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 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.
While some policymakers have blamed immigration for slowing U.S. wage growth since the 1970s, most academic research finds little long run effect on Americans’ wages.
The available evidence suggests that immigration leads to more innovation, a better educated workforce, greater occupational specialization, better matching of skills with jobs, and higher overall economic productivity.
Immigration also has a net positive effect on combined federal, state, and local budgets. But not all taxpayers benefit equally. In regions with large populations of less educated, low-income immigrants, native-born residents bear significant net costs due to immigrants’ use of public services, especially education.
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.
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.