Impact of Immigration on the American Economy

Introduction

What makes America unique in respect to many other countries is it's immigrant history. For years the US has opened its doors to absorb many immigrants, something Americans pride themselves upon and glorify for good reason; if those doors were shut on our ancestors we would never have made it to where we are today. In spite of this, new research is revealing startaling news about the economics of immigration into the US. In order to preserve our heterogenious American identity and to make immigration succeed steps need to be taken to control immigration.

American Gains from Immigration, Who Gains?

To illustrate this gain lets draw a correlation between the gains from the influx of immigrants and foreign trade. If the United States imports cheap good from China or any other country with cheap labor costs, the American workers who are employed in the same sector are going to suffer. There wage will go down or they may even be fired. However, these losses are offset by the benefit to consumers who are now paying less for these goods, the result of competition. As more immigrants enter the U.S. there is going to be more competition among workers. Wages or native workers are going to fall as a reult of this competition. Howver, again thes losses are offset by the gains the fim recieves, they can employ labor at a lower wage. Consumers gain as well because they are able to buy the goods that the firm employing cheaper labor produces at a lower cost. As long as the gains exceed the losses the country will be better off.

Winners and Losers

-%70 of GDP goes to workers, the rest going to the owners of the compaines. Companies who use uskilled immigrant labor gain at the expense of the unskilled native.

(ie.) If, as stated above, %70 of GDP goes to workers, the rest to the comapnies who employ the labor, and if native born Americans constitute %90 of the population, they take home %63 of GDP. If there is a %10 increase in workers (due to immigration) and the resulting competition has lowered native GDP by %1.9, their earnings will drop by $133 billion.(George Borjas)

-Where do these lost earnings go, who wins in this situation? The users of immigrant services and the employers. They earn a chunk of the lost %133 billion.

There is a small amount to be gained from immigration, however the gain is not very signifigant, estimated at about 7 billion annually. This translates into an increase in per capita income of less that $30 a year.

Immigration Statistics

-There are an estimated 34 Million immigrants in the United States, one-third of which are illegal.

-35 percent lack health instrance.

-26 percent recieve some sort of federal benefit.

-30 percent of immigrants are Mexican, making them the largest group of U.S. immigrants. One in 20 working men is a mexican immigrant. In 1920 that number was one in 100. In 2000 63 percent of Mexican men lacked a high school diploma and 57 percent of women. 3 percent of men had a colege diploma and 7 percent of women. Thus, Mexicans found themselves in low wage jobs.

-It is estimated that native born workers lose about 133 billion a year due to immigration. That is 1.9% of American GDP.(George Borjas)

Unskilled worker inflow

The inflow of unskilled workers has two detremental affects on America.

1. Harms the economic opportunities of unskilled American workers.

2. Unskilled immigrants are likely to recieve welfare assistance. 21 precent of immigrant families recieve some type of assistance (ie. food stamps, medicaid, cash benefits.) This is bound to create a financial burden for those states with a large population of unskilled immigrants.

Impact on American unskilled workers

Due to the heavy influx of unskilled immigrants the harder it is for unskilled workers already here to advance. As the number of immigrants increases, the number of workers in the economy increases. This creates competition in the labor market, thus wages fall.

Immigration Control

What policies should be implimented?

Option 1: Points program Borjas

Who should be admitted? Those who provide economic controbution to native well being that exceedes the cost of social services provided to them? (economic standpoint)

Should favor be given to skilled workers?