Economic Development Quarterly

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The Impact of Immigration on Computer Manufacturing in the 1990s

Marie Howland and Doan Bao Luu Nguyen
Economic Development Quarterly 2009; 23; 60 originally published online Dec 4, 2008;
DOI: 10.1177/0891242408327453
The online version of this article can be found at:
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The Impact of Immigration on Computer

Manufacturing in the 1990s

Economic Development Quarterly

Volume 23 Number 1
February 2009 60-70
2009 Sage Publications
10.1177/0891242408327453
http://edq.sagepub.com
hosted at
http://online.sagepub.com

Marie Howland
Doan Bao Luu Nguyen
University 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 that
to stay competitive and keep production costs low, the computer and computer peripherals manufacturing and electronic
equipment manufacturing businesses that remain in the United States are shifting employment to areas receiving large
numbers of immigrants. Using industry and immigration data by metropolitan area, the authors examine the impact of immigration on industry employment change during the 1990 decade. Results show that cities that attracted immigrants experienced slower declines in computer employment than they would have in the absence of immigration.
Keywords:

immigration; computer industry; Asian immigrants; metropolitan employment

ationwide, computer and computer peripherals

manufacturing hired about 250,000 employees in
2000. Total U.S. employment in this industry dropped
during the 1990s by about 50,000 employees, with much
of this industry moving offshore. In contrast, the electronic components industry grew over the decade from
about 550,000 to 585,000 employees. Both industries
have remained competitive by offshoring some production. Although offshoring has reduced production costs,
another strategy for competitiveness is for firms to move
or expand employment in the regions in which a
low-wage labor force is growing.
The rapid growth of immigration into selected metro
areas changes the composition of the labor force and
should have an effect on local industrial structure. We
hypothesize that firms that are footloose, with production processes that are labor dependent, are now shifting
to immigrant-magnet cities where they can find the lowskilled, low-cost workers they need. Firms in immigrantmagnet cities may also invest in more labor-intensive
technology than they would have in the absence of
immigration, thus creating more jobs. This article
addresses this issue: Are the cities that are receiving the
greatest number of immigrants experiencing a relative
growth in labor-intensive industries such as computer
and computer peripherals manufacturing and electronic
equipment manufacturing? We examine industries in
Standard Industrial Classifications (SIC) 357 and 367.1
60

Throughout this article, we use the terms foreign born

and immigrant interchangeably.

Immigration Patterns During the 1990s

According to the 2000 census (U.S. Bureau of the
Census, 2001), the foreign-born population was up from
7.9% of the U.S. population in 1990 to 10.4% in 2000.
As a result of changes in immigration laws and the influx
of illegal immigrants, the foreign-born population
increased from 9.6 million in 1970 to 28.4 million in
2000.2 More than 50% of the current foreign born are
from Latin America, one fourth are from Asia, and the
remaining 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 than
a ninth grade education (U.S. Bureau of the Census,
2001). The 10 cities receiving the greatest number of
immigrants are shown in Table 1.
Authors Note: The authors are grateful to Harry Kelejian and
Antonio Bento for assistance with the econometrics and Gerald Feuer
and Jon Youngman of the U.S. Census Bureau for their assistance
with the census data. Carolina Burnier, Joe Costanzo, Maria Teresa
Souza, Yoonhee Kim, and three anonymous referees made helpful
comments on an earlier version. We alone are responsible for any
remaining errors.

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Howland, Nguyen / Immigration and Computer Manufacturing 61

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

Net Foreign-Born per Net

Total In-Migrants

Net Number of
Foreign-Born In-Migrants

0.69
0.54
0.61
0.83
0.60
0.22
0.46
0.46
0.27
0.29

1,607,184
1,353,003
1,122,787
651,611
552,359
549,511
435,564
401,835
306,481
295,653

New YorkNorthern New JerseyLong Island, NYNJCTPA CMSA

MiamiFort Lauderdale, FL CMSA
Los AngelesRiversideOrange County, CA CMSA
San FranciscoOaklandSan Jose, CA CMSA
ChicagoGaryKenosha, ILINWI CMSA
DallasFort Worth, TX CMSA
HoustonGalvestonBrazoria, TX CMSA
WashingtonBaltimore, DCMDVAWV CMSA
Atlanta, GA MSA
PhoenixMesa, AZ MSA
Note: MA = metropolitan area; CMSA = consolidated metropolitan statistical area.

Table 2
Industry Characteristics
Proportion of Industry
Employees Who Are
Foreign Born (%)

Office and store machines

Electrical machinery, equipment, and supplies
All manufacturing average

Change in National
Employment
in Metro Areas

Growth in
Imports
(% Change)

1990

2000

1990 to 2000

1980 to 2000

14
12

23
20

48,260
34,225
2,722,416

194
174
110

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

Characteristics of Two ImmigrantIntensive Industries

Computer and computer peripherals manufacturing
(SIC 357) and electronic equipment manufacturing (SIC
367) are two industries dependent on immigrant labor.
For both industries, immigrants compose 20% or more
of the workforce. In computer manufacturing in 2000,
23% of the labor force was immigrants; 54% of the
immigrants were Asian. In electronics components manufacturing in the same year, 20% of the labor force was
made up of immigrants; 43% were Asian (Ruggles et al.,
2002).3 Both industries are highly competitive and therefore constantly searching for the lowest cost production
locations and methods. This is evidenced by the fact that
U.S. firms have moved considerable amounts of production employment offshore during the past two decades
(see Table 2). The growth of imports was 194% for office
and computing equipment, and the growth of imports
was 174% for electronics during the two decades 1980 to

2000. The growth in all manufacturing imports during

the two decades was 110% (Bureau of Economic
Analysis, 2003).4 This movement of firms offshore is
indicative of their footloose nature. Neither industry is
tied to expensive-to-transport inputs.
In 1990, the same two metropolitan areas (MAs), San
FranciscoOaklandSan Jose and New YorkNorthern
N.Y.Long Island, were the largest computer and electronics manufacturing employers. Both computer and
computer peripherals manufacturing (SIC 357) and electronic equipment manufacturing (SIC 367) show a pattern of decentralizing out of the traditional centers of
production. The pattern is stronger for computer and
computer peripheral manufacturing than for electronics
manufacturing (see Figures 1 and 2).

Literature Review
When immigrants move into a region, they may compete for the existing stock of jobs, or they may stimulate

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62 Economic Development Quarterly

Figure 1
Spatial Distribution of Computer and Office Equipment Manufacturing:
Standard Industrial Classification (SIC) 357, 1990 and 1997

Figure 2
Spatial Distribution of Electronic Components and Accessories Manufacturing:
Standard Industrial Classification (SIC) 367, 1990 and 1997

new capital investment and urban economic growth.

Evidence showing that immigration has little impact on the
employment rates and wages of the native born is inconsistent with arguments that immigrants compete for a fixed
number of regional jobs and hurt employment opportunities 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 labor

growth on the wages and employment rates of the native
born and find immigration responsible for either no or only
small downward pressure on wages and employment rates
of the native born. For example, Card (1997) subdivides
the immigrant and native-born populations into 10 skilllevel groupings and finds that inflows of new immigrants
are associated with 1% to 2% declines in the employment

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Howland, Nguyen / Immigration and Computer Manufacturing 63

rates of native men of the same skill level, with little impact
on wage rates. In general, all these labor market studies
find immigration has only a minimal impact on natives
wages and employment levels.
One explanation for the weak adverse impact of immigrant growth on competing native-born workers wages
and employment may be that there is a growth in capital
that absorbs the growth in the labor force. This explanation
is consistent with the findings of this study. Another explanation for the absence of a negative impact on native-born
workers may be that the native born move out in response
to 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 jurisdictions experience domestic out-migration. Card and
DiNardo (2000), Card (1997, 2001), and Wright et al.
(1997) find no causal relationship between metropolitan
growth in the foreign born and metropolitan out-migration
of the native born, after controlling for worker skill levels.
Rather, Card (2001) finds that cities with higher inflows of
new immigrants also tend to have lower leaving rates and
higher joining rates among natives and earlier immigrants.
Findings of Kritz and Gurak, Card and Wright, Ellis, and
Reibel indicate that earlier immigrants and the native born
do not abandon labor markets to new immigrants. Thus, the
geographical mobility of natives does not appear to be the
cause of an absence of downward pressure on the wages
and employment of native-born workers.5
Another reason immigration may fail to adversely
affect native wages and employment is that immigrants
move to regions experiencing economic growth and high
unemployment, thereby equalizing regional wages and
employment (Bartel, 1989; Bartel & Koch, 1991; Borjas,
2001; Card, 2001). Borjas hypothesizes that immigrants
are the grease on the wheel that leads to the equalization
of regional labor markets. Immigrants move to labor markets with more opportunity and therefore play an important role in improving labor market efficiency. The
literature does not support this hypothesis either. For
example, Bartel finds that immigrants have a tendency to
locate in cities with high proportions of their own ethnic
group or ethnic enclaves rather than solely maximizing
economic opportunity. In this study, we hold constant the
possibility that immigrants are flowing to regions where
employment growth is strong.
In this article, we present evidence that a reason
researchers are finding little evidence of tighter labor
markets in immigrant-magnet cities is that capital investment responds to the growth in labor. Immigration will
stimulate capital investment, increasing employment and
output in exports from immigrant-intensive industries.

Altonji and Card (1989) show that the nationwide

trend of falling employment in some industries has been
slower in high-immigrant cities, suggesting that the supply of immigrant workers has enabled low-wage industries to survive in high-immigrant cities. Industries
showing greater employment growth (or slower decline)
in high-immigrant cities include apparel, leather, agriculturecrops, furniture, miscellaneous manufacturing, and
private household services.
A study from the urban planning and public policy literatures buttresses the argument for labor growths leading to
capital 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 manufacturing has grown there, in spite of the national decline.
The shortcoming of Mullers work is its reliance on correlations between immigrant growth and economic growth
where cause and effect are impossible to separate.
Consistent with the absence of evidence of a significant drop in wage and employment rates in response to
immigrant inflows is the line of reasoning that capital
investment follows labor. This capital investment and
additional hiring may either lead to an increase in output or a shift to more labor-intensive production methods. In other words, technology may be endogenously
chosen to complement the workforce. An increase in
the relative supply of some type of labor might lead
producers to alter their production technologies to take
advantage of the new mix of worker skills. Lewis
(2003, 2004, 2005) finds that labor demand for
unskilled workers rose in cities experiencing an influx
of low-skilled workers, but manufacturing output did
not increase. In summary, the labor economics literature finds little evidence that immigrant inflows into a
MA have an adverse impact on the labor market opportunities for the native born. A consistent explanation is
that employment opportunities expand in immigrantmagnet cities because of new capital investment in
immigrant-hiring industries. Our study examines the
industrial employment response to immigrant flows but
cannot tell us whether a labor response is because of
increases in output or changes to more labor-intensive
technologieswith output left unchanged.
Our study adds to the literature on the relationship
between regional growth and immigration by examining
two industries regional growth patterns in the 1990s
computer and computer peripherals manufacturing and
electronic equipment manufacturing. We control for
factors that, aside from immigration, might influence
business relocations and differential regional expansion
and hiring decisions.

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64 Economic Development Quarterly

Data and Method

We estimate industry employment change across 276
metropolitan statistical areas (MSAs) as a function of the
growth in Hispanic and Asian immigration. Industry
employment change, for our two industries, is taken
from the County Business Patterns for 1990, 1997, and
2000 (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 consolidated
MSA (CMSA) and MSA boundary definitions used in
the 2000 Population Census, adjusting all the 1990
boundaries to be consistent with the 2000 boundaries
(U.S. Bureau of the Census, 2003). In other words, if a
firm was outside the MSA in 1990 but inside the MSA in
1997, the firm was assigned to inside the MSA in 1990.
This required that all 1990 data be gathered at the county
level and reaggregated up to match the counties included
in the 2000 MSA definitions. The two categories (MSAs
and 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, computer
peripheral equipment, calculating and counting machines,
and office machines, not elsewhere classified. SIC 367
includes the production of electronic tubes, printed circuit
boards, semiconductors and related devices, electronic
capacitors, electronic resistors, electronic coils and transformers, electronic connectors, and electronic components, not elsewhere classified.
Employment change spans from 1990 to 1997. In
1997, the U.S. Department of Commerce switched from
the SIC system to the North American Industrial
Classification System (NAICS). Two difficulties arose in
linking the SIC to NAICS code employment numbers for
SICs 357 and 367. The census provides a bridging algorithm to create consistent SIC and NAICS industry categories over time. However, where the bridging algorithm
for an industry requires collecting data at the six-digit
level of industry detail, we ran into problems. At the sixdigit level of industry detail, much of the data are suppressed at the county level, making it impossible to
create a consistent employment series for MAs over
time. In addition, even at the six-digit level of detail,
some categories were not compatible between the two
series. Both problems arose for computer manufacturing
and electronics; therefore, for both industries, we end
employment change in 1997, the last year the old code
system was in place.

The dependent variable is the change in industry employment 1990 to 1997 for computer and office equipment and
electronics manufacturing. As data become available after
2008, we will be able to use a consistent set of 1997 to 2007
NAICS data to determine whether our results can be
extended to the present. Absolute industry employment
changes are used because, in some MAs, where an industry
is underrepresented, small absolute changes result in large
percentage changes.
We hypothesize that job creation is greatest in MAs
where immigrant growth is greatest. Immigrant growth is
divided into two groups, Hispanics and Asians. The number
of foreign-born Hispanics in the United States in 2000
totaled 10 million, with 49.6% completing high school
or higher and 11.2% completing a bachelors degree or
higher. The Asian foreign born totaled 5.8 million population in 2000, with 83.8% completing a high school
diploma or higher and 44.9% completing a bachelors
degree or higher (U.S. Bureau of the Census, 2001, p. 37).
Cross-ethnic group differences in education levels, as
well as cultural differences, may explain why Hispanic
and Asian immigrants have differential impacts on
industry employment.6
We use residents aged 18 to 64 who speak Spanish or
an Asian language as their primary language at home as
our measure of immigration and immigrants region of
origin. Pearson correlations coefficients are .99 between
Asian foreign born in 2000 and a person, aged 18 to 64,
speaking an Asian language at home in 2000. The
Pearson correlation is .99 for the Latin American foreign
born in 2000 and speaking Spanish at home, aged 18 to
64. Immigrants who speak their native language at home
are more likely to be recent immigrants.7
The model includes several control variables. The literature documents the importance of agglomeration
economies for industry location and production decisions. The presence of a large labor force, a wide number
of suppliers, a rich array of support services, and welldeveloped public infrastructure increase efficiency and
should attract investment to a region (Henderson, 1988).
Agglomeration economies are composed of urbanization
economies and localization economies, each of which is
measured separately in our model. Urbanization economies
are the economies to scale or cost efficiencies that are created in larger metropolitan regions because the city offers
a large and diverse labor pool and public infrastructure.
We hypothesize that the greater the urbanization
economies, the greater the change in employment.
At some population size, diseconomies set in and an
urban area becomes too congested and living costs too high;
thus, new investment is deterred. Urbanization economies

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Howland, Nguyen / Immigration and Computer Manufacturing 65

Table 3
Data Sources: Model and Variables Used to Test the Impact of Immigration on Industry Employment
Symbol
Dependent variable
Change in employment
Independent variables
Total metropolitan area population in 1990
Population squared
Employment in industry i in 1990

Reason for Including

Empim1990-1997
TotPopm1990
Pop^2m1990
Empim1990

Employment in largest supplier

Interaction term between
MainSupim1990 and Empim1990
Change in native-born population

MainSupim1990
IEim1990

Number of Hispanic foreign born

#HISPm1990

Number of Asian foreign born

#ASIANm1990

Change in Hispanic workforce

HISPm1990-2000

Change in Asian workforce

ASIANm1990-2000

Number of Hispanics in the MA in 1980

HISPm1980

Number of Asians in the MSA in 1980

ASIANm1980

The distance to a gateway for Hispanics

The distance to a gateway for Asians

DISH
DISA

NBPm1990-2000

Captures market size or urbanization economies

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.)
Measures extent to which an industry is attraction to its largest supplier
Measures the attraction of locations with both suppliers and
other computer industries
The in-migration of the native-born population increases labor supply
and therefore increases investment and employment
Measured as total population, aged 18 to 65, speaking Spanish
at home, 1990
Measured as total population, aged 18 to 65, speaking an Asian
language at home, 1990
Measured as change in population speaking Spanish at home
who are 18 to 65 years of age
Measured as change in population speaking an Asian language at home
who are 18 years to 65 years of age
Instrumental variable, measured as the number of Hispanic foreign
born in 1980
Instrumental variable, measured as the number of Asian
foreign born in 1980
Instrumental variable: Distance to the closest border town
Instrumental variable: Distance to the closest Asian gateway,
Los Angeles, New York, or San Francisco

Note: m = metropolitan area; i = industry.

are measured by total 1990 population (TotPopm1990) and

diseconomies to scale are measured by the 1990 population
squared (Pop^2m1990). The inclusion of these agglomeration
economy variables follows the convention of regional economists (see, e.g., Henderson, 1988). The total 1990 population also captures market size. Where firms sell to final
consumers, a large market may be an attraction.
Localization economies occur when the same industry
concentrates in a region to create economies to scale. Cost
efficiencies occur when there is a shared pool of industryspecific labor and special suppliers and services.
Localization economies are measured here by total 1990
industry employment (Empim1990), the size of the industrys
most important supplier in 1990 (MainSupim1990), and an
interaction term between 1990 industry and supplier
employment (IEim1990). When a metro area has both many
supplier and industry firms, we expect the region to be
exponentially attractive to investment and hiring. Computer
and electronics manufacturings largest suppliers were
selected from the national input-output tables (Bureau of
Economic Analysis, 1997). Computer manufacturing (SIC

357) is the largest supplier to the electronics industry, and

electronics (SIC 367) is the largest supplier to the computer
and office equipment industry. In short, we expect the
change in computer manufacturing employment to be
greater where other computer firms and electronic firms
are already situated. These metro areas would be most
likely to have the kind of labor force and services that make
computer manufacturing profitable. In addition, this variable captures other attractions to the MA that are not
specifically addressed in our models.
The growth in the native labor force, 1990 to 2000, is
the final control variable (NBPm 1990-2000). We expect
industry growth to be greater in the MAs experiencing a
swelling native-born labor force. Thus, we measure the
impact of the growth of immigrant labor on industry
employment, holding constant the other factors that
could influence an industrys growth, including the size
of the MA in 1990, the size of the industry in 1990, the
availability of industry suppliers, and change in the MAs
native-born labor force from 1990 to 2000. The variables
are defined and the data sources identified in Table 3.

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66 Economic Development Quarterly

The estimated model pays particular attention to the

issue of endogeneity. If immigrants are moving to MAs
to take advantage of growth in these particular industries,
single equation models will likely overstate the effects of
immigration on industry employment. We control for
endogeneity in two ways, and both show similar results.
Model I controls for endogeneity by estimating the
change in industry employment 1990 to 1997 as a function
of the size of the immigrant labor pool at the beginning of
the decade, in 1990. There is no evidence of endogeneity
bias 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 a
change in immigrant population over the decade. In this
model, we find endogeneity bias. The growth in immigrants may be the result of local economic growth rather
than growth resulting from immigration. Even though the
coefficients are biased, we report Model II for comparison
purposes with the two-stage least squares (2SLS) model
reported in Model III. Model III controls for endogeneity
by using instrumental variables for both HISPm1990-2000
and ASIANm1990-2000. For instrumental variables to be
valid, they must be determinants of the growth in the immigrant labor force but independent of the error term. The
instrumental variables in the final Model III are the number
of Hispanic immigrant residents in the metro area in 1980
(HISPm1980), the distance of the MA to the nearest southern
border (DISHm), the number of Asian immigrants in the
metro area in 1980 (ASIANm1980), and the distance of the
MA to the nearest Asian immigrant gateway city (DISAm).
These instrumental variables meet this requirement.
Because the OLS results violate the assumptions of
homoskedasticity, the Hal White procedure for robust
regression is used to correct the standard errors in all three
models (White, 1984).8 The results are reported in Table 4.

Results
Our analysis provides evidence that Asian immigration has an effect on regional employment growth in
computer and office equipment manufacturing. For computer and office equipment manufacturing, the results on
the Asian labor force variable are robust, independent of
the included independent variables or the form of the
instrumental variable. The fact that the coefficient
(ASIANm1990) is significant in Model I and (ASIANm1990)
is statistically significant in Model III gives us confidence that the level of the Asian population in 1990 and
the growth of Asian immigrant population during the
1990s had an impact on the spatial pattern of computer
manufacturing employment.

For the electronics industry, the results are less robust

and are sensitive to the included independent variables
and the formulation of the instrumental variables. Thus,
although some formulations indicate that Asians and/or
Hispanics have an impact on the location and growth of
this industry, neither is robust enough to make a confident
argument. 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 and
local industry employment (IEim1990) indicate computer
manufacturing is decentralizing away from the largest
MAs and the traditional centers of employment concentration. This is consistent with the data shown in
Figures 1 and 2. Employment growth in computer manufacturing is positively associated with the size and
growth of the Asian labor force but not associated with
the level or growth of the Hispanic labor force or the
growth of the native-born labor force.
The results imply that for every 1,000 additional working-age Asian immigrants added to the local economy in
1990, 23 additional computer jobs were added to the economy during the next 7 years. In Model III, the coefficient
on ASIAN is significant at the 5% level, implying that
for every 1,000 Asian workers aged 18 to 64 added to an
MA, employment in computer and office equipment manufacturing increased by 68 jobs. These results are also
robust for various combinations of independent variables
and specifications of the instrumental variable. Figure 3
shows the estimated employment losses in the absence of
and with immigration, holding all other variables in the
model constant across the 10 largest MAs. Immigration
appears to have saved or created the most computer industry jobs in the Los AngelesRiversideOrange County and
the San FranciscoOaklandSan Jose MAs.
We interviewed the manager and toured a computer
assembly plant near San Diego to determine whether our
statistical analysis was consistent with assembly operations on the ground. This company is owned by a large,
multinational, foreign-headquartered computer firm.
Nearly 100% of this plants assembly line workforce is
made up of immigrants. Asians are the largest share,
along with Hispanics and Africans. The diversity of the
workforce is illustrated by the fact that 17 different languages are spoken by assembly line workers. This workforce receives on-the-job training, but formal education
requirements are limited. Some English proficiency is
required.
The company competes with low-cost offshore labor
not only through the hiring of local unskilled immigrant workers but also by hiring these workers through

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Howland, Nguyen / Immigration and Computer Manufacturing 67

Table 4
Regression Results for Computer and Office Equipment Manufacturing
Model I, OLS, Hal
White Correction

Model II, OLS, Hal

White Correction

Model III, 2SLS,

Hal White Correction

EMPm1990-1997

EMPm1990-1997

EMPm1990-1997

98.56
(73.01)
[1.35]

124.62
(66.699)
[1.86]

146.42
(87.961)
[1.66]

TotPopm1990

9.66 {5}
(0.178) {3}
[0.54]

0.19 {3}
(0.163) {3}
[1.18]

0.34 {3}
(0.335) {3}
[1.02]

Pop^2m1990

0.30 {10}*
(0.154) {10}
[1.95]

0.43 {10}*
(0.123) {10}
[3.49]

0.35 {10}*
(0.107) {10}
[3.27]

EMPim1990

0.17
(0.100)
[1.66]

0.19
(0.107)
[1.73]

0.19*
(0.097)
[1.99]

MainSupim1990

0.05
(0.040)
[0.56]

0.04
(0.082)
[0.50]

0.04
(0.075)
[0.52]

IEim1990

0.51 {5}*
(0.223) {5}
[2.30]

0.49 {5}*
(0.194) {5}
[2.55]

0.52 {5}*
(0.185) {5}
[2.91]

NBPm1990-2000

1.55 {5}
(0.572) {3}
[0.03]

0.77 {3}
(0.794) {3}
[0.96]

0.95 {3}
(0.217) {2}
[0.44]

#HISPm

3.84 {3}
(0.276) {2}
[1.39]

0.10 {2}
(0.176) {2}
[0.59]

0.76 {2}
(0.772) {2}
[0.98]

0.023*
(0.0103)
[2.24]

ASIANm1990-2000

0.048*
(0.0174)
[2.76]

0.068*
(0.0349)
[1.95]

Adjusted R2
Number of observations

.83
276

.83
276

.81
276

Dependent Variable
Constant

HISPm1990-2000

#ASIANm

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.

a temporary service. The ability to lay off and rehire

workers to match the companys fluctuating production
schedule keeps costs competitive with offshore sites.
The peak employment months are February, June, and
September, during which employment expands
approximately 250 to 750 workers. A workforce of
approximately 72 floor supervisors works year-round,

handling assembly in the off-peak periods and supervising the temporary workforce during the peak production periods.
The company hires approximately 25 native-born
workers at this facility to handle accounting and management functions. International competition remains
intense, and a corporate decision to move this assembly

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68 Economic Development Quarterly

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

50000

NJ-Long
Island
CMSA

Boston-

ChicagoGaryKenosha

San
Francisco
-Oakland-

CMSA

Sam Jose
PhiladelCMSA
phia-

Los
AngelesRiversideOrange
County
CMSA

Washington
-Baltimore
CMSA

DallasFort Worth

Worcester
- Lawrence
CMSA

CMSA

Detroit-

Wilmington
-Atlantic

Ann
Arbor Flint

City CMSA

CMSA

Houston Galveston
- Brazoria
CMSA

Number of Jobs

50000

100000

150000

200000

Actual Employment Change

Hypothetical Employment Change without Immigration, Based on Model I
Hypothetical Employment Change without Immigration, Based on Model II

Note: CMSA = consolidated metropolitan statistical area.

plant offshore looms overhead. Without this domestic

immigrant labor force, this plant could not be competitive with offshore locations.9

Additional Issues
As shown in our case study, employment estimates do
not imply that all jobs went to immigrants. When production work expands or is retained, managerial and professional jobs are created or saved as well.
We conjecture that immigrants are not significant factors in the location and retention of electronics for two reasons. The share of immigrant workers is slightly lower in
electronic components than in computer manufacturing,
with immigrants being 20% of all electronic industry
workers versus 23% for computer manufacturing (see
Table 2). Second, electronics may be heterogeneous within
the SIC classification captured by County Business
Patterns. Heterogeneity may result in employment patterns
in one sector, canceling out the pattern in other sectors.
A final caveat is that these results apply to the decade
of the 1990s. In spite of the econometric model that
attempts to hold external conditions constant, we cannot
abstract from or control for conditions that change with

time, such as the precise educational mix of the future

immigrant population, the technological and managerial
changes within these industrys production processes, and
consumer demand. The results presented here are tested
within the context of and conditions in the 1990s.
Although data from one of our two three-digit industries
supported our hypotheses, it is likely that many smaller
industries and individual firms are similarly influenced in
their location and investment decisions by the supply of
immigrant labor. The limitation of industry data at gross
levels of detail for geographical areas makes it difficult to
capture the narrower industries also affected.

Summary
Job growth in computer and office equipment manufacturing responded to the growth in the Asian labor
force. This job growth may result from output expansion,
job retention, or changes in modes of production to more
labor-intensive methods. Whichever of these mechanisms are at work, we conclude that the rapid immigration of the 1990s has led to a reallocation of employment
to MAs attracting immigrants. Computer programming
lost 48,000 jobs during the decade. Would more jobs

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Howland, Nguyen / Immigration and Computer Manufacturing 69

have been lost in the absence of Asian immigration? Our

results indicate that Asian immigration did slow the
decline in Asian-magnet cities. New capital investment
or slower decline in MAs with high rates of immigration
may be two reasons previous researchers have failed to
find evidence that immigrants have a significant adverse
impact on the employment levels and wages of native
workers. Immigration leads to job creation and retention
in occupations compatible with the skills of immigrants,
thus minimizing direct job competition between immigrants and the native born.

Some Implications for Planners

MAs attracting few immigrants are positioned to lose
an above-average share of low-skilled jobs to immigrantmagnet cities and offshore locations. These metro areas
should continue to retrain displaced workers, upgrade
industry skills to move out of the lowest skilled manufacturing, and reuse land left behind in the spatial reallocation of jobs. These metro areas should not expend public
monies on supporting low-skilled, low-wage industries
with no local future.
In MAs attracting immigrants, economic development
planners should study immigrant employing industries in
depth and begin to plan for a regional future when the
flow of low-skilled cheap labor slows. How will the metropolitan economy adjust if immigration laws are tightened, as threatened in political circles? To avoid future
economic decline, planners might build on the advantages of their growing industrial specializations.
Immigration is having an impact both on labor supply
and demand and on urban economic structure across the
United States. Whether planners are in an MA attracting
immigrants or not, their cities are likely to be affected,
and as economic development professionals we should
be discussing and debating the consequences and staying
one step ahead of the impacts.
Finally, in the debate over the costs and benefits of
immigration into the United States, one of the benefits to
be appreciated is the retention of jobs. These firms not
only pay taxes but also provide management and professional jobs to native workers.

Notes
1. Standard Industrial Classification (SIC) codes were changed to
the North America Industrial Classification System (NAICS) codes in
1997. Although some industries translated easily into NAICS codes,
this was not the case for computer manufacturing (SIC 357) and electronics (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 is
underreported.
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 immigrant
magnets experienced an out-migration of the native-born population.
This domestic out-migration was concentrated among the lower
skilled workers. Freys methodology does not, however, distinguish
between correlation and causation.
6. In a study of apparel, leather, and fruit and vegetable processing, Hispanic immigrants were significant whereas Asian immigrants
were not (see Howland & Nguyen, 2008).
7. The results were similar when we replaced language speakers
with 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 Planning
Program at the University of Maryland. She has a PhD from the
Massachusetts Institute of Technology and has published extensively
in the economic development field, most recently on the redevelopment of brownfields.
Doan Bao Luu Nguyen has a PhD from the University of Maryland,
where he is currently a postdoctoral fellow in the School of
Architecture, Planning, and Preservation. He is also assistant editor
for Real Estate Review.

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