Estimation results for the full set of 1991 United States immigrants

3. Estimation results for the full set of 1991 United States immigrants

A series of log likelihood ratio statistics tested three restricted models for each admission category. In the first test, all coefficients were restricted to zero. The null hypothesis was rejected for each admission category at the 1 percent level of significance. The x 2 statistics were 1049.6, 1102.5, 6993.9, and 7435.7 for the family sponsored, immediate relative, refugee, and employment-based categories respectively. A second test restricted the coeffi- cients for the temperature interactions and the country dummies to zero. In this case the restricted model was rejected for each class of admission at the 1 percent level of significance as well. This suggests that there is source country specific variation in location decisions and that climate in the intended state of residence is important relative to the source country’s climate. A third restricted model set the coefficients of the border, coastal, and distance dummies to zero. The restricted model in this case could not be rejected at the 1, 5, or 10 percent level of significance for the family sponsored, immediate relative, or refugee class of admission. The x 2 statistics were 6.07, 8.01, and 6.64 respectively. The restricted model was rejected in the case of the employment-based admission class. The test statistic was 15.51, which is significant at 5 percent. COST is only weakly significant for two of the four admission categories but does display the proposed relationship in these cases. Other results, not reported here, include substituting the distance from each source country capital city to each state capital for this distance dummy. 13 As argued before, this variable may not capture the important segment of any moving cost, but the results were similar and the final conclusions were not altered. The dummy variables for coastal states and states with an international border with Mexico are not significant for any of the admission classes. Refugees and employment-based immigrants seem to be repelled by those states that border Canada. Before elaborating on the estimation results of the model something must be said concerning the multicollinearity issue raised by Buckley 1996 and further complicated by the combination of his results and those of Zavodny 1997. Buckley suggests that measure- ments of the foreign-born population may be correlated with the other independent variables, especially the welfare generosity variable. Given that the independent variables correlate with the current inflow, they may also explain the stock of immigrants already in place. Consider the scenario where immigrants from country j are welfare motivated and locate in state k at time period t. Also assume that the current inflow of immigrants at time t resembles the nativity stock at time t. In this case multicollinearity exists between the welfare variable and the nativity stock. Coefficient estimates may exhibit spurious correlation due to this problem. The scenario above is unlikely in this specification. Correlation between the stock variable and welfare suggests that the variation in the population share from country j and the variation in maximum welfare payments for any particular state k are related. Two factors make this connection seem unreasonable. First, the stock variable is the culmination of many years of flows. It could be that the immigrant flow in period t is related to welfare payments in period t or t-1. However, immigrant flows in period t-100 through 13 Distance data provided by the Bureau of Airline Statistics, U.S. DOT. 57 M. E. Dodson III International Review of Law and Economics 21 2001 47– 67 t-10 are most likely not correlated with welfare payments in period t or t-1. Second, keep in mind that changes in welfare payments are the product of legislation. This legislation may be dependent upon some formula or change drastically with changes in representation. It is possible that current immigration inflow may influence changes in welfare legislation, but past immigration inflows would most likely not enter this decision. More to the point, current welfare payments may explain current immigration flow but it is unlikely that it explains the sum of past immigration inflows. In an attempt to more accurately model location choices, this model introduces a third variable which produces still more multicollinearity concerns. Similarly born immigrants who entered each state in fiscal years 1989 and 1990 are included as independent variables. In the end, any resolution to this debate in the current specification will be found in empirical testing. Variance inflation factors VIF are well known and a simple tool in determining the severity of any multicollinearity. A VIF of five or more is the threshold for severe multi- collinearity. 14 A VIF for the welfare variable, foreign born share of state population, and the recent immigrant flow variable was calculated using this procedure. The values for each were 2.7, 1.1 and 1.2, respectively. Since all of these were far below five, multicollinearity is not a problem in the model. The elasticities presented in Table 3 are calculated using the median values of both the independent and dependent variables. The zero observations in the dependent variables would produce an upward bias if mean values were used. Elasticities for each category of admission are included. The log-likelihood statistics for each regression are also reported in Table 3. Per capita gross state product is significant only in the family sponsored and refugee catego- ries. Further, none of the classes consider the growth in employment or the unemployment rate. These elasticities indicate that the health of any particular state’s economy does not typically impact the location choices of immigrants. The specific economic and social features of states seem to weigh more heavily into the location decision. In all admission categories the state population is a significant and positive factor in the decision. For example, a 1 percent increase in the state population is associated with a 9.5 percent increase in family-sponsored immigrants locating within the state on average. The same population increase results in a larger inflow of refugees and employment-based immigrants. Elasticity estimates in Table 3 also suggest that immigrants from every admission category prefer employment in the service producing sector. In all cases, a negative elasticity results with respect to the share of employment in agriculture and the goods producing sector. These estimates are strongly significant for employment based and family-sponsored immi- grants. Contrary to Zavodny 1997 the percent of the population within a state living in a metropolitan area is not strongly significant. Only in the case of family-sponsored immi- grants and refugees is the metropolitan population a significant factor and only at the 10 percent level. However, the elasticities are large in magnitude compared to the insignificant elasticity associated with the immediate relative and employment-based category. All immigrants seem to be attracted by at least one of the nativity factor variables. Employment-based immigrants do not respond significantly to the similarly born stock of 14 See Studenmund 1994, p. 274. 58 M. E. Dodson III International Review of Law and Economics 21 2001 47– 67 immigrants but a 10 percent increase in the recent flow of similarly born immigrants increased the number of employment-based immigrants to the average state by 0.7 percent. Refugees respond in a converse manner; responding with a 5.9 percent increase for every 10 percent increase in the stock of similarly born immigrants in the average state but not responding to the recent inflow. Family sponsored and immediate relatives respond to both of the nativity variables. The significant elasticities for the nativity factors lend support for Zavodny’s 1997 conclusions. However, while this motivation exists in location choices, after correctly controlling for nativity factors the welfare generosity variable remains positive and signif- icant. This result is strongly supportive of Buckley’s 1996 argument. Every class of Table 3 Tobit elasticities Family Sponsored Immediate Relatives Refugees Asylees Employment Based Per Capita Gross State Product 1.027 V 0.115 3.772 V 0.128 0.556 0.182 2.265 0.428 Welfare 31.699 8.806 150.983 40.616 10.937 3.702 44.376 8.112 Percent of Total Population that is Similarly Born 0.219 0.021 0.025 0.007 0.591 0.08 0.01 0.015 Similarly Born Recent Arrivals 0.296 0.136 20.031 0.077 0.016 0.005 0.048 0.01 Agricultural Share of Employment 215.180 20.735 27.275 213.035 4.629 1.542 18.76 3.502 Goods Producing Share of Employment 210.275 20.430 27.751 213.607 5.915 V 2.004 24.742 4.327 Total Population 9.587 3.137 30.156 10.104 1.298 0.452 5.361 1.001 Employment Growth 1.682 1.05 5.487 1.421 2.807 0.956 11.566 2.114 Unemployment Rate 22.926 20.163 25.881 23.642 8.212 2.728 34.742 6.113 Sales Tax 20.158 0.142 6.267 23.682 4.005 1.334 16.538 2.933 Metropolitan Population 10.985 V 21.465 51.624 V 2.356 6.539 2.172 26.677 4.801 COST 58.529 V 82.283 V 45.38 5.747 46.043 58.899 29.522 10.809 Coastal States 218.05 255.485 233.709 10.942 45.891 58.579 29.63 10.754 Northern Border States 222.767 259.231V 235.972 211.838 24.744 30.632 17.06 6.019 Southern Border States 222.764 57.434 221.154 0.409 39.632 50.288 26.098 9.655 Log Likelihood 25826.21 27257.38 24311.66 24090.76 Elasticities are calculated as: Estimated Tobit coefficient Median of independent variable Median of dependent variable. Standard errors are calculated as: square root of Median of independent variable Median of dependent variable 2 Variance of the estimated Tobit coefficient. A significance level of 1 is denoted by , 5 by , and 10 by V. 59 M. E. Dodson III International Review of Law and Economics 21 2001 47– 67 admission displays some welfare motivation in the location decision. The smallest elasticity is in the immediate relative category. In this case a 1 percent increase in the maximum combined AFDC and food stamp benefit correlates with an 8.8 percent increase in the number of immigrants choosing the state as their location. The same increase in welfare correlates with an even larger inflow of immigrants in each of the remaining three categories.

4. Differences among immigrants within the sample