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October 2016, Volume 22, Number 4

National Academies, OECD

A September 2016 report, "The Economic and Fiscal Consequences of Immigration," estimated that immigrants generated up to $54 billion in benefits for Americans in 2015, equivalent to 0.3 percent of US GDP of $17.5 trillion in 2015. This net benefit reflects a loss in wages to US workers of $494 billion and a gain in profits of $548 billion. In the words of the report: "the immigration surplus stems from the increase in the return to capital that results from the increased supply of labor and the subsequent fall in wages."

The main beneficiaries of immigration are immigrants who earn higher wages in the US, followed by US owners of capital. Immigrants are 16.5 percent of US workers, and their presence lowered US by 5.2 percent.

The NAS report concluded that immigration bolsters "economic growth, innovation and entrepreneurship," and has "little to no" negative effects on US wages in the long term, in part because the models used to estimate immigration's impacts assume that there will be no long-run impacts on wages. The report highlighted negative impacts of newcomers on previous immigrants and US-born workers with little education, including teenagers.

Immigrants pay less in taxes than they consume in public services, and their US-born children do not close this gap because of the federal budget deficit. At the state and local levels, where laws often require balanced budgets, immigrants pay less in taxes than they consume in tax-supported services, but natives pay more in taxes than they consume in services. If the US-born children of immigrants fare as well as other US-born children, over 75 years this immigrant fiscal deficit disappears at the federal level, but persists at the state level.

The NAS report found that highly skilled workers increase the wages of US-born workers, largely because they complement US workers and "the infusion of human capital by high-skilled immigrants has boosted the nation's capacity for innovation, entrepreneurship, and technological change." The report said that the impact of foreign IT workers was "mixed."

The NAS report found slowing rates of wage convergence, meaning that newcomers to the US begin with their American journeys with a larger earnings gap than previous arrivals, and are slower to close this gap as they integrate into the US. One reason for this earnings gap is that a higher share of newcomers to the US have low levels of education. Immigrants are learning English slower than previously.

The number of foreign-born US residents rose from 24.5 million or nine percent of US residents in 1995 to 42.3 million or 13 percent in 2014. Between 1995 and 2014, the number of unauthorized foreigners doubled to 11.1 million.

OECD. The OECD published its 40th annual review of international migration in September 2016, emphasizing that 4.8 million settler migrants moved to OECD countries in 2015, the most since 2007, the boom year before the 2008-09 recession. A third of the 2015 migrants moved from one OECD country to another; two thirds were from non-OECD countries, led by China and India.

There were 120 million foreign-born residents in the 35 OECD countries in 2015, making migrants 10 percent of the 1.2 billion residents of the world's rich countries.

A record 1.6 million foreigners applied for asylum in OECD countries in 2015, including 1.3 million in Europe. A quarter were Syrians and a sixth were Afghanis. OECD countries had three million international students, including a quarter from China.

Foreign-born residents in OECD countries have lower employment rates, 60 percent compared to 65 percent for natives, and higher unemployment rates, nine compared to seven percent, with significant variation by country of origin. The OECD acknowledged growing anti-immigrant sentiments in many countries, but asserted the benefits of migration exceed its costs and urged governments to better explain immigration's benefits.

Blau, Francine, and Christopher Mackie. 2016. The Economic and Fiscal Consequences of Immigration. National Academies. www.nap.edu/catalog/23550/the-economic-and-fiscal-consequences-of-immigration OECD. 2016. International Migration Outlook 2016. www.oecd.org/migration/international-migration-outlook-1999124x.htm


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