The Impact of Immigration on Computer Manufacturing in the 1990s

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DOI: 10.1177/0891242408327453 2009; 23; 60 originally published online Dec 4, 2008; Economic Development Quarterly

Marie Howland and Doan Bao Luu Nguyen The Impact of Immigration on Computer Manufacturing in the 1990s

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The Impact of Immigration on Computer Manufacturing in the 1990sMarie HowlandDoan Bao Luu NguyenUniversity of Maryland, College Park

This article examines the impact of immigration on the location of the computer and computer peripherals manufacturing(SIC 357) and electronic equipment manufacturing (SIC 367) industries in the United States. The authors hypothesize thatto stay competitive and keep production costs low, the computer and computer peripherals manufacturing and electronicequipment manufacturing businesses that remain in the United States are shifting employment to areas receiving largenumbers of immigrants. Using industry and immigration data by metropolitan area, the authors examine the impact of immi-gration on industry employment change during the 1990 decade. Results show that cities that attracted immigrants experi-enced slower declines in computer employment than they would have in the absence of immigration.

Keywords: immigration; computer industry; Asian immigrants; metropolitan employment

Nationwide, computer and computer peripheralsmanufacturing hired about 250,000 employees in2000. Total U.S. employment in this industry droppedduring the 1990s by about 50,000 employees, with muchof this industry moving offshore. In contrast, the elec-tronic components industry grew over the decade fromabout 550,000 to 585,000 employees. Both industrieshave remained competitive by offshoring some produc-tion. Although offshoring has reduced production costs,another strategy for competitiveness is for firms to moveor expand employment in the regions in which alow-wage labor force is growing.

The rapid growth of immigration into selected metroareas changes the composition of the labor force andshould have an effect on local industrial structure. Wehypothesize that firms that are footloose, with produc-tion processes that are labor dependent, are now shiftingto immigrant-magnet cities where they can find the low-skilled, low-cost workers they need. Firms in immigrant-magnet cities may also invest in more labor-intensivetechnology than they would have in the absence ofimmigration, thus creating more jobs. This articleaddresses this issue: Are the cities that are receiving thegreatest number of immigrants experiencing a relativegrowth in labor-intensive industries such as computerand computer peripherals manufacturing and electronicequipment manufacturing? We examine industries inStandard Industrial Classifications (SIC) 357 and 367.1

Throughout this article, we use the terms foreign bornand immigrant interchangeably.

Immigration Patterns During the 1990s

According to the 2000 census (U.S. Bureau of theCensus, 2001), the foreign-born population was up from7.9% of the U.S. population in 1990 to 10.4% in 2000.As a result of changes in immigration laws and the influxof illegal immigrants, the foreign-born populationincreased from 9.6 million in 1970 to 28.4 million in2000.2 More than 50% of the current foreign born arefrom Latin America, one fourth are from Asia, and theremaining one fourth are from Europe, North America,and Africa (U.S. Bureau of the Census, 2001, pp. 2-11).More than 50.0% of the Hispanic immigrants and 16.2%of the Asian immigrants 25 years and older had less thana ninth grade education (U.S. Bureau of the Census,2001). The 10 cities receiving the greatest number ofimmigrants are shown in Table 1.

Economic Development QuarterlyVolume 23 Number 1February 2009 60-70

2009 Sage Publications10.1177/0891242408327453

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Authors Note: The authors are grateful to Harry Kelejian andAntonio Bento for assistance with the econometrics and Gerald Feuerand Jon Youngman of the U.S. Census Bureau for their assistancewith the census data. Carolina Burnier, Joe Costanzo, Maria TeresaSouza, Yoonhee Kim, and three anonymous referees made helpfulcomments on an earlier version. We alone are responsible for anyremaining errors.


Howland, Nguyen / Immigration and Computer Manufacturing 61

Characteristics of Two Immigrant-Intensive Industries

Computer and computer peripherals manufacturing(SIC 357) and electronic equipment manufacturing (SIC367) are two industries dependent on immigrant labor.For both industries, immigrants compose 20% or moreof the workforce. In computer manufacturing in 2000,23% of the labor force was immigrants; 54% of theimmigrants were Asian. In electronics components man-ufacturing in the same year, 20% of the labor force wasmade up of immigrants; 43% were Asian (Ruggles et al.,2002).3 Both industries are highly competitive and there-fore constantly searching for the lowest cost productionlocations and methods. This is evidenced by the fact thatU.S. firms have moved considerable amounts of produc-tion employment offshore during the past two decades(see Table 2). The growth of imports was 194% for officeand computing equipment, and the growth of importswas 174% for electronics during the two decades 1980 to

2000. The growth in all manufacturing imports duringthe two decades was 110% (Bureau of EconomicAnalysis, 2003).4 This movement of firms offshore isindicative of their footloose nature. Neither industry istied to expensive-to-transport inputs.

In 1990, the same two metropolitan areas (MAs), SanFranciscoOaklandSan Jose and New YorkNorthernN.Y.Long Island, were the largest computer and elec-tronics manufacturing employers. Both computer andcomputer peripherals manufacturing (SIC 357) and elec-tronic equipment manufacturing (SIC 367) show a pat-tern of decentralizing out of the traditional centers ofproduction. The pattern is stronger for computer andcomputer peripheral manufacturing than for electronicsmanufacturing (see Figures 1 and 2).

Literature Review

When immigrants move into a region, they may com-pete for the existing stock of jobs, or they may stimulate

Table 1Ten MAs Receiving the Greatest Net Number of Foreign-Born In-Migrants, 1990 to 2000

Net Foreign-Born per Net Net Number of MA Total In-Migrants Foreign-Born In-Migrants

New YorkNorthern New JerseyLong Island, NYNJCTPA CMSA 0.69 1,607,184MiamiFort Lauderdale, FL CMSA 0.54 1,353,003Los AngelesRiversideOrange County, CA CMSA 0.61 1,122,787San FranciscoOaklandSan Jose, CA CMSA 0.83 651,611ChicagoGaryKenosha, ILINWI CMSA 0.60 552,359DallasFort Worth, TX CMSA 0.22 549,511HoustonGalvestonBrazoria, TX CMSA 0.46 435,564WashingtonBaltimore, DCMDVAWV CMSA 0.46 401,835Atlanta, GA MSA 0.27 306,481PhoenixMesa, AZ MSA 0.29 295,653

Note: MA = metropolitan area; CMSA = consolidated metropolitan statistical area.

Table 2Industry Characteristics

Proportion of Industry Change in National Growth in Employees Who Are Employment Imports

Foreign Born (%) in Metro Areas (% Change)1990 2000 1990 to 2000 1980 to 2000

Office and store machines 14 23 48,260 194Electrical machinery, equipment, and supplies 12 20 34,225 174All manufacturing average 2,722,416 110

Source: Ruggles et al. (2002); Integrated Public Use Microdata Series 1% Sample Data, U.S. Census; censored by school attendance; authorscalculations.


62 Economic Development Quarterly

new capital investment and urban economic growth.Evidence showing that immigration has little impact on theemployment rates and wages of the native born is inconsis-tent with arguments that immigrants compete for a fixednumber of regional jobs and hurt employment opportuni-ties for the native born. Altonji and Card (1989), Borjas(1987, 1998, 2003), Butcher (1998), Card (1990, 1997),Grossman (1982), LaLonde and Topel (1991), and

Reimers (1998) examine the impact of immigrant laborgrowth on the wages and employment rates of the nativeborn and find immigration responsible for either no or onlysmall downward pressure on wages and employment ratesof the native born. For example, Card (1997) subdividesthe immigrant and native-born populations into 10 skill-level groupings and finds that inflows of new immigrantsare associated with 1% to 2% declines in the employment

Figure 1Spatial Distribution of Computer and Office Equipment Manufacturing:

Standard Industrial Classification (SIC) 357, 1990 and 1997

Figure 2Spatial Distribution of Electronic Components and Accessories Manufacturing:

Standard Industrial Classification (SIC) 367, 1990 and 1997



rates of native men of the same skill level, with little impacton wage rates. In general, all these labor market studiesfind immigration has only a minimal impact on nativeswages and employment levels.

One explanation for the weak adverse impact of immi-grant growth on competing native-born workers wagesand employment may be that there is a growth in capitalthat absorbs the growth in the labor force. This explanationis consistent with the findings of this study. Another expla-nation for the absence of a negative impact on native-bornworkers may be that the native born move out in responseto immigrant inflows, leaving job competition unchanged.Card (2001), Card and DiNardo (2000), Kritz and Gurak(2001), Frey (2003), and Wright, Ellis, and Reibel (1997)examine the extent to which high-immigrant-growth juris-dictions experience domestic out-migration. Card andDiNardo (2000), Card (1997, 2001), and Wright et al.(1997) find no causal relationship between metropolitangrowth in the foreign born and metropolitan out-migrationof the native born, after controlling for worker skill levels.Rather, Card (2001) finds that cities with higher inflows ofnew immigrants also tend to have lower leaving rates andhigher joining rates among natives and earlier immigrants.Findings of Kritz and Gurak, Card and Wright, Ellis, andReibel indicate that earlier immigrants and the native borndo not abandon labor markets to new immigrants. Thus, thegeographical mobility of natives does not appear to be thecause of an absence of downward pressure on the wagesand employment of native-born workers.5

Another reason immigration may fail to adverselyaffect native wages and employment is that immigrantsmove to regions experiencing economic growth and highunemployment, thereby equalizing regional wages andemployment (Bartel, 1989; Bartel & Koch, 1991; Borjas,2001; Card, 2001). Borjas hypothesizes that immigrantsare the grease on the wheel that leads to the equalizationof regional labor markets. Immigrants move to labor mar-kets with more opportunity and therefore play an impor-tant role in improving labor market efficiency. Theliterature does not support this hypothesis either. Forexample, Bartel finds that immigrants have a tendency tolocate in cities with high proportions of their own ethnicgroup or ethnic enclaves rather than solely maximizingeconomic opportunity. In this study, we hold constant thepossibility that immigrants are flowing to regions whereemployment growth is strong.

In this article, we present evidence that a reasonresearchers are finding little evidence of tighter labormarkets in immigrant-magnet cities is that capital invest-ment responds to the growth in labor. Immigration willstimulate capital investment, increasing employment andoutput in exports from immigrant-intensive industries.

Altonji and Card (1989) show that the nationwidetrend of falling employment in some industries has beenslower in high-immigrant cities, suggesting that the sup-ply of immigrant workers has enabled low-wage indus-tries to survive in high-immigrant cities. Industriesshowing greater employment growth (or slower decline)in high-immigrant cities include apparel, leather, agricul-turecrops, furniture, miscellaneous manufacturing, andprivate household services.

A study from the urban planning and public policy liter-atures buttresses the argument for labor growths leading tocapital investment. Thomas Muller (1993, pp. 118-123)focuses on the wealth-enhancing effect of immigration.Because of the current influx of Hispanic labor into Miami,Los Angeles, New York, and San Francisco, apparel man-ufacturing has grown there, in spite of the national decline.The shortcoming of Mullers work is its reliance on corre-lations between immigrant growth and economic growthwhere cause and effect are impossible to separate.

Consistent with the absence of evidence of a signifi-cant drop in wage and employment rates in response toimmigrant inflows is the line of reasoning that capitalinvestment follows labor. This capital investment andadditional hiring may either lead to an increase in out-put or a shift to more labor-intensive production meth-ods. In other words, technology may be endogenouslychosen to complement the workforce. An increase inthe relative supply of some type of labor might leadproducers to alter their production technologies to takeadvantage of the new mix of worker skills. Lewis(2003, 2004, 2005) finds that labor demand forunskilled workers rose in cities experiencing an influxof low-skilled workers, but manufacturing output didnot increase. In summary, the labor economics litera-ture finds little evidence that immigrant inflows into aMA have an adverse impact on the labor market oppor-tunities for the native born. A consistent explanation isthat employment opportunities expand in immigrant-magnet cities because of new capital investment inimmigrant-hiring industries. Our study examines theindustrial employment response to immigrant flows butcannot tell us whether a labor response is because ofincreases in output or changes to more labor-intensivetechnologieswith output left unchanged.

Our study adds to the literature on the relationshipbetween regional growth and immigration by examiningtwo industries regional growth patterns in the 1990scomputer and computer peripherals manufacturing andelectronic equipment manufacturing. We control forfactors that, aside from immigration, might influencebusiness relocations and differential regional expansionand hiring decisions.



Data and Method

We estimate industry employment change across 276metropolitan statistical areas (MSAs) as a function of thegrowth in Hispanic and Asian immigration. Industryemployment change, for our two industries, is takenfrom the County Business Patterns for 1990, 1997, and2000 (U.S. Bureau of the Census, 1990, 1997, 2000).The U.S. census revised MSA boundaries in 1990, 1996,1998, 1999, and 2000. We use the 2000 consolidatedMSA (CMSA) and MSA boundary definitions used inthe 2000 Population Census, adjusting all the 1990boundaries to be consistent with the 2000 boundaries(U.S. Bureau of the Census, 2003). In other words, if afirm was outside the MSA in 1990 but inside the MSA in1997, the firm was assigned to inside the MSA in 1990.This required that all 1990 data be gathered at the countylevel and reaggregated up to match the counties includedin the 2000 MSA definitions. The two categories (MSAsand CMSAs) are referred to here as MAs.

Computer and office equipment manufacturing (SIC 357)and electronic components and accessories manufacturing(SIC 367) are analyzed at the three-digit level of detail.SIC 357 includes the production of electronic computers,computer storage devices, computer terminals, computerperipheral equipment, calculating and counting machines,and office machines, not elsewhere classified. SIC 367includes the production of electronic tubes, printed circuitboards, semiconductors and related devices, electroniccapacitors, electronic resistors, electronic coils and trans-formers, electronic connectors, and electronic compo-nents, not elsewhere classified.

Employment change spans from 1990 to 1997. In1997, the U.S. Department of Commerce switched fromthe SIC system to the North American IndustrialClassification System (NAICS). Two difficulties arose inlinking the SIC to NAICS code employment numbers forSICs 357 and 367. The census provides a bridging algo-rithm to create consistent SIC and NAICS industry cate-gories over time. However, where the bridging algorithmfor an industry requires collecting data at the six-digitlevel of industry detail, we ran into problems. At the six-digit level of industry detail, much of the data are sup-pressed at the county level, making it impossible tocreate a consistent employment series for MAs overtime. In addition, even at the six-digit level of detail,some categories were not compatible between the twoseries. Both problems arose for computer manufacturingand electronics; therefore, for both industries, we endemployment change in 1997, the last year the old codesystem was in place.

The dependent variable is the change in industry employ-ment 1990 to 1997 for computer and office equipment andelectronics manufacturing. As data become available after2008, we will be able to use a consistent set of 1997 to 2007NAICS data to determine whether our results can beextended to the present. Absolute industry employmentchanges are used because, in some MAs, where an industryis underrepresented, small absolute changes result in largepercentage changes.

We hypothesize that job creation is greatest in MAswhere immigrant growth is greatest. Immigrant growth isdivided into two groups, Hispanics and Asians. The numberof foreign-born Hispanics in the United States in 2000totaled 10 million, with 49.6% completing high schoolor higher and 11.2% completing a bachelors degree orhigher. The Asian foreign born totaled 5.8 million popula-tion in 2000, with 83.8% completing a high schooldiploma or higher and 44.9% completing a bachelorsdegree or higher (U.S. Bureau of the Census, 2001, p. 37).Cross-ethnic group differences in education levels, aswell as cultural differences, may explain why Hispanicand Asian immigrants have differential impacts onindustry employment.6

We use residents aged 18 to 64 who speak Spanish oran Asian language as their primary language at home asour measure of immigration and immigrants region oforigin. Pearson correlations coefficients are .99 betweenAsian foreign born in 2000 and a person, aged 18 to 64,speaking an Asian language at home in 2000. ThePearson correlation is .99 for the Latin American foreignborn in 2000 and speaking Spanish at home, aged 18 to64. Immigrants who speak their native language at homeare more likely to be recent immigrants.7

The model includes several control variables. The lit-erature documents the importance of agglomerationeconomies for industry location and production deci-sions. The presence of a large labor force, a wide numberof suppliers, a rich array of support services, and well-developed public infrastructure increase efficiency andshould attract investment to a region (Henderson, 1988).Agglomeration economies are composed of urbanizationeconomies and localization economies, each of which ismeasured separately in our model. Urbanization economiesare the economies to scale or cost efficiencies that are cre-ated in larger metropolitan regions because the city offersa large and diverse labor pool and public infrastructure.We hypothesize that the greater the urbanizationeconomies, the greater the change in employment.

At some population size, diseconomies set in and anurban area becomes too congested and living costs too high;thus, new investment is deterred. Urbanization economies



are measured by total 1990 population (TotPopm1990) anddiseconomies to scale are measured by the 1990 populationsquared (Pop^2m1990). The inclusion of these agglomerationeconomy variables follows the convention of regional econ-omists (see, e.g., Henderson, 1988). The total 1990 popula-tion also captures market size. Where firms sell to finalconsumers, a large market may be an attraction.

Localization economies occur when the same industryconcentrates in a region to create economies to scale. Costefficiencies occur when there is a shared pool of industry-specific labor and special suppliers and services.Localization economies are measured here by total 1990industry employment (Empim1990), the size of the industrysmost important supplier in 1990 (MainSupim1990), and aninteraction term between 1990 industry and supplieremployment (IEim1990). When a metro area has both manysupplier and industry firms, we expect the region to beexponentially attractive to investment and hiring. Computerand electronics manufacturings largest suppliers wereselected from the national input-output tables (Bureau ofEconomic Analysis, 1997). Computer manufacturing (SIC

357) is the largest supplier to the electronics industry, andelectronics (SIC 367) is the largest supplier to the computerand office equipment industry. In short, we expect thechange in computer manufacturing employment to begreater where other computer firms and electronic firmsare already situated. These metro areas would be mostlikely to have the kind of labor force and services that makecomputer manufacturing profitable. In addition, this vari-able captures other attractions to the MA that are notspecifically addressed in our models.

The growth in the native labor force, 1990 to 2000, isthe final control variable (NBPm 1990-2000). We expectindustry growth to be greater in the MAs experiencing aswelling native-born labor force. Thus, we measure theimpact of the growth of immigrant labor on industryemployment, holding constant the other factors thatcould influence an industrys growth, including the sizeof the MA in 1990, the size of the industry in 1990, theavailability of industry suppliers, and change in the MAsnative-born labor force from 1990 to 2000. The variablesare defined and the data sources identified in Table 3.

Table 3Data Sources: Model and Variables Used to Test the Impact of Immigration on Industry Employment

Symbol Reason for Including

Dependent variableChange in employment Empim1990-1997Independent variablesTotal metropolitan area population in 1990 TotPopm1990 Captures market size or urbanization economiesPopulation squared Pop^2m1990Employment in industry i in 1990 Empim1990 Captures localization economies and other unmeasured variables that

attract industry to a jurisdiction (e.g., presence of forward and backward industry linkages, proximity to suppliers and markets, etc.)

Employment in largest supplier MainSupim1990 Measures extent to which an industry is attraction to its largest supplierInteraction term between IEim1990 Measures the attraction of locations with both suppliers and

MainSupim1990 and Empim1990 other computer industriesChange in native-born population NBPm1990-2000 The in-migration of the native-born population increases labor supply

and therefore increases investment and employmentNumber of Hispanic foreign born #HISPm1990 Measured as total population, aged 18 to 65, speaking Spanish

at home, 1990Number of Asian foreign born #ASIANm1990 Measured as total population, aged 18 to 65, speaking an Asian

language at home, 1990Change in Hispanic workforce HISPm1990-2000 Measured as change in population speaking Spanish at home

who are 18 to 65 years of ageChange in Asian workforce ASIANm1990-2000 Measured as change in population speaking an Asian language at home

who are 18 years to 65 years of ageNumber of Hispanics in the MA in 1980 HISPm1980 Instrumental variable, measured as the number of Hispanic foreign

born in 1980Number of Asians in the MSA in 1980 ASIANm1980 Instrumental variable, measured as the number of Asian

foreign born in 1980The distance to a gateway for Hispanics DISH Instrumental variable: Distance to the closest border townThe distance to a gateway for Asians DISA Instrumental variable: Distance to the closest Asian gateway,

Los Angeles, New York, or San Francisco

Note: m = metropolitan area; i = industry.



The estimated model pays particular attention to theissue of endogeneity. If immigrants are moving to MAsto take advantage of growth in these particular industries,single equation models will likely overstate the effects ofimmigration on industry employment. We control forendogeneity in two ways, and both show similar results.

Model I controls for endogeneity by estimating thechange in industry employment 1990 to 1997 as a functionof the size of the immigrant labor pool at the beginning ofthe decade, in 1990. There is no evidence of endogeneitybias in Model I (Hausman, 1978; Wooldridge, 2003,p. 505). Model II reports ordinary least squares (OLS)results using the growth in employment as a function of achange in immigrant population over the decade. In thismodel, we find endogeneity bias. The growth in immi-grants may be the result of local economic growth ratherthan growth resulting from immigration. Even though thecoefficients are biased, we report Model II for comparisonpurposes with the two-stage least squares (2SLS) modelreported in Model III. Model III controls for endogeneityby using instrumental variables for both HISPm1990-2000and ASIANm1990-2000. For instrumental variables to bevalid, they must be determinants of the growth in the immi-grant labor force but independent of the error term. Theinstrumental variables in the final Model III are the numberof Hispanic immigrant residents in the metro area in 1980(HISPm1980), the distance of the MA to the nearest southernborder (DISHm), the number of Asian immigrants in themetro area in 1980 (ASIANm1980), and the distance of theMA to the nearest Asian immigrant gateway city (DISAm).These instrumental variables meet this requirement.

Because the OLS results violate the assumptions ofhomoskedasticity, the Hal White procedure for robustregression is used to correct the standard errors in all threemodels (White, 1984).8 The results are reported in Table 4.

Results

Our analysis provides evidence that Asian immigra-tion has an effect on regional employment growth incomputer and office equipment manufacturing. For com-puter and office equipment manufacturing, the results onthe Asian labor force variable are robust, independent ofthe included independent variables or the form of theinstrumental variable. The fact that the coefficient(ASIANm1990) is significant in Model I and (ASIANm1990)is statistically significant in Model III gives us confi-dence that the level of the Asian population in 1990 andthe growth of Asian immigrant population during the1990s had an impact on the spatial pattern of computermanufacturing employment.

For the electronics industry, the results are less robustand are sensitive to the included independent variablesand the formulation of the instrumental variables. Thus,although some formulations indicate that Asians and/orHispanics have an impact on the location and growth ofthis industry, neither is robust enough to make a confidentargument. Thus, we do not report the results here.

The negative results on the diseconomies to city size(Pop^2m1990), the size of the industry locally (Empim1990),and the interaction term between the main supplier andlocal industry employment (IEim1990) indicate computermanufacturing is decentralizing away from the largestMAs and the traditional centers of employment concen-tration. This is consistent with the data shown inFigures 1 and 2. Employment growth in computer man-ufacturing is positively associated with the size andgrowth of the Asian labor force but not associated withthe level or growth of the Hispanic labor force or thegrowth of the native-born labor force.

The results imply that for every 1,000 additional work-ing-age Asian immigrants added to the local economy in1990, 23 additional computer jobs were added to the econ-omy during the next 7 years. In Model III, the coefficienton ASIAN is significant at the 5% level, implying thatfor every 1,000 Asian workers aged 18 to 64 added to anMA, employment in computer and office equipment man-ufacturing increased by 68 jobs. These results are alsorobust for various combinations of independent variablesand specifications of the instrumental variable. Figure 3shows the estimated employment losses in the absence ofand with immigration, holding all other variables in themodel constant across the 10 largest MAs. Immigrationappears to have saved or created the most computer indus-try jobs in the Los AngelesRiversideOrange County andthe San FranciscoOaklandSan Jose MAs.

We interviewed the manager and toured a computerassembly plant near San Diego to determine whether ourstatistical analysis was consistent with assembly opera-tions on the ground. This company is owned by a large,multinational, foreign-headquartered computer firm.Nearly 100% of this plants assembly line workforce ismade up of immigrants. Asians are the largest share,along with Hispanics and Africans. The diversity of theworkforce is illustrated by the fact that 17 different lan-guages are spoken by assembly line workers. This work-force receives on-the-job training, but formal educationrequirements are limited. Some English proficiency isrequired.

The company competes with low-cost offshore labornot only through the hiring of local unskilled immi-grant workers but also by hiring these workers through



a temporary service. The ability to lay off and rehireworkers to match the companys fluctuating productionschedule keeps costs competitive with offshore sites.The peak employment months are February, June, andSeptember, during which employment expandsapproximately 250 to 750 workers. A workforce ofapproximately 72 floor supervisors works year-round,

handling assembly in the off-peak periods and super-vising the temporary workforce during the peak pro-duction periods.

The company hires approximately 25 native-bornworkers at this facility to handle accounting and manage-ment functions. International competition remainsintense, and a corporate decision to move this assembly

Table 4Regression Results for Computer and Office Equipment Manufacturing

Model I, OLS, Hal Model II, OLS, Hal Model III, 2SLS,White Correction White Correction Hal White Correction

Dependent Variable EMPm1990-1997 EMPm1990-1997 EMPm1990-1997Constant 98.56 124.62 146.42

(73.01) (66.699) (87.961)[1.35] [1.86] [1.66]

TotPopm1990 9.66 {5} 0.19 {3} 0.34 {3}(0.178) {3} (0.163) {3} (0.335) {3}

[0.54] [1.18] [1.02]Pop^2m1990 0.30 {10}* 0.43 {10}* 0.35 {10}*

(0.154) {10} (0.123) {10} (0.107) {10}[1.95] [3.49] [3.27]

EMPim1990 0.17 0.19 0.19*(0.100) (0.107) (0.097)[1.66] [1.73] [1.99]

MainSupim1990 0.05 0.04 0.04(0.040) (0.082) (0.075)[0.56] [0.50] [0.52]

IEim1990 0.51 {5}* 0.49 {5}* 0.52 {5}*(0.223) {5} (0.194) {5} (0.185) {5}

[2.30] [2.55] [2.91]NBPm1990-2000 1.55 {5} 0.77 {3} 0.95 {3}

(0.572) {3} (0.794) {3} (0.217) {2}[0.03] [0.96] [0.44]

#HISPm 3.84 {3} (0.276) {2}

[1.39]HISPm1990-2000 0.10 {2} 0.76 {2}

(0.176) {2} (0.772) {2}[0.59] [0.98]

#ASIANm 0.023* (0.0103)[2.24]

ASIANm1990-2000 0.048* 0.068*(0.0174) (0.0349)[2.76] [1.95]

Adjusted R2 .83 .83 .81Number of observations 276 276 276

Note: OLS = ordinary least squares; 2SLS = two-stage least squares; ( ) = standard error; [ ] = t-statistics; {} = movement of decimal points.See Table 3 for variable definitions.*Significant at the 5% level.



plant offshore looms overhead. Without this domesticimmigrant labor force, this plant could not be competi-tive with offshore locations.9

Additional Issues

As shown in our case study, employment estimates donot imply that all jobs went to immigrants. When pro-duction work expands or is retained, managerial and pro-fessional jobs are created or saved as well.

We conjecture that immigrants are not significant fac-tors in the location and retention of electronics for two rea-sons. The share of immigrant workers is slightly lower inelectronic components than in computer manufacturing,with immigrants being 20% of all electronic industryworkers versus 23% for computer manufacturing (seeTable 2). Second, electronics may be heterogeneous withinthe SIC classification captured by County BusinessPatterns. Heterogeneity may result in employment patternsin one sector, canceling out the pattern in other sectors.

A final caveat is that these results apply to the decadeof the 1990s. In spite of the econometric model thatattempts to hold external conditions constant, we cannotabstract from or control for conditions that change with

time, such as the precise educational mix of the futureimmigrant population, the technological and managerialchanges within these industrys production processes, andconsumer demand. The results presented here are testedwithin the context of and conditions in the 1990s.

Although data from one of our two three-digit industriessupported our hypotheses, it is likely that many smallerindustries and individual firms are similarly influenced intheir location and investment decisions by the supply ofimmigrant labor. The limitation of industry data at grosslevels of detail for geographical areas makes it difficult tocapture the narrower industries also affected.

Summary

Job growth in computer and office equipment manu-facturing responded to the growth in the Asian laborforce. This job growth may result from output expansion,job retention, or changes in modes of production to morelabor-intensive methods. Whichever of these mecha-nisms are at work, we conclude that the rapid immigra-tion of the 1990s has led to a reallocation of employmentto MAs attracting immigrants. Computer programminglost 48,000 jobs during the decade. Would more jobs

Figure 3Actual and Hypothetical Employment Losses for the 10 Largest Metropolitan Areas

NY-NorthernNJ-LongIslandCMSA

Chicago-Gary-KenoshaCMSA

SanFrancisco-Oakland-Sam JoseCMSA

Boston-Worcester- LawrenceCMSA

Dallas-Fort WorthCMSA

Philadel-phia-Wilmington-AtlanticCity CMSA

Detroit-AnnArbor -FlintCMSA

Houston -Galveston- BrazoriaCMSA

Washington-BaltimoreCMSA

LosAngeles-Riverside-OrangeCountyCMSA

50000

50000

100000

200000

150000

0

Num

ber o

f Job

s

Actual Employment ChangeHypothetical Employment Change without Immigration, Based on Model IHypothetical Employment Change without Immigration, Based on Model II

Note: CMSA = consolidated metropolitan statistical area.



have been lost in the absence of Asian immigration? Ourresults indicate that Asian immigration did slow thedecline in Asian-magnet cities. New capital investmentor slower decline in MAs with high rates of immigrationmay be two reasons previous researchers have failed tofind evidence that immigrants have a significant adverseimpact on the employment levels and wages of nativeworkers. Immigration leads to job creation and retentionin occupations compatible with the skills of immigrants,thus minimizing direct job competition between immi-grants and the native born.

Some Implications for Planners

MAs attracting few immigrants are positioned to losean above-average share of low-skilled jobs to immigrant-magnet cities and offshore locations. These metro areasshould continue to retrain displaced workers, upgradeindustry skills to move out of the lowest skilled manufac-turing, and reuse land left behind in the spatial realloca-tion of jobs. These metro areas should not expend publicmonies on supporting low-skilled, low-wage industrieswith no local future.

In MAs attracting immigrants, economic developmentplanners should study immigrant employing industries indepth and begin to plan for a regional future when theflow of low-skilled cheap labor slows. How will the met-ropolitan economy adjust if immigration laws are tight-ened, as threatened in political circles? To avoid futureeconomic decline, planners might build on the advan-tages of their growing industrial specializations.

Immigration is having an impact both on labor supplyand demand and on urban economic structure across theUnited States. Whether planners are in an MA attractingimmigrants or not, their cities are likely to be affected,and as economic development professionals we shouldbe discussing and debating the consequences and stayingone step ahead of the impacts.

Finally, in the debate over the costs and benefits ofimmigration into the United States, one of the benefits tobe appreciated is the retention of jobs. These firms notonly pay taxes but also provide management and profes-sional jobs to native workers.

Notes1. Standard Industrial Classification (SIC) codes were changed to

the North America Industrial Classification System (NAICS) codes in1997. Although some industries translated easily into NAICS codes,this was not the case for computer manufacturing (SIC 357) and elec-tronics (SIC 367). Thus, we had to analyze the period 1990 to 1997.

2. The census attempts to capture legal and illegal immigration.However, most observers suspect the number of illegal immigrants isunderreported.

3. Calculated by Nguyen and Howland.4. Standard Industrial Trade Classification industry categories do

not coincide with U.S. SIC and NAICS codes; therefore, the U.S.industries were selected based on descriptions.

5. Frey (2003) finds that in the late 1990s the six largest immigrantmagnets experienced an out-migration of the native-born population.This domestic out-migration was concentrated among the lowerskilled workers. Freys methodology does not, however, distinguishbetween correlation and causation.

6. In a study of apparel, leather, and fruit and vegetable process-ing, Hispanic immigrants were significant whereas Asian immigrantswere not (see Howland & Nguyen, 2008).

7. The results were similar when we replaced language speakerswith the working-age population of immigrants.

8. These results are available from the authors on request.9. Interview in August 2005 and January 2008. The enterprise prefers

to remain anonymous but is located in San Diego County, California.

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Marie Howland is a professor in the Urban Studies and PlanningProgram at the University of Maryland. She has a PhD from theMassachusetts Institute of Technology and has published extensivelyin the economic development field, most recently on the redevelop-ment of brownfields.

Doan Bao Luu Nguyen has a PhD from the University of Maryland,where he is currently a postdoctoral fellow in the School ofArchitecture, Planning, and Preservation. He is also assistant editorfor Real Estate Review.


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The Impact of Immigration on Computer Manufacturing in the 1990s