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Immigration & wagesImmigration: Small impact on wages, employment of native-born U.S. workers

Published 6 October 2016

A new report on the impact of immigration over the past twenty years on the U.S. labor market and wages of native-born workers, found that the impact of immigration on the wages of native-born workers overall is very small. To the extent that negative impacts occur, they are most likely to be found for prior immigrants or native-born workers who have not completed high school — who are often the closest substitutes for immigrant workers with low skills. There is little evidence that immigration significantly affects the overall employment levels of native-born workers. Some evidence on inflow of skilled immigrants suggests that there may be positive wage effects for some subgroups of native-born workers, and other benefits to the economy more broadly. Immigration has an overall positive impact on long-run economic growth in the United States.

A new report from the National Academies of Sciences, Engineering, and Medicine provides a comprehensive assessment of economic and demographic trends of U.S. immigration over the past twenty years, its impact on the labor market and wages of native-born workers, and its fiscal impact at the national, state, and local levels.

NAS says that among the report’s key findings and conclusions:

  • When measured over a period of ten years or more, the impact of immigration on the wages of native-born workers overall is very small. To the extent that negative impacts occur, they are most likely to be found for prior immigrants or native-born workers who have not completed high school — who are often the closest substitutes for immigrant workers with low skills.
  • There is little evidence that immigration significantly affects the overall employment levels of native-born workers. As with wage impacts, there is some evidence that recent immigrants reduce the employment rate of prior immigrants. In addition, recent research finds that immigration reduces the number of hours worked by native teens (but not their employment levels).
  • Some evidence on inflow of skilled immigrants suggests that there may be positive wage effects for some subgroups of native-born workers, and other benefits to the economy more broadly.
  • Immigration has an overall positive impact on long-run economic growth in the United States.
  • In terms of fiscal impacts, first-generation immigrants are more costly to governments, mainly at the state and local levels, than are the native-born, in large part due to the costs of educating their children. However, as adults, the children of immigrants (the second generation) are among the strongest economic and fiscal contributors in the U.S. population, contributing more in taxes than either their parents or the rest of the native-born population.
  • Over the long term, the impacts of immigrants on government budgets are generally positive at the federal level but remain negative at the state and local level — but these generalizations are subject to a number of important assumptions. Immigration’s fiscal effects vary tremendously across states.