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Sunday, July 6, 2014

Economic benefits of immigration

Extensive research demonstrates that legal immigration has a substantially beneficial influence on economic performance. For example, increases in productivity following immigration lead to higher average incomes over a 7-10 year period per a study published by the Migration Policy Institute. An additional economic boost of immigration is a demand for housing that helps push up real estate prices per the Center for American Progress. Moreover, the effect of an increase in housing prices is an increase in the net worth of property holders.
Benefits of U.S. immigration
As population rises, demand for housing increases and boosts economic growth


According to the Immigration Policy Center, immigration has benefited the U.S. economy by adding an average of $150 billion per year to gross domestic product or GDP. This is further substantiated by Gordon Hanson, an Economics Professor who has taught at the University of California, San Diego. Moreover, Hanson claims that immigration increases capacity utilization or the amount of production that can occur given a certain amount of human resources. So long as the economy is functional to make use of that capacity, immigrants can therefore increase productivity or GDP.


An important economic benefit of immigration is the entrepreneurial drive that immigrants bring with them. The Council of Economic Advisors quotes Kaufman Foundation Research as stating entrepreneurial activity is 40 percent higher in immigrants than in U.S. born Americans. This means start up businesses and productivity are stronger in immigrant populations than pre-existing population. A similar benefit of immigration is the U.S. Citizenship and Immigration Services EB-5 program which benefits the economy via infusions of immigrant investor capital into commercial enterprise.


Immigration policy such as the EB-5 program is important because it can influence how effective a population of immigrants will be at improving the economy. U.S.  immigration policy gives preference to individuals who can benefit the economy. For example, according to the Congressional Budget Office or CBO, immigration preference is granted to immediate relatives, family and persons with in demand job skills. Moreover, lower preference is given to refugees, asylum seekers, and diversity initiatives. This immigration structure helps ensure new immigrants provide useful economic benefits or have the assistance of family members when becoming productive Americans. 


The economic benefits of immigration on U.S. born Americans are not always clear.  The Federal Reserve Bank of San Francisco measures economic boosts from immigration by  contrasting the benefits across states with different levels of immigration. This is a simplification however, as other economic variables such natural resources can influence an economy as well. The Council of Economic Advisors says measuring the advantages of immigration can be complex and take decades to assess. Moreover, the Migration Policy Institute states economic benefits are more easily realized during periods of economic expansion making it a less desirable policy during recessionary times.

Opponents of more open immigration policy suggest that it displaces existing workers and takes away jobs from Americans who have already established themselves. This may occur at some level and to some extent, but is also offset by the many benefits that immigration policy allows for. The increased demand for housing, capital inflow from business immigration policy and technical expertise from specialized professional immigration all have value that potentially far exceeds any economic losses that result from legal immigration programs.

Image: Raquel Baranow;  CC BY 2.0
"World & US Population (1790 - 2100)"