September 30, 2017 – The widely-accepted view that immigrants have a long-term benefit on the receiving country’s economy is supported by the findings of two recent studies.
Both studies make it clear that when the immigration argument is held in purely economic terms, the only possible conclusion is that more newcomers mean greater prosperity.
The results suggest Donald Trump’s U.S. immigration crackdown will actually have a long-term negative impact on the American economy.
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Initially, new immigrants are a draw on society as they seek to establish themselves in a new country. But after that process takes place, they contribute more in the long term that they receive in the short term upon arrival.
This explains the focus, particularly in Canada, on achieving the swift integration of new immigrants. The faster they can become established; the less government support they need in the initial arrival phase.
Study One: The Economic and Social Outcomes of Refugees in the United States
As the title suggests, the first study focused purely on refugees, a group who at the surface may be viewed as the most likely to be a draw on society.
However, the paper by William Evans and Daniel Fitzgerald found that “over the first 20 years in the U.S., the average adult refugee pays taxes that exceed relocation costs and social benefits.” The paper also concluded that the younger the refugee, the more likely they were to catch up with their native-born peers in terms of education and economic success.
Evans and Fitzgerald used data from the 2010-2014 American Community Survey to create a sample of 20,000 refugees who entered the U.S. between 1990 and 2014.
Refugee Aged 18-45: First 20 Years in U.S.
Average relocation cost to state: $15,148
Average social benefits paid by state: $92,217
Average taxes paid by refugee: $128,689
The pair found that initial disadvantages experienced by refugee children were offset by their appetite for education. “Refugees who arrived as children of any age have much higher school enrollment rates than U.S.-born respondents of the same age,” the report said.
In adult refugees aged 18 to 45, the report found that despite the group being less educated and less fluent in English than native-born peers, after six years in the country they had a higher employment rate, although lower earnings.
Evans and Fitzgerald found the U.S. spends $15,148 in relocation costs and $92,217 in social benefits on an average adult refugee over their first 20 years in the country. But over the same time period, the average adult refugee pays $128,689 in taxes — $21,324 more than the benefits received.
Study Two: The Economic and Fiscal Consequences of Immigration
The second study, by the U.S. National Academies of Sciences, Engineering, and Medicine, focused more broadly on immigration over the last 20 years.
Key findings included:
- Immigration has a positive impact on the long-term economic growth of the U.S.
- The negative impact of immigrants on wages is extremely small, and mainly experienced by native workers who have not completed high school, “who are often the closest substitutes for immigrant workers with low skills”.
- In certain sub-groups, immigrants have positive wage impacts on native-born workers and other broad economic benefits.
- Little evidence exists to suggest immigrants affect the overall employment levels of native-born workers.
- First-generation immigrants are costlier to governments due to costs of educating children, but “the second generation are among the strongest economic and fiscal contributors in the U.S. population”.
“The panel’s comprehensive examination revealed many important benefits of immigration — including on economic growth, innovation, and entrepreneurship — with little to no negative effects on the overall wages or employment of native-born workers in the long term,” said Francine Blau, Frances Perkins Professor of Industrial and Labour Relations and professor of economics at Cornell University, and chair of the panel that conducted the study and wrote the report.
“Where negative wage impacts have been detected, native-born high school dropouts and prior immigrants are most likely to be affected. The fiscal picture is more mixed, with negative effects especially evident at the state level when the costs of educating the children of immigrants are included, but these children of immigrants, on average, go on to be the most positive fiscal contributors in the population. We hope our detailed analysis of the evidence will be of use to policymakers and the public as they consider this issue.”
The Canadian Example
The conclusions of these two studies are supported by empirical evidence in Canada.
A study published last year provided conclusive evidence that immigrants admitted to Canada under all programs are far more likely to start businesses than their Canadian counterparts, a key component for economic growth. Released in March 2016 and entitled Immigration, Business Ownership and Employment in Canada, the study concludes that ‘rates of private business ownership and unincorporated self-employment are higher among immigrants than among the Canadian-born population’.
Then there is the generational impact of migration. How do you measure the value added to a country’s economy by an immigrant’s children, and their children further down the line? A recent Statistics Canada study highlighted that immigrant children outperform their Canadian counterparts in terms of both high school and university graduation rates. The study found 91.6 per cent of children who arrived in Canada between 1980 and 2000 graduated high school, against 88.8 per cent of their Canadian peers. In terms of university graduation, that gap widened to 35.9 per cent of immigrants versus 24.4 per cent of Canadians.
As Canada prepares to announce its immigration levels plan for 2018 and beyond this fall, the indication is that numbers will increase beyond the base level of 300,000. The evidence suggests there is sound economic sense behind the federal government’s intention to continue to gradually increase Canada immigration levels.
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