where we trace our outcome measures to an indicator of whether the person is an immigrant. Vector X controls a number of additional variables that correlate with wealth and immigration status. These variables include a square of age, number of children, and self-reported health status.10 We also include the control of years of education as an approximation of permanent income, which should be important for savings decisions. We control the census breakdown to account for the spatial grouping of immigrants in certain regions of the country. We also control Hispanic race and ethnicity. These characteristics are closely related to the source country of immigrants, and previous work has shown significant heterogeneity in migration outcomes by source country (e.g., Cobb-Clark and Hildebrand (2006); Duleep and Dowhan (2008); Favreault and Nichols (2011); Abramitzky, Boustan and Eriksson (2012)). However, we cannot focus directly on the country of origin in our analysis.11 Regressions also include fixed effects for the survey year. For most regressions, we calculate robust Huber-White standard errors grouped at the respondent level. This explains the fact that in these regressions we have multiple observations for respondents in our sample, and therefore our errors are likely to be correlated between survey waves for a particular person.12 Despite the fact that immigrants may have less than quarters of Social Security income and therefore have lower social security benefits than locals, your retirement savings could still be adequate, if they compensate for these differences with a greater accumulation of private wealth. Previous research has shown that social security and private savings can replace each other (see Feldstein (1974) and CBO (1998) for a review of this literature). In addition, the accumulation of private wealth may vary between immigrants and natives based on income due to different savings rates (resulting from different preferences for saving or different consumption and spending patterns) or because of different returns.
Undocumented immigrants` payments to social security funds become a darker affair when they are self-employed. By law, anyone who earns income in the United States is required to pay taxes, even if they violate other laws in the process. Trends in PIA, social security benefits, pension coverage and private wealth are similar for the other subsamples (married women, unmarried men and unmarried women). The main differences in stratification by sex and marital status are related to employment. Married and unmarried immigrant women are less likely to retire and are currently less likely to work with the same marital status as Canadian-born women.8 Unmarried immigrant men have similar pension and employment rates to their native-born counterparts, and they also have similar income levels. Table 2 provides summary statistics for our sample on other variables used in this analysis. Immigrants are more likely to be Hispanic, have fewer years of education, more children, and poorer self-reported health9 than Native Americans. Our interpretations of the results also do not take into account tabulation agreements, which are bilateral agreements between the United States and other countries that allow individuals to base individuals` entitlement to social security benefits on a combination of their work under the U.S. social security system and their work in their home country system (Barrick and Kestenbaum).
2013). Currently, 24 countries have these agreements with the United States. Given that most of the countries that have tabulation agreements are developed countries in Europe and Asia (including Japan and Korea), we expect immigrants affected by these agreements to have higher levels of human capital and income than immigrants from countries without such agreements. As a result, we may underestimate retirement resources at the upper end of immigrants` wealth distribution relative to the lower end. Undocumented immigrants who fall under the Child Arrivals Deferred Action Program (DACA) – that is, people who were smuggled into the country when they were minors – can receive Social Security numbers, but they still have decades before one of them reaches retirement age. Undocumented immigrants` contributions to social security funds help their finances, especially because they don`t receive benefits, says Monique Morrissey, a retirement economist at the Economic Policy Institute, a Washington-based think tank. But since „it was done on the backs of the most vulnerable people in society,“ she said, „it`s not a good thing.“ Yes, as long as they are legally located in the United States or, if they live abroad, meet the criteria listed below. Many undocumented sole proprietors, from gardeners to tech startup founders, pay taxes on self-employment through an individual tax identification number legally issued by the IRS. It would be pretty easy to pay nothing to the IRS, especially if it`s paid in cash.
But many undocumented immigrants apply to an ITIN to be in good standing with the government if there is a possibility of applying for a green card or citizenship in the future. Undocumented immigrants who pay taxes on self-employment through an ITIN also contribute to social security funds, but there are no statistics on the exact dollar amounts. Most control variables, including race, ethnicity, education and self-reported health status, are intended for the person in question. However, HRS, like most datasets, measures wealth at the family level. Therefore, our measures of wealth for married people are at the family level rather than at the individual level. In addition, our unmarried subsamples include people who are never married, divorced and widowed. When interpreting our results, it is important to remember that the composition of these groups is influenced by differences between immigrants and natives in terms of mortality, marriage and divorce. Sevak and Schmidt (2008) document lower age-specific mortality rates among immigrants than among Aboriginal people. Immigrants are less likely than Aboriginal people who have never been married, are more likely to be married, and are less likely to divorce (Grieco et al. 2012). Next, we look at pension coverage for immigrants and Indigenous workers.
These regressions are performed on the sample of HRS respondents under the age of 65 who were currently working. As shown in Table 1, married immigrant men are 11 percentage points less likely than their native-born counterparts to have a pension. Again, these differences are of great magnitude if one considers an average probability of pension coverage in the native married man who was born of 60%. The results from the „Married“ section of Table 5 show that controlling for age, health, education, census, race and ethnicity reduces the difference in the probability of pension coverage by 7 percentage points. In addition, additional years spent in the United States are narrowing the gap between immigrants and natives in pension coverage for married men. Immigrants to the United States for the 25th percentile number of years are 10 percentage points less likely to report retirement coverage, but when time spent in the country increases to the median number of years, this coverage gap narrows by half (5 percentage points). Immigrants to the United States for the 75th percentile number of years no longer show a statistically significant difference in pension coverage. For married women, the large gap in pension coverage shown in Table 1 will be completely eliminated once controls are included. For unmarried men and women, the trend in results is more similar to that of married men – a significant gross difference in pension coverage is reduced in magnitude once controls are included, but remains significant and economically significant. However, these significant differences are caused exclusively by immigrants with the fewest years of age in the United States. In Immigrant Social Security Benefits and USA Born (NBER Working Paper No.
6478), Alan Gustman and Thomas Steinmeier examine the application of the Social Security formula to immigrants and the United States.
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