Title: The Effects of Immigration on the United States’ Economy — Penn Wharton Budget Model
Headings: The Effects of Immigration on the United States’ Economy
Key Points
The Effects of Immigration on the United States’ Economy
Introduction
Figure 1: Foreign-Born Share of U.S. Population, 1850-2013
Labor Market Competition
Figure 2: U.S. Log Capital-Labor Ratio, 1948-2013
Table 1. Distribution of the Population 25 Years and Over by Educational Attainment, 2012
Table 2. Estimates of the Long-Run Wage Impact of Immigration
Productivity
Fiscal Impact
Figure 3: Age Distribution of Natives and Non-Citizen Immigrants, 2012
Conclusion

Content: This might explain why competition from new immigrants has mostly affected earlier immigrants, who experienced significant reductions in wages from the surge in immigration. In contrast, studies find that immigration has actually raised average wages of native-born workers during the last few decades. Immigrants are at the forefront of innovation and ingenuity in the United States, accounting for a disproportionately high share of patent filings, science and technology graduates, and senior positions at top venture capital-funded firms. In addition, the presence of immigrants often creates opportunities for less-skilled native workers to become more specialized in their work, thereby increasing their productivity. Immigration generally also improves the government’s fiscal situation, as many immigrants pay more in taxes over a lifetime than they consume in government services. However, native-born residents of states with large concentrations of less-educated immigrants may face larger tax burdens, as these immigrants pay less in taxes and are more likely to send children to public schools. Labor Market Competition
A popular view is that immigrants are taking jobs from American citizens. However, although immigrants increase the supply of labor, they also spend their wages on homes, food, TVs and other goods and services and expand domestic economic demand. This increased demand, in turn, generates more jobs to build those homes, make and sell food, and transport TVs. Most empirical studies indicate long-term benefits for natives’ employment and wages from immigration, although some studies suggest that these gains come at the cost of short-term losses from lower wages and higher unemployment.