GMF Immigration Roundtables: A View From Berlin
has been termed the “immigration surplus.”
Estimatessuggest the gain to natives’ incomes rom immigration isabout $35–$70 billion per year, which is not insignicantalthough it represents less than 0.5 percent o the $15 tril-lion U.S. economy. Consumers benet rom lower relativeprices or goods and services; investors, business owners,and landowners rom higher returns on capital and land.In cases where immigrants and natives are complements,lower prices can have ar-reaching eects. For example,research shows the immigration-induced decline in the costo child care and housekeeping has signicantly increasedthe labor supply o skilled native women.
Immigration Surplus: Education,Institutions and Spillovers
Te immigration surplus depends on, among other things,the relative skill levels o migrants, host country institu-tions, and spillover eects. I the migrant skill compositionis unlike that o natives, then immigrants are complemen-tary to most domestic workers, which means immigrantsand natives mutually supply what the other lacks. In thiscase, the immigration surplus is larger than it would be i migrants and natives were close substitutes, which is whenone can perorm the work o the other.
I capital is takeninto account, the benets o high-skilled immigration inparticular are larger. Capital represents the economy’sstock o nancial and physical assets including technology.
Cortés and Tessada (2009)
If the migrant skill compositionis unlike that of natives, thenimmigrants are complementary to most domestic workers, whichmeans immigrants and nativesmutually supply what the otherlacks.
set o recommendations arising rom the economic analysisand empirical evidence presented.
Economic Effects of Immigration
Immigration and GDP
Immigrants help power and grease the economy’s engines.
First, immigration increases the labor orce, enlarging theeconomy. Tere are 40 million immigrants in the UnitedStates, 25 million o them workers.
Although they makeup only 16.3 percent o U.S. workorce, these immigrantsaccount or a much larger share o its growth. Nearly hal o the increase in the U.S. labor orce between 1996 and 2010was the result o immigration — legal and illegal. Native-born workers’ role in workorce growth is diminishing dueto several actors, including declining labor orce partici-pation rates. As the native-born population ages over thenext 20 years, the oreign-born contribution to labor orcegrowth is expected to stay high or even increase. It will helposet 80 million baby boomers retiring rom the U.S. work-orce over the next two decades.
When immigrants ow into the labor orce, it is not just aquestion o adding more workers. As long as immigrantsdier rom natives — which they do in varying degrees— specialization occurs. Native and immigrant workerssort into the jobs and tasks that they do relatively well.For example, one recent study shows that natives have acomparative advantage in communication-intensive work and immigrants have the advantage in manual labor jobs.
Specialization increases eciency, which allows moreoutput to be produced with ewer resources. Tis boostslabor market productivity, raising economic output or GDP.Although the bulk o GDP gains go to the immigrants inthe orm o labor earnings, the native-born populationalso benets rom the immigrant inux through lowerprices and specialization in production described above.Te eect o immigration on the GDP accruing to natives
We use the terms “immigrant” and “oreign-born” interchangeably in this articleto reer to all individuals residing in the United States who were born abroad to non-U.S. parents. Immigrants thus include legal and illegal, temporary, and permanentresidents.
Social Security Administration (2012) “Annual Perormance Plan or FY 2012 andRevised Final Perormance Plan or FY 2011.” Accessed at http://www.socialsecurity.gov/perormance/2012/APP%202012%20508%20PDF.pd
Peri and Sparber (2011)