Report: California’s High Welfare Benefits Attract New Immigrants

In a report entitled “Immigrants Tend to Live in High Welfare Benefit States,” published on Jan. 26, 2015, the National Bureau of Economic Research (NBER) determined that “the generous welfare benefits offered by some states have magnetic effects and alter the geographic sorting of immigrants in the United States”–attracting many to California.

The report found that “there is a ‘striking and easily observable clustering of immigrants in high-benefit states.” As California rose from offering medium benefit levels in 1970 to “almost the most generous in the nation” by 1990, the benefit levels served as a magnet for less-educated immigrants.

The NBER is a nonprofit, nonpartisan research organization that has been dedicated since 1920 toundertaking and disseminating unbiased economic research in a scientific manner.

NBER’s latest publication, by Research Associate George Borjas, found a causal relationship that “clustering” has been true for immigrants receiving welfare as opposed to those who are not. American native populations do not cluster in the same way as immigrants, because they find it expensive or costly in other ways to move from one state to another. But immigrants who have decided to make the costly move to the U.S. must only decide which state is most advantageous to them. The extra cost of reaching that state may be small for an immigrant compared to a native resident.

Borjas used data from the 1980 and 1990 censuses to look at where immigrant households (those whose heads are resident aliens or naturalized citizens born outside the United States) have settled, and compare that data with data from native households (those with heads born in the United States). Borjas then determined if a household received Aid to Families with Dependent Children (AFDC), Supplemental Security Income, and general assistance in the year prior to the census to account for the general trends in welfare.

Analysis determined that California had become much more generous in its welfare provisions over the two decades. In 1970, California benefits were at the median, with as many states giving more as those giving less. But by 1990, California’s AFDC benefit package was almost the most generous in the nation. It was 20% larger than that provided by New York; 89% larger than the one in Illinois, and almost 280% greater than the package offered by Texas.

NBER found a direct correlation between the increasing relative the generosity of California’s welfare system and attracting immigrants. In 1990, California was home to 9.6% of U.S. natives who did not receive welfare and 11.5% of U.S. natives who did receive welfare. Yet it was the also home to 27.6% of the nation’s immigrant households not receiving welfare and 37.6% of immigrant households that did receive welfare.

If looking at only those immigrant heads of households who arrived in the United States five years prior to the census are included, the clustering becomes more obvious. Some 45.4% of recent U.S. immigrants receiving welfare live in California, as compared to only 28.9 percent of those recent immigrants who do not receive welfare.

NBER research revealed that, “Much of this clustering is because less-educated immigrants are more likely to live in California than less-educated natives. This is true even within groups of immigrants from a specific nation.”

Borjas found the same clustering was evident in the numbers for recent female-headed immigrant households with children. Borjas also determined that the clustering in California holds true even if immigrants from countries sending large numbers of refugees to the United States are excluded and if immigrants of Mexican origin are excluded. So the clustering in California cannot be said to be entirely the result of California being adjacent to Mexico, or merely a favorite location for refugees.

According to the NBER, by changing its relative rank in providing welfare benefits, California saw a direct causal increase in the percentages of less-educated immigrants that came to California.