What explains the economic success of black immigrants to the United States? The short answer: capitalism.
First, consider some indicators of the success of black immigrants. The census publishes income data by country of ancestry but doesn’t distinguish immigrants from people of the same ancestry born in the U.S. But data show that most black people in the U.S. who identify their ancestry with a specific country in sub-Saharan Africa or the Caribbean are immigrants and many of the rest are children of immigrants.
The average incomes of blacks in the U.S. with sub-Saharan or Caribbean ancestry are much higher than the average incomes in the countries they emigrated from: The average income of Nigerian Americans is 15 times higher than the average income of people living in Nigeria; the average income of Haitian Americans is 40 times higher; the average income of Jamaican Americans is nine times higher; and so on.
A larger percentage of black immigrants is in the labor force than is true for the U.S. population as a whole — white and black. Black immigrants are also, on average, younger and have larger families than the overall U.S. population. They are more likely to be naturalized U.S. citizens than are other immigrants.
Nigerian Americans have done particularly well, with average incomes that are actually higher than for the U.S. population as a whole. About 76% of the adult Nigerian American population is in the labor force compared with about 65% of the U.S. population. More than half of Nigerian Americans hold professional or managerial jobs compared with about 36% of the U.S. population. More than 60% of Nigerian Americans over the age of 25 have at least a bachelor’s degree compared with less than 30% of the U.S. population.
At this point, you may be thinking that these comparisons are driven by what economists call a sample selection problem: Nigerians who emigrate to the U.S. are much more likely to have already graduated from college and entered a profession before leaving Nigeria than the average person who remains in Nigeria.
The best way to avoid the sample selection problem is to compare immigrants to people with similar skills who did not emigrate. In a painstaking study, Michael Clemens of the Center for Global Development, Claudio Montenegro of the World Bank, and Lance Pritchett of Harvard did just that. They gathered data from 42 developing countries on low-skilled males aged 35 to 39 who had been in school in their home country for 9 to 12 years. They compared the wages earned by the workers who remained in their home country with the workers who emigrated to the U.S. Their results are astounding. The ratio of the average wage of a U.S. immigrant from one of these countries to the average wage of an identical worker in the home country is 5.6.
In other words, just moving an average worker from the worker’s home country to the U.S. would, without any further education or training, increase the worker’s wages by more than five times. For Ghana, the ratio is eight. For Haiti, it’s 14. For Nigeria, it’s 16.
Why would an unskilled Nigerian American earn 16 times as much as an identical worker in Nigeria? Wages are determined by worker productivity, not the whims of bosses, and productivity depends on the physical capital—machinery, computers, software — available to workers and on technology. Workers in the U.S. have much more physical capital available on their jobs than do workers in Nigeria and much better technology.
That’s the formal explanation, but let’s go deeper. Racism and capitalism both affect the economic success of black workers. There are few Whites in Nigeria, so workers there don’t encounter racism. Unfortunately, they also don’t encounter much capitalism. Although Nigeria is ostensibly a capitalist country, in practice, businesses are stifled by government regulation, high taxes, and corruption. The World Bank ranks countries on the ease of doing business in them. Nigeria ranks 131st; the U.S. ranks 6th.
In the U.S., Nigerian Americans, like other black workers, bear the burden of racism. Nigerian immigrants face other burdens as well. Although English is the official language of Nigeria, many lower-income Nigerians speak Hausa, Yoruba, or another language and aren’t fluent in English. Only about 25% of Nigerian immigrants use English as their only language. Despite these obstacles, Nigerian immigrants have taken advantage of the vibrant free market system in the U.S. to achieve a level of income the average worker in Nigeria can only dream of.
The success of black immigrants is more evidence that free markets work — that capitalism is the greatest engine of economic betterment the world has ever known. Those seeking to dismantle the free market system might ponder that fact.
Anthony O’Brien is an emeritus professor of economics at Lehigh University.
