Immigration Has Overall Positive Impact on Labor Markets and the Economy

The National Academy of Science has published The Economic and Fiscal Consequences of Immigration, an exhaustive analysis of the impact of immigration on the United States.

The 2017 report, the result of efforts by a panel of experts with divergent views convened by the National Academies of Sciences, Engineering and Medicine, examined a broad range of important issues, including:

(t)o what extent do the skills brought to market by immigrants
complement those of native-born workers, thereby improving their prospects; and to what extent do immigrants displace native workers in the labor market or lower their wages? How does immigration contribute to vibrancy in construction, agriculture, high tech, and other sectors? What is the role of immigration in driving productivity gains and long-term economic growth?

Other questions arise about taxes and public spending: What are the fiscal impacts of immigration on state, local, and federal governments—do immigrants cost more than they contribute in taxes? How do impacts change when traced over the life cycle of immigrants and their children? How does their impact on public finances compare with that of the native born population? To what extent is the sustainability of programs such as Social Security and Medicare affected by immigration and immigration policy?

The report finds overall that immigrants have a net positive effect.  Among the summarized conclusions, the report states that

 immigration is integral to the nation’s economic growth. Immigration supplies workers who have helped the United States to avoid the problems facing stagnant economies created by unfavorable demographics—in particular, an aging (and, in the case of Japan, a shrinking) workforce. Moreover, the infusion by high-skilled immigration of human capital has boosted the nation’s capacity for innovation, entrepreneurship, and technological change. The literature on immigrants and innovation suggests that immigrants raise patenting per capita, which ultimately contributes to productivity growth. The prospects for long-run economic growth in the United States would be considerably dimmed without the contributions of high-skilled immigrants.

Even for workers not in high-skilled fields,  the report finds that

over a period of more than 10 years, the impact of immigration on the  wages of natives overall is very small….  To the extent that negative wage effects are found, prior immigrants—who are often the closest substitutes for new immigrants—are most likely to experience them…. The literature on employment impacts finds little evidence that immigration significantly affects the overall employment levels of native-born workers. However, recent research finds that immigration reduces the number of hours worked by native teens (but not their employment rate). Moreover, as with wage impacts, there is some evidence that recent immigrants reduce the employment rate of prior immigrants—again suggesting a higher degree of substitutability between new and prior immigrants than between new immigrants and natives.

As for fiscal impacts, the report includes this information:

An immigrant and a native-born person with similar characteristics will likely have about the same fiscal impact. Persons with higher levels of education contribute more positively to government finances regardless of their generational status. Furthermore, within age and education categories, immigrants generally have a more salutary effect on budgets because they are disqualified from some benefit programs and because their children tend to have higher levels of education, earnings, and tax paying than the children of similar third-plus generation adults.

At more than 600 pages, the report is a credible and authoritative analysis of a complex topic that too often is reduced to overly simplistic talking points, debunking myths such as the often cited “immigrants take jobs from U.S. citizens”.