Immigration and the economy

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Getting illegal immigrants out could actually hurt the economy, not improve it..

Granting amnesty to illegal-immigrant workers would boost the U.S. economy more than trying to deport them, according to new research that highlights a tension between Republican plans to both crack down on unauthorized workers and rejuvenate growth. A new study puts the economic contribution of the U.S.'s illegal workers at 3% of private-sector GDP 

How an Illegal-Immigrant Crackdown Could Hit U.S. Economic Growth - Real Time Economics - WSJ

While some policymakers have blamed immigration for slowing U.S. wage growth since the 1970s, most academic research finds little long run effect on Americans’ wages. The available evidence suggests that immigration leads to more innovation, a better educated workforce, greater occupational specialization, better matching of skills with jobs, and higher overall economic productivity. Immigration also has a net positive effect on combined federal, state, and local budgets. But not all taxpayers benefit equally. In regions with large populations of less educated, low-income immigrants, native-born residents bear significant net costs due to immigrants’ use of public services, especially education.

The Effects of Immigration on the United States’ Economy — Penn Wharton Budget Model

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Roughly, growth is growth of the labor force + growth of labor productivity. How are these doing? Not very well:

The economy’s potential growth rate is constrained by two factors: the growth of the labor force (dark green bars) and the pace of productivity improvements (bright blue bars). Together, the two add up to the potential growth rate. Both are extremely weak now, and neither can be changed quickly by Washington.

Donald Trump’s top economic advisers don’t want you to know this, but the only way he can fulfill his promise to get the economy growing at 3% to 4% is to give more jobs to Mexicans. It’s a matter of economics, demographics and arithmetic.

There are only two ways to get the economy to move faster over a sustained period: Hire more workers, or make the workers we have more productive. Those two factors — working harder and working smarter — determine the economy’s potential growth rate, or its speed limit. Potential growth is the sustainable level of output that the economy can supply, and right now it’s below 2%.

Sorry, Mr. Trump, but the only way to get to 3% growth is to hire more Mexicans - MarketWatch

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Ms Martinez is one of around 740,000 beneficiaries of the Deferred Action for Childhood Arrivals (DACA) policy that Barack Obama implemented in 2012 by executive action. In his 100-day plan published in October, Mr Trump vowed to reverse every one of Mr Obama’s executive actions. He could kill DACA on his first day in the Oval Office.

In his earlier stump speeches, Mr Trump repeatedly pledged to rid the country of all 11m unauthorised undocumented migrants living within its borders, the bulk of whom arrived before 2004 (see chart). He has picked the Senate’s most enthusiastic deporter, Jeff Sessions, as his attorney-general. This has alarmed DACA recipients.

A 2014 study by the University of Southern California estimated that workers who are in the state illegally make up 10% of the workforce and contribute $130bn of California’s $2.5trn gross domestic product. On December 5th, California lawmakers introduced a package of bills to obstruct mass deportation.

Donald Trump’s administration could deport millions of undocumented immigrants, using a system perfected under Barack Obama | The Economist

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The effect of immigration on growth of the working age population is even more pronounced as immigrants are usually young relative to the aging domestic population (left panel of Exhibit 2). As a result, net immigration currently accounts for virtually all of the 0.5pp trend increase in the working age population. According to Census projections, the level of the US working age population would actually fall by about 0.2% per year in 2020-2030 in the absence of immigration (Exhibit 2, right panel). The tendency for immigrants to be younger is also reflected in labor force participation data as the participation rate of foreign-born individuals (65.9%) is a bit higher than that of their native-born counterparts (62.2%).

Snap AV: immigration and the US labour force | FT Alphaville

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During Tuesday night’s address to Congress, President Donald Trump proposed adopting a merit-based immigration system to bring millions of jobs back to the United States and raise American incomes, claiming that incoming immigrants “strain” public resources and depress wages. But in order to make his case, Trump cited a report that draws the opposite conclusion, and finds that “immigrant workers have little to no negative effects on the wages or overall employment levels of native-born workers.” 

There’s one problem with the conclusion that Trump drew from the September 2016 National Academy of Sciences study. Had he actually read it, he would have known that the same study concluded that immigration is a boon to the economy and has little impact on the employment status and wages of native-born workers.

Trump draws a fake conclusion from a study that actually finds immigration is good for the economy

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DONALD TRUMP launched his presidential campaign with a promise to build a wall along the United States-Mexico border in order to stem the tide of undocumented immigration. In fact, those flows were already in steep decline long before he introduced the proposal. The number of apprehensions of people attempting to cross illegally peaked in 2000, when America′s Border Patrol made more than 1.6m arrests, over 98% of which were of Mexicans. Over the course of George W. Bush′s administration, this number dropped to around 1m annually. During Barack Obama′s presidency, the rate fell even more precipitously, averaging just 400,000 a year. Moreover, in 2016, only 47% of the apprehensions involved Mexicans.

Daily chart: How necessary is Donald Trump’s wall? | The Economist

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Unauthorized immigrants pay a larger share of their income in state and local taxes than the nation’s top earners, and immigration reform would improve state and local finances across the country, a new report from the Institute on Taxation and Economic Policy (ITEP) finds. ITEP’s findings are particularly timely and important as a growing number of states are facing budget shortfalls, and the Trump Administration considers immigration-related policy changes that could affect state and local tax revenues.

Unauthorized Immigrants Pay Greater Share of Income in State and Local Taxes Than Top Earners | Center on Budget and Policy Priorities

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For most of the past half-century, baby boomers — those born after World War Two and before 1965 — have been the main driver of the nation’s expanding workforce, but now that they’re heading into retirement only two groups of workers are projected to grow over the next two decades: immigrants and those whose parents are first-generation immigrants. “The most important component of the growth in the working-age population over the next two decades will be the arrival of future immigrants,” a new report by the Pew Research Center, a nonprofit think tank in Washington, D.C., concluded.

This is why the U.S. workforce needs immigrants more than ever - MarketWatch

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What if you had to make a choice between hunger or deportation? As the Trump era unfolds in California, fear of an Immigration and Customs Enforcement crackdown is disrupting the daily lives of immigrants and their families. In a state with 5.4 million noncitizen residents—and where nearly half of all children have at least one immigrant parent—the president’s promise to increase deportations may already be affecting the health and livelihoods of families, even those here legally, by discouraging them from turning to public-assistance programs or from working.

Why Immigrants in California Are Canceling Their Food Stamps | The Nation

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Remarkable!

What these polls have revealed is, despite fears of surging right-wing populism, we are seeing surging liberalism instead. Consider the ultra-hot button issue of immigration. In April, the NBC/Wall Street Journal poll asked the public whether “immigration helps the United States more than it hurts it, or immigration hurts the United States more than it helps it?” The response: 60 percent said it helps more than it hurts, and just 32 percent said hurts more than it helps. That is the strongest positive evaluation this poll has ever gotten on this question.

In fact, as the chart below indicates, positive feelings about immigration have generally been rising since early 2016, including through Trump’s election and beyond. And if you go back to 2005, when the question was first asked by NBC/WSJ, positive feelings today are way higher than they were back then. (In 2005, only 37 percent thought immigration helped more than it hurt.)

What right-wing populism? Polls reveal that it’s liberalism that’s surging. - Vox