Variations in returns to naturalization by country of origin

One of the first steps in the US naturalization process is obtaining a permanent residence visa, a.k.a. a “green card.” Current US immigration policy utilizes a quota system for visa issuance. The Department of State issues a maximum of 226,000 family-preference visas and 144,000 employment-based visas per year. Furthermore, no more than 7 percent of the visas may be issued to natives of any one independent country. Thus, immigrants from the largest source countries can experience wait times of several years before being able to acquire visas, thereby significantly slowing the time to obtaining citizenship. A growing body of literature has shown that obtaining citizenship can lead to substantial improvement in labor market outcomes. Hence, slowing the process to obtain citizenship can severely hinder an immigrant's income trajectory. Further, if returns to citizenship vary by source country, this system of visa allocation can result in an inefficient distribution of visas.

This study uses the 2013 American Community Survey to explore differences in the returns to obtaining US citizenship for immigrants from the four largest source countries relative to all other immigrants. We estimate a wage equation utilizing a multivariate regression model. We first estimate the model on all immigrants, interacting naturalization with country of origin while controlling for other wage determinants. We then estimate the model separately for each of the four oversubscribed countries of origin and all other immigrants.

We find that Chinese, Mexican, and Filipino immigrants face a wage penalty prior to naturalization, while Indian immigrants experience higher wages than other immigrants. Naturalization more than offsets the wage penalty for Chinese immigrants and partially offsets the wage penalty for Mexican and Filipino immigrants. However, naturalized Indian immigrants earn significantly less than non-naturalized Indians. Our results suggest that limiting the number of visas issued according to country of origin leads to inefficent labor market outcomes, and changes in US immigration policy that allow a greater number of immigrants to obtain citizenship can improve economic performance.