Study: Immigration reform would benefit U.S. economy

January 11, 2010

Comprehensive immigration reform would add an estimated 1.5 trillion U.S. dollars to the U.S. gross domestic product (GDP) over 10 years, according to a new study released recently.

The study, entitled The Economic Benefits of Comprehensive Immigration Reform conducted by University of California, Los Angeles (UCLA) economist Raul Hinojosa-Ojeda, was published on the website of the Immigration Policy Center.

The study came shortly after a renewed commitment by the Barack Obama administration to back legislation this year that would provide a path to citizenship for an estimated 12 million illegal immigrants living in the United States.

Comprehensive immigration reform that legalizes currently unauthorized immigrants and creates flexible legal limits on future immigration in the context of full labor rights would help American workers and the U.S. economy, says the study.

Unlike the current enforcement-only strategy, comprehensive reform would raise the “wage floor” for the entire U.S. economy --to the benefit of both immigrant and native-born workers, the study says.

According to the study, the historical experience of legalization under the 1986 Immigration Reform and Control Act, or IRCA, indicates that the comprehensive immigration reform would raise wages, increase consumption, create jobs, and generate additional tax revenue.

Even though IRCA was implemented during an economic recession characterized by high unemployment, it still helped raise wages and spurred increases in educational, home and small-business investments by newly legalized immigrants, the study says.

1.5 trillion dollars in the U.S. GDP over 10 years

The study estimates that the comprehensive immigration reform would yield at least 1.5 trillion dollars in the U.S. GDP over 10 years.

This study uses a computable general equilibrium model to estimate the economic ramifications of three different scenarios: the comprehensive immigration reform that creates a pathway to legal status for unauthorized immigrants in the United States, a program for temporary workers only that does not include a pathway to permanent status, and mass deportation to expel all unauthorized immigrants and effectively seal the U.S.-Mexico border.

The model shows that the comprehensive immigration reform produces the greatest economic benefits..

According to the study, the comprehensive immigration reform generates an annual increase in the U.S. GDP of at least 0.84 percent. This amounts to 1.5 trillion dollars in additional GDP over 10 years. It also boosts wages for both native-born and newly legalized immigrant workers.

The temporary worker program generates an annual increase in the U.S. GDP of 0.44 percent. This amounts to 792 billion dollars of additional GDP over 10 years. Moreover, wages decline for both native-born and newly legalized immigrant workers.

Mass deportation reduces the U.S. GDP by 1.46 percent annually. This amounts to 2.6 trillion dollars in lost GDP over 10 years, not including the actual cost of deportation. Wages would rise for less-skilled native-born workers, but would reduce wages for higher-skilled natives, and would lead to widespread job loss, according to the study.

Legalizing the nation's unauthorized workers and putting new legal limits on immigration that rise and fall with U.S. labor demand would help lay the foundation for robust, just and widespread economic growth, the study says.

According to the study, the current enforcement-only approach to unauthorized immigration is not cost effective and has not deterred unauthorized immigrants from coming to the United States when jobs are available.

Rather, enforcement-only policies have wasted billions of taxpayer dollars while pushing unauthorized migration further underground. And these policies have produced a host of unintended consequences: more deaths among border crossers, greater demand for people smugglers, less “circular migration” in favor of more “permanent settlement” among unauthorized immigrants, and further depressed wages in low-wage labor markets.

“If we are going to create a solid recovery with good wages, we have to fix this hole that we have at the bottom of the labor market,” said the author, Raul Hinojosa-Ojeda.

“This is not about bringing in a lot of workers. This is about your neighbors and if we are better off where everybody in the economy has the ability to fight for their families and to contribute more to the economy rather than staying in the shadows,” said Hinojosa-Ojeda.

Hinojosa-Ojeda based the study in part on surveys done after the 1986 legislation that resulted in the legalization of nearly 3 million undocumented immigrants.

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