Immigrants Don’t Take Jobs, They Make Them

A new National Bureau of Economic Research working paper finds that, out of several possible immigration reforms, increasing the legalization rate for immigrants would create the most jobs. Conversely, deporting additional immigrants would stymie employment growth.

Economists Andri Chassamboulli (University of Cyprus) and Giovanni Peri (University of California, Davis) analyzed the effects of four different immigration reforms on job creation. In addition to increasing legalization and deportation, they looked at the effects of increasing border enforcement and greater costs to finding employment for undocumented immigrants.

The paper is the first to analyze immigration by examining how legal and undocumented immigrants alter companies’ incentives to hire. It is also the first to study the effect on native wages and account for the effect on migration incentives.

Since immigrants typically have lower skills than native-born workers, they face different employment prospects. Immigrants receive less pay and generate more profits for companies. As a result, more immigration leads to even more job creation, improving employment and wage prospects for native-born Americans. Using the same logic, restricting immigration hinders wages, profits, and job prospects for both native-born Americans and immigrants. Of the four reforms, increasing legalization of immigration most improved labor market prospects the most for both immigrants and natives.

Even though Chassamboulli and Peri’s paper used new methodology, it was not the first research to conclude that increased immigration would help the U.S. economy.

Research published in April 2013 by Robert W. Fairlie found that immigrants are almost twice as likely as native-born Americans to start businesses. For every 100,000 immigrants, 490 started a new business each month. Immigrants now compose 27 percent of entrepreneurs in the U.S., 14 percentage points higher than in 1996 when Fairlie’s research began. These businesses create more jobs, tax revenue, and economic growth—all of which generate benefits to be enjoyed by natives and immigrants alike.

The nonpartisan Congressional Budget Office conducted research on the budgetary and economic effects of the Border Security, Economic Opportunity, and Immigration Modernization Act that passed the Senate in June 2013. The proposed bill would allow more immigrants to remain in the country and create new visas for entrepreneurs and low-skilled temporary workers. It would also create additional green-cards for students with science, technology, engineering, and mathematics degrees from U.S. universities.

CBO found the reforms in the legislation would raise tax revenue and lower federal spending, causing an $897 billion reduction in the federal budget deficit over the next 20 years. CBO also found the proposed bill would boost economic output and create jobs.

The federal budget has not had a surplus since 2001, and has still not returned to pre-recession levels. Any proposal that would reduce the budget deficit without raising taxes or hurting the economy should be welcomed with open arms by both sides of the aisle.

In spite of the mounting evidence that immigration helps the economy and creates jobs, President Obama has continued to deport immigrants in record numbers. Nearly 2 million immigrants have been deported by the Obama administration, more than any administration in history. Every day, more than 1,100 immigrants are deported, enough to fill New York City’s Madison Square Garden every 18 days. President Obama’s record on immigration is so poor that The Economist magazine named him “deporter-in-chief.”

Recent economic research has reinforced the finding that immigration does not hurt overall employment for the vast majority of native-born workers nor lower economic growth. To the contrary, increased immigration, for both high- and low-skilled workers, is central to growing economies.

To get America’s economy back on its feet, Congress needs to expand legal immigration now.

Jason Russell is a research associate at Economics21, a center of the Manhattan Institute for Policy Research. You can follow him on Twitter here.