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Immigration

How Does Accounting for Population Change Affect Estimates of the Effect of Immigration Policies on the Federal Budget?

How Does Accounting for Population Change Affect Estimates of the Effect of Immigration Policies on the Federal Budget?

We report estimates from the Penn Wharton Budget Model (PWBM) that exempting employment-based green cards from statutory limits for applicants (and their families) who have earned a doctoral or master’s degree in a STEM field---similar to Section 80303 in H.R. 4521---would reduce federal budget deficits by $129 billion from 2025 to 2034. In contrast, a conventional budget estimate, which would include projected increases in federal spending but not the effect of a larger population on federal tax revenues, shows an increase in federal deficits of $4 billion.

Budgetary Effects of Granting Green Cards to Immigrants with Advanced STEM Degrees

Budgetary Effects of Granting Green Cards to Immigrants with Advanced STEM Degrees

PWBM estimates that exempting from immigrants with advanced STEM degrees from numerical limitations on green cards would reduce deficits by $129 billion over the 2025-2034 period and by $634 billion over the 2035-2044 period.

W2022-1 Immigration and the macroeconomy

H.R. 5376, Build Back Better Act: Budget and Macroeconomic Effects

H.R. 5376, Build Back Better Act: Budget and Macroeconomic Effects

PWBM estimates that H.R. 5376, the Build Back Better Act, would increase spending by $2.1 trillion over the 10-year budget window while increasing revenue by $1.8 trillion, for a 10-year deficit of $274 billion. By 2050, the proposal would decrease GDP by 0.2 percent, relative to current law.

The Macroeconomic Effects of the August 2021 Senate Budget Reconciliation Package

The Macroeconomic Effects of the August 2021 Senate Budget Reconciliation Package
  • Drafting a budget from the August 2021 Senate reconciliation framework that satisfies the Senate rules of reconciliation (“Byrd Rule”) will require a decrease in new outlays or a large increase in revenues (or both) after the standard 10-year budget window.

  • One such potential reduction in spending would allow the new non-healthcare related discretionary spending provisions to expire after 2031.

  • With this reduced spending in 2031, we project that the reconciliation package will decrease GDP by 4.0 percent in 2050. Without this spending decrease (and where the Byrd Rule is not satisfied), we project a 4.8 percent fall in GDP in 2050.

Effects of President Biden’s Unauthorized Immigrant Legalization Proposal on SNAP and Payroll Tax

Effects of President Biden’s Unauthorized Immigrant Legalization Proposal on SNAP and Payroll Tax

PWBM projects that the legalization provisions of the U.S. Citizenship Act proposed by President Biden would increase per capita spending on the Supplemental Nutrition Assistance Program (SNAP) by 1.2 percent in 2030 and 0.8 percent 2050 relative to the current policy baseline. Per capita payroll taxes would decrease by 0.1 percent relative to the current policy baseline.

Demographic and Economic Effects of President Biden's Proposal to Legalize Immigrants

Demographic and Economic Effects of President Biden's Proposal to Legalize Immigrants

PWBM projects that by 2050, the legalization provisions of the U.S. Citizenship Act proposed by President Biden would increase the size of the U.S. population by 4.21 percent, increase GDP by 0.5 percent, but decrease GDP per capita by 0.2 percent. More specific legalization proposals targeted at farm workers, DACA recipients, and essential workers would each increase GDP per capita by 0.1 percent in 2050.

Macroeconomic effects of Biden’s immigration policy

Macroeconomic effects of Biden’s immigration policy

Using PWBM’s dynamic model, we show the macroeconomic effects of Presidential candidate Biden’s immigration proposal. By 2050, GDP increases by 1.7 percent in 2050 relative to current law while GDP per capita stays the same.

PWBM Analysis of the Biden Platform

PWBM Analysis of the Biden Platform

Presidential candidate Joe Biden’s campaign has released a substantial list of policy proposals. PWBM finds that over the 10-year budget window 2021 – 2030, the Biden platform would raise $3.375 trillion in additional tax revenue and increase spending by $5.37 trillion. Including macroeconomic and health effects, by 2050 the Biden platform would decrease the federal debt by 6.1 percent and increase GDP by 0.8 percent relative to current law. Almost 80 percent of the increase in taxes under the Biden tax plan would fall on the top 1 percent of the income distribution.

The Effects of Immigration Trends on the U.S.

Yahoo Finance editor Adriana Belmonte reports on the effects of increasing immigration on the American workforce. Belmonte cites PWBM’s interview on Knowledge@Wharton Business Radio SiriusXM 132, along with a policy brief written by Georgetown University professor Harry Holzer and the U.S. Census data, to illustrate the effects of increasing immigration on the U.S. economy. She refers to PWBM to demonstrate that increased immigration can lead to a rise in GDP.

Projections for the Evolution of the Unauthorized Immigrant Population in the United States

PWBM projects the number of unauthorized immigrants to fall from a peak of 4 percent of the U.S. population in 2007 to under 2.5 percent in 2050. In recent years, fewer unauthorized immigrants have arrived from Mexico while more have arrived from Central America. PWBM projects that future growth of the population of unauthorized immigrants will be driven by visa overstays.

Projections for the Evolution of Naturalized Citizens in the United States

PWBM projects that by 2050 one in ten U.S. citizens will be foreign-born, up from 7 percent today. We account for different historical naturalization patterns of immigrants from different countries, including the time immigrants reside in the U.S. Thus, this increase reflects shifts in the origins of lawful immigrants. In particular, we project that the shift away from immigrants arriving from Mexico and toward immigrants arriving from Asia to continue.

The Effects of Changes to Immigration Policy on the United States’ Population

We project that increasing annual net legal immigration leads to a younger and more educated U.S. population. These population changes are likely to have a positive impact on entitlement finances and tax burdens relative to current policy. In contrast, decreasing annual net legal immigration likely has the opposite effects.

2020 Presidential Campaign Proposals for Immigration Policy: Indicators of the Economic Impact on Each State

Introducing PWBM’s Interactive 2020 Campaign Issue State Maps. We use data to inform people about the impact of campaign proposals on their states. Here we present six indicators focused on immigration policy for each state. Although PWBM has shown that increasing immigration boosts economic growth for the U.S. as a whole, these indicators imply that the impact of changes to immigration policy on a state will depend on the demographics of that state.

Immigration Policy: 2020 Presidential Campaign State-Level Economic Indicator Map

Use data to get information about the impact of campaign proposals on states. Examine six indicators focused on immigration policy for each state. See the percent of the population that is foreign-born, the percent of the foreign-born population with a bachelor’s or advanced degree compared with the percent of the native-born with a bachelor’s or advanced degree, the old-age dependency ratio, the child dependency ratio, and percent of the foreign-born population that is unauthorized for the U.S. and each state.

Why Are Recent Immigrants Better-Educated Than Ever Before?

In a previous blog post, I described two significant changes in the characteristics of newly arriving immigrants (legal and unauthorized) to the U.S. between 1997 and 2017. First, the share of recent immigrants aged 25 and older who had bachelor’s or advanced degrees rose from 30 percent to 48 percent. Second, the origins of new immigrants to the U.S. shifted dramatically, as immigration from Mexico and Europe declined in importance while immigration from Asia and Africa grew. In this post, I examine the relationship between these two changes.

Recent Immigrants Are Better-Educated Than Ever Before

From 1997 to 2007, a newly arrived adult immigrant to the United States was about as likely to have a college degree as to have not finished high school. During that period, each group accounted for about one third of new arrivals (including both legal and unauthorized immigrants). Over the decade since 2007, those odds changed dramatically. The share of recent immigrants with a college degree grew by nearly 50 percent, while the share without a high school degree fell by a similar proportion (see Figure 1). By 2017, a recently arrived immigrant was almost three times as likely to have a college degree as to have not finished high school.

The RAISE Act: Effect on Economic Growth and Jobs

The RAISE Act:  Effect on Economic Growth and Jobs
  • The RAISE Act, a bill recently introduced by Senators Tom Cotton and David Perdue and endorsed by President Trump on Aug 2, 2017, would reduce legal immigration while increasing the portion of new legal immigrants that are highly skilled.
  • By 2027, our analysis projects that RAISE will reduce GDP by 0.7 percent relative to current law, and reduce jobs by 1.3 million. By 2040, GDP will be about 2 percent lower and jobs will fall by 4.6 million.
  • Despite changes to population size, jobs and GDP, there is very little change to per capita GDP, increasing slightly in the short run and then eventually falling.

The Penn Wharton Budget Model’s Immigration Policy Simulator

The Penn Wharton Budget Model’s Immigration Policy Simulator

Click Here for Interactive Simulation

Click Here for a Video Demonstration of the Simulator

  • The Penn Wharton Budget Model’s Immigration Policy Simulator allows users to see the results of three policy options and combinations of those options, for a total of 125 policy combinations. Policies can be simulated on a standard static basis or on a dynamic basis that includes macroeconomic feedback effects.
  • Shifting the mix of legal immigrants toward college graduates has little impact on employment and only slightly increases GDP. Legalization of undocumented workers slightly reduces employment and has a negligible impact on GDP. Deportations, however, substantially reduce both employment and GDP.
  • The largest positive impact on employment and GDP comes from increasing the net flow of immigrants.

Population Aging

Population Aging
  • As in many of the world’s developed nations, America is undergoing a momentous increase in the share of older individuals in the population, or “population aging.”

  • Population aging will continue throughout this century because of baby-boomer retirements, longer lifespans due to declining mortality, and fewer newborns from reduced fertility.

  • Sustained population aging will pose a significant fiscal challenge: How best to provide funding for adequately supporting older generations’ consumption and health care.