Immigration effect on U.S. economics

The United States has been considered the birthplace of millions of refugees from all over the world. It’s been like that for decades, and various measures have been put in order to limit their numbers even though they don’t seem to succeed (Ehrenberg and Smith, 2016). As a result, the number of immigrants in the United States has continued to climb per year since 1970. As this figure rises, the number of children born to foreign-born children begins to rise. Debates have been held focusing on the socio-cultural problem, such as increased violence, but the most dominant and controversial factor is the economy of the region. The economic effects of immigration in the United States have brought controversy to many economists leading to research in order to determine the truth. Effects on employment, wages as well as the market share have been considered in the research (Llull, 2017). While some people tend to propose that the presence of immigrants in the United States negatively affects the economy, research has clear indications that foreign-borns promote the economy of the State.

The State of Immigrants in the United States

As of 2015, more than four million immigrants were living in the United States as pointed out by Card and Peri (2016.) By then, their number presented 13.5 percent of the total population in the country. In addition, immigrants also housed 40.6 million children who are born on American Soil. Their total percent equals 25 percent of the total population. The number of legal immigrants approximates to 75 percent, together with their children. The aliens, in their high population, all require jobs and employment in order to sustain themselves as well as their children. However, employment depends on the level of education that one has as well as the period immigrants stay in the United States. This is because some of them do not know how to speak English and therefore, they are not so competitive. The jobs they acquire are those that do not require skills.

There is also concern about the number of illegal new arrivals in the United States because of the economic drain they cause the government. In 2014, the number of illegal immigrants in the United States was estimated to be 11 million as pointed out by Card and Peri (2016). This amounts to 3.5 percent of the total population in the country. Eight million of these illegal immigrants are in the workforce, leaving the rest to be a burden on the society. Although illegal immigrants are not eligible for social security benefits when they retire, some of them are faithful in paying their taxes as asserted by Ehrenberg and Smith (2016). This is a positive aspect towards promoting the economy of the United States since taxes enable citizens to acquire better services.

Immigration Impact on Employment

The presence of illegal immigrants has raised concerns in the economic society since most of them have jobs that sustain them In the United State as pointed out by Dustmann, Schönberg, and Stuhler (2017). Some of the immigrants cross the border illegally while others fail to return to their country after the expiration of their visas. Their presence has always been seen as a threat to the employment of natives who also require jobs to sustain themselves. Some facts need to be considered in order to determine whether or not immigrants pose a threat to the availability of jobs especially to the natives in the country. These facts should be able to provide reliable evidence.

First, immigrants are less educated and therefore do not offer much competitiveness to native-born Americans according to Card and Peri (2016). Carl and Peri (2016) add that approximately 29 percent of the immigrants have a college degree as compared to 30 percent of the native-born. Considering to their percentage population in the United States, it would be true to argue that immigrants do not decrease the level of employment in the country. The number of immigrants who hold only a high school diploma is also comparatively large, estimated at 25 percent. This makes them hold jobs such as construction and taxi driving in the country which are not so much loved by natives.

The increase in the working-age population of the native-born Americans is also very high compared to that of the immigrants. As of 2013, the increase since 2000 was 8.8 million for the immigrants which was lower in comparison to 16.4 million for the native-born Americans (Llull, 2017). Therefore, 65 percent of the increase in working age population is accounted for by natives. Despite this contrast, the net gain in employment went to the immigrants as pointed out by Card and Peri (2016). In 2013, 5.3 more immigrants were holding jobs as compared to the year 2000.

Growth of Labor Market in the United States

Some scholars estimate that the increase in the number of immigrants in the United States causes a decrease in wages paid to the Americans. However, using economic logic, increase in labor supply leads to an increase in demands for goods and services (Dustmann, Schönberg and Stuhler, 2017). This, in turn, results into an increase in production in the market. With this kind of an economic view, increase in the number of immigrants only causes an increase in the demand for goods and services. Research also indicates that the elevated number of immigrants cause a significant increase in the supply of labor (Ehrenberg and Smith, 2016). Consequently, firms end up enhancing investment in order to offset any reduction in per worker capital. This ensures that average wages do not fall in the long-run. Therefore, the wage levels do not change because of the balance obtained by the principal of labor and investment.  In addition, no displacement occurs since the quantity of labor is shifted to the new jobs created by the presence of immigrants in the country.

Research has also indicates that immigrants are always imperfect substitutes for the native-born Americans workers in the country and therefore they do not impact on the labor market negatively (Dustmann, Schönberg and Stuhler, 2017). This is because a big percentage of the immigrants cannot compete for the same jobs as the native-born Americans. Significantly, they do not lower the wages of Americans in jobs due to lack of competition. On contrary, most immigrants compete for jobs with the old immigrants. In return, the wages of the old immigrants reduce due to the surge in immigration.

New immigrants are willing to work for lower wages and at the same time, investors are willing to pay less for more labor. This affects the immigrants who sequentially receive lesser wages which digresses proportionately with increase in their population. This has happened over the last few decades. In addition, a growing economy, the United States being one of such, leads to a faster growth of wages due to increase in productivity and this translates to a general increase in the equilibrium of wage level as a result of immigration as pointed out by Llull (2017). Therefore, the long-term effect of the newcomers’ presence in the United States is an increase in wages especially on the side of natives.

The presence of immigrants in the United States also increases opportunities for the skilled Americans. This is because quite a number of immigrants are at the forefront when it comes to innovation as well as ingenuity in the as asserted by Llull (2017). Therefore, they account for a disproportionate share of patent filing as well as the creation of new jobs. Moreover, immigrants who are interested in science and technology also make a big portion of graduates in the country as pointed out by Card and Peri (2016). Therefore, some of them acquire top positions in ventures as well capital-funded firms. As a result, more jobs are created for the natives who are skilled in specific areas. Immigrants who are innovative also pose to the natives the challenge to become more productive in their work and increase their investments, a healthy competitive facet which in turn attracts more wages.

Government fiscal situation is also improved by the presence of immigrants in the United States. First, it is evident that more than 75 percent of the immigrants pay taxes which also includes the illegal immigrant population (Ehrenberg and Smith, 2016). The continued payment of takes by the immigrants improves the fiscal state of the government by a higher percentage since most of them are consistent. It is also estimated that immigrants pay more taxes than they actually consume in the government services. However, this is not the same in all places because of the mixture as well as the concentration of immigrants in the country (Llull, 2017). In areas where there is a high number of less-educated immigrants, the natives end up suffering. This is as a result of large tax burdens since the new arrivals are more likely to send their children to public schools which also raises tax burdens.

Advantages of Immigration

The market is mostly improved by the presence of immigrants in the United States. Due to the mix of goods as well as skill levels the market is widely distributed. First, most of the immigrants have families back in their mother countries and therefore, they send some portions of their income to them. They send funds out to their domestic economy in form of remittances as pointed out by Ehrenberg and Smith (2016). This is not so different from the domestic purchase of imports and in fact, the cash flows may end up circulating back to the United States in forms of exports and other related plough-backs. Secondly, just like any other workers, immigrants get paid their marginal products as pointed out by Llull (2017). This means that most of their value which is added to production in most cases benefits the native-born Americans.

Most of the empirical studies have found out that immigrants bring long-term benefits for the natives’ employment as well as wages as pointed out by Llull (2017), although these benefits may be as a result of short-term losses as well as low wages and higher unemployment at the start. It is also evident that even though high labor as a result of immigration may initially decrease wages, with time, firms increase their investments in order to restore the amount of capital afforded to workers (Dustmann, Schönberg and Stuhler, 2017). Consequently, the wages increase gradually and the economy is boosted. In the long run, the average the wages for the Americans increase because of a steady increase of capital-labor.

Although some critics such as politicians may argue that immigrants take away jobs from the American citizens, research has shown that immigrants also spend their income in the United States (Card and Peri, 2016). As part of the American population, they spend their wages on goods and services such as food and the TVs and therefore they expand the demand for the economy. An increase in demand results to increase in more jobs so as to cater for needs such as the building of homes. This means that with the increase of immigrants in the United States, the economy eventually stabilizes and an increase in jobs and wages may be a result. The economic stabilization opposes the proposition that immigration is associated with reduced number of jobs available for the natives in the country.

In studies conducted in 2009, the results indicated that the total immigration in the United States was associated with a 6 % to 10% increase in the income per worker in average (Ehrenberg and Smith, 2016). This increase occurred between 1990 and 2007. Many analysts consider the immediate effect of immigration rather than its long-term effects. There should also be a consideration of differences in the increase of wages as a result of diversity in skills. While some skills may not experience a huge increase in wages, the overall comparison over the years indicates that there is an increase in wages as a result of an increase of immigrants. In addition, Llull (2017) asserts that state and national economies are different and more dynamic as compared to the theoretical explanation. Therefore, immigration is seen to complement the levels of skill for the natives.

Conclusion

In summary, the presence of immigrants in the United States does not reduce the rates of employment nor does it cause the natives to lack jobs. Instead, it attracts more labor which increases demand as well as production in the long run. When labor supply increases in the market, the scenario is accompanied by an equal elevation in innovations as well as investments order to balance the economy as pointed out by Ehrenberg and Smith (2016).  Evidence also portrays that although immediate effects of the new arrivals might seem negative, the economy gets better with time. Therefore, the overall effects of immigration in the United States are positive in terms of increasing wages for the natives and attracting more investment and innovation, both of which increase production in the country as a whole. 

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References

Abramitzky, R., & Boustan, L. P. (2016). Immigration in American Economic History (No. w21882). National Bureau of Economic Research.

Card, D., & Peri, G. (2016). Immigration economics by George J. Borjas: a review essay. Journal of Economic Literature, 54(4), 1333-1349.

Dustmann, C., Schönberg, U., & Stuhler, J. (2017). Labor supply shocks, native wages, and the adjustment of local employment. The Quarterly Journal of Economics, 132(1), 435-483.

Ehrenberg, R. G., & Smith, R. S. (2016). Modern labor economics: Theory and public policy. Routledge.

Llull, J. (2017). The effect of immigration on wages: exploiting exogenous variation at the national level. Journal of Human Resources, 0315-7032R2.