Description

By the latest estimates, 8.3 million workers in the United
States are illegal immigrants. Proposed policy responses range from
more restrictive border and workplace enforcement to legalization
of workers who are already here and the admission of new workers
through a temporary visa program. Policy choices made by Congress
and the president could have a major economic impact on the welfare
of U.S. households. This study uses the U.S. Applied General
Equilibrium model that has been developed for the U.S.
International Trade Commission and other U.S. government agencies
to estimate the welfare impact of seven different scenarios, which
include increased enforcement at the border and in the workplace,
and several different legalization options, including a visa
program that allows more low-skilled workers to enter the U.S.
workforce legally.
For each scenario, the USAGE model weighs the impact on such
factors as public revenues and expenditures, the occupational mix
and total employment of U.S. workers, the amount of capital owned
by U.S. households, and price levels for imports and exports. This
study finds that increased enforcement and reduced low-skilled
immigration have a significant negative impact on the income of
U.S. households. Modest savings in public expenditures would be
more than offset by losses in economic output and job opportunities
for more skilled American workers. A policy that reduces the number
of low-skilled immigrant workers by 28.6 percent compared to
projected levels would reduce U.S. household welfare by about 0.5
percent, or $80 billion.
In contrast, legalization of low-skilled immigrant workers would
yield significant income gains for American workers and households.
Legalization would eliminate smugglers' fees and other costs faced
by illegal immigrants. It would also allow immigrants to have
higher productivity and create more openings for Americans in
higherskilled occupations. The positive impact for U.S. households
of legalization under an optimal visa tax would be 1.27 percent of
GDP or $180 billion.