The Impact of Immigration and Immigration Reform On the Wages of American Workers

Today, the New Politics Institute (NPI) is proud to release an economic report on the impact of immigration and comprehensive immigration reform on the wages of the American worker. The report written by NPI Fellow and Former Under Secretary of Commerce Dr. Robert J. Shapiro, presents an accurate portrait of America's immigrant population, dispels certain misconceptions about American Immigration and offers economic analysis regarding the impact of immigration, and proposed immigration reforms on wages and the economy. This report offers a much needed look at the intersection of America's economy and immigration system.

Below is a link to to the paper, after the executive summary there is an appendix which highlights some of the more pertinent information from the paper and Rob has blogged on the paper here.

Paper: The Impact of Immigration and Immigration Reform on the Wages of American Workers

Executive Summary

As the debate on comprehensive immigration reform has been rejoined, alarming amounts of misinformation are being presented as facts.  This report corrects some of this misinformation by reviewing the empirical evidence and evaluating the real economic effects of the recent waves of immigrants into the United States by analyzing the role of immigrants in our labor markets and economy.

This report presents an accurate portrait of our immigrant population, dispels misconceptions about undocumented immigrants, and reviews the evidence and analysis regarding the wage and other economic effects of both immigration and reforms to provide undocumented immigrants a path to legal status.

• Immigration Population Demographics: More than one-third of recent immigrants come from Asia and Europe, while less than 57 percent come from Mexico and Latin America. A substantially larger share of immigrants than native-born Americans lack a high school diploma; but roughly equal shares of both groups -- between 28 percent and 30 percent - hold college or graduate degrees, and more than half of immigrants from Asia are college-educated or better.

• Misconceptions about Undocumented Immigrants: Two-thirds of immigrants are naturalized citizens or legal permanent resident aliens, 4 percent have legal status as temporary migrants, and 30 percent are undocumented. While undocumented male immigrants are generally low-skilled, they also have the highest labor participation rates in the nation: Among men age 18 to 64 years, 94 percent of undocumented immigrants work or actively seek work, compared to 83 percent of native-born Americans, and 85 percent of immigrants with legal status.

• Economic Analysis on the Impact of Immigration on Wages: A careful review shows that high levels of immigration have not slowed overall wage gains by average, native-born American workers. Most studies suggest that recent waves of new immigrants are associated with increases in the average wage of native-born Americans in the short-run and with even larger increases in the long term as capital investment rises to take account of the larger number of workers.

• The Wage Impact of Reforms to Provide a Path to Legal Status for Undocumented Immigrants: The largest effects of such reforms would be felt by immigrants themselves: After the 1986 immigration reforms, wages rose by 6 percent to 15 percent for previously-undocumented male immigrants and by 21 percent for previously-undocumented female immigrants. Those reforms also increased wages of previously legal immigrants. Research also suggests that those reforms led to modest wage gains by native-born Americans.

• Other Economic Effects of Immigration: Studies have found that immigrants are 30 percent more likely to start new businesses than native-born Americans; and even immigrants without high school diplomas, who account for 31 percent of all immigrants, comprise 27 percent of immigrant business owners. Various analyses of the fiscal effects of immigration have produced mixed results on the state and local levels; but studies show that immigrants have a net positive effect on the federal budget. Moreover, immigration reform would enhance these positive fiscal effects by indirectly raising the taxable incomes of immigrants and others.