Wednesday, July 30, 2014

Immigration Good for U.S. Economy

Immigration expands the economy’s productive capacity, stimulates investment and promotes specialization that in the long run boosts productivity says an Economic Letter published by the Federal Reserve Bank of San Francisco.

The letter written by Giovanni Peri, an associate professor at the University of California, Davis, and a visiting scholar at the FRBSF, summarizes recent research that examines the impact of immigrants on the broader U.S. economy.

The effects of immigration on the total output and income of the U.S. economy can be studied by comparing output per worker and employment in states that have had large immigrant inflows with data from states that have few new foreign-born workers,” Peri wrote.

Peri also writes that consistent with past research, there is no evidence that immigrant workers are taking jobs away from Americans.

“The impact of these immigrants on the U.S. economy is hotly debated.  Some stories in the popular press suggest that immigrants diminish the job opportunities of workers born in the United States,” Peri said in the letter.  “Economists who have analyzed local labor markets have mostly failed to find large effects of immigrants on employment and wages of U.S.-born workers.”

In his summary Peri says that this suggests the economy absorbs immigrants by expanding job opportunities rather than by displacing workers born in the United States.  Secondly, the presence of immigrants is associated with increased output per worker says Peri.

“The U.S. economy is dynamic, shedding and creating hundreds of thousands of jobs every month. Businesses are in a continuous state of flux,” Peri said.  “The most accurate way to gauge the net impact of immigration on such an economy is to analyze the effects dynamically over time.”

Federal Reserve Bank of San Francisco