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Immigrations Economic Impact
"Our review of economic research finds immigrants not only help fuel the Nation's economic growth, but also have an overall positive effect on the income of native-born workers." -Council of Economic Advisers Chairman Edward P. Lazear Introduction.
In 2006, foreign-born workers accounted for 15% of the U.S. labor force, and over the last decade they have accounted for about half of the growth in the labor force. That immigration has fueled U.S. macroeconomic growth is both uncontroversial and unsurprising – more totalworkers yield more total output. That immigrant workers benefit from working in the United States is also uncontroversial and unsurprising – few would come here otherwise. Assessing how immigration affects the well-being of U.S. natives is more complicated. This is because immigration’s economic impact is complex and may play out over generations, and because not all natives are alike in terms of their economic characteristics. Even in retrospect itis not easy to distinguish the influence of immigration from that of other economic forces atwork at the same time. Nor is it easy to project costs and benefits far into the future. Nonetheless, economists and demographers have made headway on many of the measurement problems. This white paper assesses immigration’s economic impact based on the professional literature and concludes that immigration has a positive effect on the American economy as a whole and on the income of native-born American workers.
Key Findings
1. On average, US natives benefit from immigration. Immigrants tend to complement (notsubstitute for) natives, raising natives’ productivity and income.
2. Careful studies of the long-run fiscal effects of immigration conclude that it is likely tohave a modest, positive influence.
3. Skilled immigrants are likely to be especially beneficial to natives. In addition to contributions to innovation, they have a significant positive fiscal impact.
General Points
• Immigrants are a critical part of the U.S. workforce and contribute to productivitygrowth and technological advancement. They make up 15% of all workers and even largershares of certain occupations such as construction, food services and health care.Approximately 40% of Ph.D. scientists working in the United States were born abroad.(Source: Bureau of Labor Statistics; American Community Survey)
• Many immigrants are entrepreneurs. The Kauffman Foundation’s index of entrepreneurial activity is nearly 40% higher for immigrants than for natives. (Source: Kauffman Foundation)
• Immigrants and their children assimilate into U.S. culture. For example, although 72% of first-generation Latino immigrants use Spanish as their predominant language, only 7% of the second generation are Spanish-dominant. (Source: Pew Hispanic Center/Kaiser Family Foundation)
• Immigrants have lower crime rates than natives. Among men aged 18 to 40, immigrants are much less likely to be incarcerated than natives. (Source: Butcher and Piehl)
• Immigrants slightly improve the solvency of pay-as-you-go entitlement programs such as Social Security and Medicare. The 2007 OASDI Trustees Report indicates that an additional 100,000 net immigrants per year would increase the long-range actuarial balance by about 0.07% of taxable payroll. (Source: Social Security Administration)
• The long-run impact of immigration on public budgets is likely to be positive. Projections of future taxes and government spending are subject to uncertainty, but a careful study published by the National Research Council estimated that immigrants and their descendants would contribute about $80,000 more in taxes (in 1996 dollars) than they would receive in public services. (Source: Smith and Edmonston)
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