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For immediate release: December 29, 2009

Virtual Immigration Holds Up During Global Recession, Says Dallas Fed’s Economic Letter

DALLAS—Technology-driven virtual immigration has held up better than traditional physical immigration during the global recession, according to the latest issue of the Federal Reserve Bank of Dallas’ Economic Letter.

The spread of computer and telecommunications technologies in recent decades allows workers to circumvent barriers of traditional physical immigration, say W. Michael Cox, Richard Alm and Justyna Dymerska in “Labor Market Globalization in the Recession and Beyond.”

Virtual immigration moves the work rather than the workers, and it typically involves the long-distance delivery of services, the authors state.

The recession has taken a toll on both forms of immigration, but virtual immigration’s continued growth—albeit, at a slower pace—contrasts with the evidence of declines in physical immigration in 2008 and into 2009, according to the authors.

“Most likely, the difference stems from the jobs the two types of immigrants typically do,” the authors write. “Physical immigrants work in construction and other highly cyclical industries. Virtual immigrants are more likely to work in the services economy.”

The service economy is traditionally less sensitive than goods to cyclical fluctuations, largely because services aren’t subject to inventory bulges that make goods production unstable, the authors say.

Cox is a senior fellow in the Dallas Fed’s Globalization and Monetary Policy Institute and director of the William J. O’Neil Center for Global Markets and Freedom at Southern Methodist University’s Cox School of Business. Alm is a senior economics writer in the Dallas Fed’s Research Department. Dymerska is a former consultant in the Research Department.


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