impact of immigration on the US economy


Immigration refers to the cross-border movement of individuals into countries where they lack citizenship to find settlement in terms of permanent residence or natural citizenship. Immigration may also be in the form of taking up job opportunities as migrant laborers. In the context of the United States, this nation hosts the highest immigration population in the world. Although, the rate of assimilation into the system in faster in the United States than in any other developed part of the world, the issue of immigration remains largely a contentious issue in terms of its impact on the US economy. This article gives an insight into the impact that immigration has caused on several aspects of the US economy.

competition in terms of skills

First, there is a significant amount of competition that immigrants offer to the existing labor market in the United States. Immigrants with similar ranges of skill sets come to fill in the deficits in the demand for labor reducing the number of available opportunities for Americans. However, there has been a counterargument for this observation, stating that these immigrants do not exist in a vacuum but also spend their salaries on homes, food, clothing and household items thus improving the local economic demand. It is this reciprocal in their expenditure that results in the establishment of new clotheslines, the construction of new buildings and the continued agricultural production to feed an ever-growing immigration population. In turn, there is the creation of more jobs with many people and sectors involved in the delivery of the goods and services demanded by the immigrants. George states that there are “numerous benefits for the employment status and the wages of natives” as a result of immigration (George 1335).
Furthermore, although there exists a significant increase in the supply of labor in the US from the immigration population, the majority of immigrants often act as complements to the jobs of American-born workers instead of replacements to their craftsmanship. This fact is due to the failure to possess the linguistic skills required for many employment venues by the less educated immigration population. Therefore, these immigrants tend to lean towards opportunities that arise in occupations involving manual and labor-intensive activities for example construction industry and agricultural-related sectors. Besides, there lacks significant justification for the reduction in the number of jobs and the cutting of wages for less-educated natives owing to the presence of less-educated immigrants in the labor market. This statement is true because less-skilled native workers leverage on their superior communication abilities and shift into professions where these skills receive more valuation for example sales and marketing and offering personal services. Moreover, highly skilled immigrants fare at a disadvantage in their pursuit for opportunities where communication is intensive and therefore result in working in technical or scientific professions. Therefore, the continued inflow of foreign skills becomes concentrated in occupations that have employed many immigrants already. Conclusively, the amount of competition offered by foreign labor to natives’ jobs and wages is less significant than the return in terms of expenditure and taxes on top of the advantage of natives to seek other opportunities.

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The wave of talent and skills

Second, the immigrant population in the USA is responsible for bringing in a wave of talent and skills and accounts for a significant share of men and women in the fields related to innovation. Amongst the top one hundred companies funded through venture capital, over 50% had at least one of their founders being an immigrant and 75% had the top research or management dockets being immigrants (Stuart 23). Additionally, there are numerous degrees awarded in the fields of science and engineering – fields that often form the fundamental pillars of innovation and the growth of employment opportunities – that go to students born abroad and in possession of student visas carrying out scholarships, internship and higher education in American institutions. Specifically, according to a report by National Science Board, 27% of all the master’s degrees earned in the disciplines of science and engineering in the year 2009 were by foreign students (National Science Board 26). Recently, there has been a significant increase in the population of foreign-born students undertaking their undergraduate programs in the USA, increasing to eighteen percent between 2010 and 2013 (National Science Board 5).
Related to innovation, there was at least one foreign-born author in three-quarters of the total number of patents form the patent-producing universities in the US (Jennifer and Marjolaine 32). Furthermore, foreign-born citizens produce these patients at rates that are double and sometimes triple that of natives. It is the presence of these immigrants in the US that have also produced positive spillovers on patenting by natives. Moreover, the states in the US with relatively high populations of foreign-born workers undergo significantly faster growth in productivity. As mentioned earlier, natives who are less skilled usually react to a high competition posed by immigrants by abandoning labor-intensive labor to seek occupations that require intensive use of language and communication skills. It is this more specialization that is responsible for greater efficiency in labor allocation and that raises incomes and productivity, not only for the natives but also for the immigrants.
Third, immigration, whether documented or undocumented, has an impact on the fiscal policies of the United States and is, therefore, a primary factor in influencing the federal budget. Statistics on immigrants and more specifically recent arrivals show that the majority of foreign-born citizens are mainly of the working-age and as such, they impose relatively lower costs on medical care and social security, two aspects of which are the largest of the federal government’s non-defense spending. Although the revenue derived from immigrants in terms of taxes is an aid to the payment for the expenditure of the defense sector, these immigrants do not create any significant costs for military operations and therefore in many ways “immigration reduces the federal tax burden of the average native” (Leighton and Brian 9).
It is a common phenomenon for immigrants to be less educated than natives. Also, the wages of natives at all ages are higher than those of their immigrant counterparts. Consequently, immigrants tend to pay less in state and federal taxes and use entitlement programs funded by the federal government such as Medicaid at higher rates than natives. However, according to Leighton and Brian (9), these immigrants have a less likelihood of receiving public assistance and even when they do receive this aid, the value of benefits in return is below average and this implies a lower cost to the federal government in relation to a comparable low-income native.
In conclusion, immigration is a win for the economy of the United States. Although there is a significant amount of competition that immigrants offer to the existing labor market in the United States, immigrants do not exist in a vacuum but also spend their salaries on homes, food, clothing, and household items thus improving the local economic demand. Also, the immigrant population in the USA is responsible for bringing in a wave of talent and skills and accounts for a significant share of men and women in the fields related to innovation. Immigration, whether documented or undocumented, has an impact on the fiscal policies of the United States and is, therefore, a primary factor in influencing the federal budget by reducing the cost to the federal government in relation to a comparable low-income native – the federal tax burden of the average native.

Work cited

George Borjas, “The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market,” Quarterly Journal of Economics 118, no. 4 (2003): 1335–1374
Stuart Anderson, “Immigrant Founders and Key Personnel in America’s 50 Top Venture-Funded Companies,” NFAP Policy Brief (December 2011).
National Science Board, Science and Engineering Indicators, 2012, pp. 2-26, available at
National Science Board, Science and Engineering Indicators, 2014, pp. 2-5, available at
Jennifer Hunt and Marjolaine Gauthier-Loiselle, “How Much Does Immigration Boost Innovation?” American Economic Journal: Macroeconomics 2, no. 2 (April 2010): 31–56.
Leighton Ku and Brian Bruen, “The Use of Public Assistance Benefits by Citizens and Non-citizen Immigrants in the United States,” Cato Working Paper No. 13, February 2013

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