Why India Is Source Of Most Elite Group Of Immigrants In US

Among advocates of immigration restriction, it's almost an article of faith that newcomers from rich countries are more desirable than those from poor countries. In early 2018, President Donald Trump reportedly expressed a desire for more immigrants from Norway and fewer from countries such as Haiti, labeling the latter with an expletive. Writing in 1896, restrictionist Francis Walker made a similar argument, calling East European immigrants "beaten men from beaten races."

This view comes partly from racial bigotry and negative stereotypes. But it also stems from two misconceptions about U.S. immigration: Restrictionists ignore the importance of institutions, and they underestimate how effective the U.S. is at selecting the talented, the hard-working and the ambitious.

First, the caricatures offered up by Trump and Walker don't come close to describing reality. Immigrants tend to be poor when they arrive on American shores, but they and their children rapidly move up. Native-born children of immigrants from Mexico, Guatemala and El Salvador who were born to families near the poverty line tend to earn about the median income:

The children of immigrants from India and Pakistan are even more upwardly mobile.

So why do immigrants born in poor countries -- and their children -- succeed in the U.S.?

One big reason is that U.S. institutions are more effective at generating economic prosperity than institutions in developing nations. The U.S. has a reasonably functional and responsive government, property rights and the rule of law, a fairly efficient corporate culture and a large stock of accumulated knowledge and expertise. When immigrants and their children adapt to the American way of doing things, their natural potential is put to much better use than in their home countries.

There's another powerful reason immigrants from poor countries do well in the U.S.: selectivity. The U.S. doesn't just let in people randomly; in most cases, it carefully chooses those who are most likely to succeed.

For one thing, the system selects for education. About 12% of U.S. immigrants come via employment-based green cards, often after spending some time in the H-1B visa program. These individuals tend to be highly educated. And so do their families; 66% of U.S. immigration is done via various family reunification programs. As unauthorized immigration to the U.S. has dried up and gone into reverse, the average education level of new immigrants has soared:

The amount of selectivity is different for different countries. In a recent paper, economist Ed Lazear used a simple model to show how the education levels of a particular ancestry group in the U.S. -- say Algerian-Americans -- depends not just on the average education levels of the source country, but also on the size of its population and its degree of access to the U.S.

Lazear suggested that larger countries that send relatively small numbers of immigrants to the U.S. will tend to send their best and brightest. This explains why India, with 1.3 billion people and low average education levels, is the source of what is arguably the most elite group of immigrants in the U.S.

Looking at the data, Lazear found that just knowing three things -- a country's population, the number of immigrants it sends to the U.S. and the average education level in that country -- allows one to make a highly accurate prediction of how educated the immigrants from that country will be. Selectivity ends up being the most important factor, by a considerable margin. Importantly, Lazear also finds that selectivity strongly predicts income, showing that the system isn't just picking immigrants with useless paper degrees.

Of course, education isn't the only kind of skill that the system selects for. The simple act of coming to a strange new country and starting a whole new life, often without even speaking the language, requires an uncommon amount of courage, ambition and grit. That's probably why immigrants from Mexico, for whom selectivity is the lowest because of the big porous land border, are still very upwardly mobile. Because of low average education levels and racial discrimination, Mexican-Americans don't tend to reach parity with the native-born, but they do close much of the gap.

So the evidence shows that the U.S. system is actually very good at selecting talented go-getters from abroad. Restrictionists who believe that immigrants from poor countries will make the U.S. a poorer place are simply wrong.

(Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.)

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