. For
related with low levels of education, so even if improvements in schooling across

generations were much higher among Mexicans, one would observe lower education
levels of the third generation with low literacy rates.
Fig. 10.—Education advances by generation
Fig. 11.—Education advances by women
two reasons, these data tend to understate the progress made by Latinos
relative to other groups and to overstate the differences in educational
accomplishments that remain in the third generation. As mentioned earlier,
by necessity, the third generation refers to all generations beyond the
second. This tends to understate the relative educational advances of La-
tino immigrants between the second generation and the third generation,
since a larger fraction of Latinos in the third plus group (compared to
Europeans) will actually be members of the third generation. In contrast,
many of the Europeans will be members of generations well beyond the
third, and unless all generational progress stops at the third generation,
this will further increase their education levels.
The second reason why the educational advances of Latinos are un-
derstated, at least relative to Europeans, is that, as Latinos intermarry and
assimilate across the generations, some subset of them will stop reporting
their Latino ancestry. There is some evidence that this leakage out of
Latino ancestry is positively correlated with education, so that the gains
in education across generations are biased downward (Duncan and Trejo
2005).
This more positive reading of the history of Latino immigrant education
advances across generations has some cautions attached to it. First, some
care has to be exercised in assessing rates of progress across generations
and the use of labels of what is fast and slow. Complete elimination of
all economic and educational differentials by the third generation would
take a half century, and another generation alone would extend it to 75
years. Second, the past does not have to repeat itself. The grandchildren
of prior immigrants, including Hispanic immigrants, have been success-
fully integrated in the economic mainstream of America because the
schools they attended apparently did their job. The schools that today’s
Latino immigrants attend may have greater challenges due to much larger
concentrations of immigrants in the schools, difficulties in communication
across several competing dominant languages, and the possibility of with-
drawal of support from the nonimmigrant white middle class as the
schools of immigrants become more isolated from the rest of the
community.
IV. Conclusion
This article deals with a number of issues about immigrants to the
United States and their education. In part reflecting the reasons why they
come to America, immigrants are more highly represented in both the
lowest and highest rungs of the education ladder. On average, immigrants
have less schooling than the native-born, a schooling deficit that reached
1.3 years in 2002. Perhaps as important as the average difference between
immigrants and the native-born population, there is considerable diversity
230 Smith
in the schooling accomplishments among different immigrant subgroups.

The education of new European and Asian immigrants is higher than that
of native-born Americans, while the typical Latino immigrant continues
to trail the native-born by about 4 years of schooling on average.
The education gap of new recent immigrants did rise modestly over
the last 60 years. This increase was higher among men than among women
and is entirely accounted for by the increasing fraction of immigrants
who are illegal. Legal immigrants appear to have about the same amount
of schooling as native-born Americans do, and in the top of the schooling
hierarchy, they have a good deal more. Finally, I find that the concern
that educational generational progress among Latino immigrants has
lagged behind other immigrant groups is largely unfounded.
Data Appendix
In this data appendix, I describe how the principal variables in this
article were defined in the various data sets that were used.
Years of Schooling
1940 census: Years of schooling was defined by the highest grade of
school completed. Five or more years of college was assigned a value of
17.5.
1950 census: Years of schooling was defined by the highest grade at-
tended from which 1 year was subtracted if the respondent was still
attending school. Five or more years of college was assigned a value of
17.5. This value, as well as the one used in the 1940 census, was obtained
by examining the distribution of schooling beyond college in the 1960
census.
1960 and 1970 censuses: Years of schooling was defined by the highest
grade attended from which 1 year was subtracted if the respondent was
still attending school. Six or more years of college was assigned a value
of 18.5.
1980 census: Years of schooling was defined by the highest grade at-
tended from which 1 year was subtracted if the respondent was still
attending school. Eight or more years of college was assigned a value of
20.5.
1990 census and 1994–2002 Current Population Surveys (CPS): In the
1990 census and beginning in 1992, the CPS changed its education ques-
tion from years of schooling to educational attainment categories. Taking
advantage of the CPS practice of rotating households into and out of the
survey, I matched people who responded to the 1991 survey with the
same people in the 1992 survey by household I.D., person line number,
race, ethnicity, and age. I then calculated the mean of the years of schooling
reported in 1991 by the educational attainment categories used in 1992
for this matched sample. These means were used to assign the values
within the 1990 census and post-1992 CPS education categories.
Weekly Wages
Weekly wage data are obtained from the 1970 to 2000 decennial cen-
suses. In addition, a combination of the 1995–97 CPSs and the 2001–3
CPSs are used to produce estimates for 1996 and 2002. Weekly wages are
calculated as annual income divided by weeks worked. The sample consists
of men 25–54 years old who did not live in group quarters. A number
of additional sample restrictions were imposed. I excluded men (1) who
worked less than 50 weeks in the previous year and who were now
attending school; (2) who were in the military; (3) who were self-employed
or working without pay if they were not employed in agriculture; (4)
whose weekly wages put them below the following values: 1970 p $10.00;
1980 p $19.80; 1990 p $33.82; 1995, 1996, 1997, 2000, 2001, and 2002
p $40.00; (5) whose computed weekly wages put them above the fol-
lowing values: 1970 p $1,250; 1980 p $1,875; 1990 p $3,202; 1995 p
$3,500; 1996 p $3,550; 1997 p $3,600; 2000 p $3,850; 2001 p $3,900;
and 2002 p $3,950; and (6) who were in the open-ended upper-income
interval and who worked at least 40 weeks last year.
The census and CPS all contain open-ended upper income intervals.
The means of these top codes were calculated assuming that the upper
part of the income distribution followed an exponential distribution, and
the following values were assigned; 1940 ($5,000) p $8,900; 1950 ($10,000)
p $22,500; 1960 ($25,000) p $42,500; 1970 ($50,000)p $80,000; 1980
($75,000) p $115,000; 1990 ($140,000) p $195,000. The CPS-imputed
top codes were used in that data. In the 2000 census, respondents with
wage and salary income equal to $175,000 and above were assigned the
state mean for their state of residence based on all people in that state
with wage and salary income equal to $175,000 and above.
Weeks worked were coded into broad intervals in the 1960 and 1970
censuses. The following within-interval means, derived from the 1980
census, were assigned: 1–13 p 6.5; 14–26 p 21.73; 27–29 p 33.08; 40–47
p 42.67; 48–49 p 48.29; 50–52 p 51.82. In the other census years, we
used these intervals or the continuous value of weeks worked, and the
results were basically identical. In light of this, I used the continuous
weeks measure in the CPS files.
Percent weekly wage differentials are then computed as the difference
in the natural logs of the ratio of the arithmetic means of recent immigrants
compared to the native-born. All male recent immigrants are compared
to all male native-born, both between the ages of 25 and 54.
232 Smith
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NORC at the University of Chicago

Immigrants and the Labor Market

NORC at the University of Chicago, Society of Labor Economists, The University of

This article examines skill gaps between immigrants and native-born

[ Journal of Labor Economics, 2006, vol. 24, no. 2]

Fig. 1.—Schooling disparity of foreign-born ages 25⫹ (foreign-born ⫺ all native-born)

II. The Changing Labor Market Quality of Immigrants

years, the conventional definition of “recent immigrants” used by labor

quality differences between immigrants and the native-born.2 First, it ig-

Fig. 3.—Schooling disparity of females ages 25⫹ (foreign-born ⫺ all native-born)

Fig. 5.—a, Age difference of foreign-born (with native-born); native-born ⫺ foreign-born.

isolation to determine how much of the trend in the recent immigrant

labor. Starting in the mid-1970s, continuing with considerable force

When two populations start off at very different initial conditions in

Fig. 7.—“Inequality-adjusted” wage disparity of recent immigrants

The final factor I consider involves the impact of illegal immigration.

Europe 19.1 4.3

All 12.64 10.79 12.33 11.73 12.99

compared to the wage of legal migrants, which is what we would like to

D ( Wage of Recent Foreign-Born

Schooling 13.0 10.5

legal immigrants may be representative of all recent legal recent migrants,

Fig. 8.—“Illegal-adjusted” wage disparity of recent immigrants

Fig. 9.—“Illegal-adjusted” education disparity of recent immigrants

III. Immigrant Education and Generational Assimilation

to that question. I then defined the specific Asian generation by place of

necessity, third-generation Europeans always had to be defined using the

Hispanic male education:

about the alleged inability of successive Hispanic generations to close

1830–34 3.17 2.80

are definitely smaller than those of either European or Asian migrants

1830–34 5.04 3.67

more plausible than those implied by the cross-sectional comparison in

1830–34 8.13 5.00

the previous tables arrayed by generation, these educational advances can

This stronger educational transmission among Latinos between the first

related with low levels of education, so even if improvements in schooling across

Fig. 11.—Education advances by women

in the schooling accomplishments among different immigrant subgroups.

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