President Bush’s Council of Economic Advisers Report on Immigration: Finding — On Average, U.S. Natives Benefit from Immigration

June 21, 2007

President Bush’s Council of Economic Advisers released a report (here) earlier this week on the economic impacts on immigration.

Here are some high points:

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 total workers 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 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

On average, US natives benefit from immigration. Immigrants tend to complement (not substitute for) natives, raising natives’ productivity and income. Careful studies of the long-run fiscal effects of immigration conclude that it is likely to have a modest, positive influence. 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 productivity growth and technological advancement. They make up 15% of all workers and even larger shares 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)

Thanks to Dan Sokol for steering this our way!