The Economic and Fiscal Consequences of Immigration (2017) / Chapter Skim
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1 Introduction
1 Introduction
Pages 17-32
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From page 17... ...
According to the 1 In general in this report, the term "immigrant" is used synonymously with the term "foreign-born." In doing this, the panel follows common statistical practice for referring to the foreign-born population counted in a census or estimated by a survey as "immigrants," even though the category includes foreign students, temporary workers on H-1B and other visas, and migrants who entered the country surreptitiously or overstayed legal visas. Further, in portions of the report, such as in the fiscal analyses in Chapters 8 and 9, we distinguish between immigrant generations: the first generation (who are foreign-born)
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Part II (Chapters 4-6) assesses economic impacts of immigration, focusing on wages, employment, and labor markets generally, as well as on broader economic activity and long-run growth.
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citizen or lawful permanent resident, admitted through employer sponsorship, granted protection as refugees or asylum seekers, or originating from countries with low immigration rates to the United States (also known as diversity immigrants or greencard lottery immigrants)
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3. Growth of the unauthorized immigrant population averaged about 500,000 per year between 1990 and 2007 as a result of large inflows of new unauthorized immigrants offset by smaller outflows of those already here.
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This trend reflects current demographics (mainly an aging Baby Boom cohort reaching retirement age) , more young people going to college, and a decline in labor force participation rates of working-age adults (including a leveling off of the decades-long trend of rising labor force participation by women)
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. Although the recession officially ended in June 2009, the labor market response has been sluggish, unlike trade and industrial growth, which has direct implications for economic opportunity.
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Differences in the restrictiveness embedded in a nation's policy objectives affect the size and composition of immigrant inflows. The primary entry-purpose designations are "economic," "family reunification," "asylum and humanitarian," and "student." Family reunification is the largest avenue through which individuals qualify for admission and for lawful permanent residence in the United States, and those entering under this designation represent more than 60 percent of all legal entries.
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Together, these first three chapters set the context for the subsequent chapters, which analyze how these variables interact to affect wage, employment, and other economic and fiscal outcomes. 1.2 ECONOMIC IMPACTS The consequences of immigration for individuals already established in a receiving country, particularly those involving wage and employment prospects, are a long-standing concern to a range of stakeholders.
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Population aging is a major policy issue in part because of slowing labor force growth and a declining ratio of workers to dependents but also because, relative to other adult age groups, older people purchase fewer houses and durable goods, which drive a significant component of economic demand. The demographic profile of immigrants factors into these trends in obvious ways: One-half of the foreign-born are between the ages of 18 and 44 (about 80% are between the ages of 18 and 64)
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indicate that immigrants display entrepreneurial rates above those of the native-born population.13 1.3 FISCAL IMPACTS Part III of this report (Chapters 7-10) assesses the impact that immigration has on fiscal trends at the federal and state levels of government.
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For example, in a recent analysis of the 2013 Senate immigration reform bill by the Executive Office of the President (2013) , the Congressional Budget Office estimated that the bill's enactment could reduce the federal budget deficit by nearly $850 billion over the next 20 years, in large part due to increased work by otherwise unauthorized immigrants who would become authorized under the bill, along with greater ability to tax their earned income.
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The first-order net fiscal impact of immigration is the difference between the various tax contributions immigrants make to public finances and the government expenditures on public benefits and services they receive. The foreign-born are a diverse population, and the way in which they affect government finances is sensitive to their demographic and skill characteristics, their role in labor and other markets, and the rules regulating accessibility and use of government-financed programs.
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These age and life-cycle variations in fiscal impacts are only realized over the course of many years. When considering alternative scenarios, it can be important to differentiate immigrants by country of origin and legal status, as individuals grouped by these characteristics experience different outcomes in the labor market and different take-up rates for government services.
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Multiple Origins, Uncertain Destinies: Hispanics and the American Future (National Research Council, 2006b) made important contributions to understanding the process of immigrant integration and its effects on families, education, the labor force, and health.
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natives and immigrants; • the labor market broadly (e.g., to what extent does immigrant labor complement and substitute for native employment) ; • budgets and fiscal health at the federal, state, and local levels; and • intergovernmental fiscal dynamics (e.g., the distribution of the budget impact across federal, state, and local entities)
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The audience for the report begins with policy makers and lawmakers at the federal, state, and local levels but extends to the general public, nongovernmental organizations, the business community, educational institutions, and the research community.
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