NC Budget and Tax Center

New Report Finds Impact of Immigration is Positive

The National Academy of Sciences (NAS) has just released a new report measuring the impact that immigrants have on federal and state budgets. The report follows up on a 1995 NAS study on the same topic. Since the release of the previous report, the United States immigrant population has more than doubled, from 24.5 million immigrants to 42.3 million in 2014.[1]

The issue of how immigration affects state and local costs as well as the economy overall is a pressing one where rhetoric on this topic has often trumped facts.  The authors find that in addition to the positive net benefits of immigration at the federal level, second generation immigrants produce a long-term net benefit for state and local economies, so long as states educate immigrant children.

Here are some other key findings from the report:[2]

  • Between 2020 and 2030, the only increase in our labor force population will come from immigrants and their children. Therefore, in order to sustain our labor force, a level of immigration is needed going forward.
  • Immigrant workers grow the size of the economy by approximately 11 percent each year. That would amount to approximately $2 trillion in 2016.
  • Immigrants today have more education than previous generations, making them stronger contributors to government finances than immigrants in the past.[3]
  • Second generation immigrants have an overall higher positive impact on the nation’s economy than other immigrant groups.
  • Overall, there was little impact on the economy in terms of wages and employment. The only negative impact was on native-born residents who do not hold a high school degree.

The report also adds to a growing body of research about the economic effects of immigration in North Carolina. In June, for example, the Budget and Tax Center released a report that underlined the benefits of immigration to the state’s economy. The report pointed out the contributions of immigrants as business owners, consumers and workers – pointing out that the long-run effect of immigration was the growth of most native-born workers’ wages.[4] Similar to BTC’s findings, a 2014 report from UNC’s Kenan-Flagler School of Business found that immigration produced a net fiscal surplus for the North Carolina when immigrants’ estimated public cost was subtracted from their estimated tax contributions.[5] The government’s challenge going forward is to introduce immigration policies that better support immigrants as participants in our economy and labor force, and as students in our education systems.

[1] The National Academies of Sciences, Engineering, and Medicine. (2016). The Economic and

Fiscal Consequences of Immigration. Washington, DC: The National Academies Press. doi: 10.17226/23550.

[2] The National Academies of Sciences, Engineering, and Medicine. (2016). The Economic and

Fiscal Consequences of Immigration. Washington, DC: The National Academies Press. doi: 10.17226/23550.

[3] The National Academies of Sciences, Engineering, and Medicine. (2016). The Economic and

Fiscal Consequences of Immigration. Washington, DC: The National Academies Press. doi: 10.17226/23550.

[4] McHugh, Patrick. Smart Choices in an Era of Migration. Rep. Raleigh: Budget and Tax Center, 2015. Web.

[5] Johnson, James H., Jr., and Stephen J. Appold. Demographic and Economic Impacts of International Migration to North Carolina. Rep. Chapel Hill: Kenan-Flagler Business School, 2014. Web.

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