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Patricia Hall
Professor Dennis Wilson
Econ 2020
13 April 2016
Immigration Policy and its Effects on the Economy
With primary elections happening around our country we have heard candidates speaking
about a wide variety of issue. They have spoken on everything from education to Wall Street.
One hot button topic that seems to keep coming up time and time again is immigration. Current
front runner and presumptive Republican nominee Donald Trump has become both hated and
loved for his outspoken remarks on Mexican immigrates. According to Donald Trumps website
the influx of foreign workers holds down salaries, keeps unemployment high and makes it
difficult for poor and working-class Americans including immigrants themselves and their
children to earn a middle-class wage. (Trump, 2016) With comments like these drawing such
contrasting reactions it makes people wonder, what side is right? How do immigration policies
effect our economy?
Background Statistics
To really understand the immigration situation, we first must understand the terminology
and the basic statistics. According to the United States Census Bureau they categorize foreign
born residents in four sections:
o Naturalized U.S. citizens or lawful permanent residents commonly called
immigrants.
o Temporary migrants - such as foreign students.
o Humanitarian migrants - such as refugees and asylees.
o Persons illegally present in the United States - illegal immigrants.

IMMIGRATION POLICY AND ITS EFFECTS ON THE ECONOMY

(The U.S. Census Bureau, 2013)

When most people talk about immigrants what they really mean is illegal immigrants.
Immigrants are in this country legally and have followed all the set rules to live here, illegal
immigrants have not. According to the Economic Policy Institute more than 40 million
immigrants resided in the United States as of 2012, accounting for about 13 percent of the total
U.S. population. Of these roughly 40 million immigrants, slightly less than half (46 percent) are
naturalized U.S. citizens. (Economic Policy Institute, 2014) That means there are around 11.3
million illegal immigrants currently in the United States.
Keeps unemployment high?
According to Pew Research Center while there are 11.3 million illegal immigrants or
3.5% of the U.S. population they make up 5.1% of the workforce. (Krogstad, 2015) With illegal
immigrants making up such a large chuck of the work force it is easy to see why some people
assume that means they are taking jobs from Americans, but is that true? Michael Greenstone
and Adam Looney of the Brookings Institution wrote that on average, immigrant workers
increase the opportunities and incomes of Americans". (Looney, 2012) They argued that when
low-skilled immigrant workers take on the entry level jobs that allows the worker previously in
that position to move up and expand the given field. Many economists argue that more workers
equal more business.
Holds down salaries?
It is easy to use basic logic and say when the labor supply grows it lowers wages, but that
is not always the case. In the first model below you see a very basic graph to demonstrate the

IMMIGRATION POLICY AND ITS EFFECTS ON THE ECONOMY

Graph 1 (Kane,Graph
2015)3 (Kane, 2015)Graph 2 (Kane, 2015)

labor market. When you

increase the amount of available labor you see the LS curve go to the right. That would be true if
everything else actually stayed the same but when there is an actual influx of workers there also
comes an increase in good. That demand in good shifts is shown in graph three. (Kane, 2015)

Immigration Policy and Trade

When you take a hard look at immigration policy and our economy you find that not only
does immigration not affect our economy the way many believe but having harsh immigration
policies may actually hurt our economy. Giorgio Fagiolo from the Institute of Economics and
Marina Mastrorillo from Princeton University did a study to find out if there was a correlation
between immigration policy between countries effects the amount of trade done between the
countries. They found the bilateral trade between any two countries is not only affected by the
presence of migrants from either countries, but also by their relative embeddedness in the
complex web of corridors making up the network of international human migration.
(Mastrorillo, 2014) According to George Borjas, the nation's leading immigration economist,
estimates that the presence of immigrant workers (legal and illegal) in the labor market makes
the U.S. economy an estimated $1.6 trillion each year. (Camarota, 2013)

IMMIGRATION POLICY AND ITS EFFECTS ON THE ECONOMY

Conclusion
Timothy Kane of the Hoover Institution said it well when he said when immigration
reform is done right, it will use the fact-based reality that immigrants of all skill levels are good
for the native economy, including wages, jobs, and economic growth. (Kane, 2015) We need to
look at immigration policies and reform with a fact based frame of mind and not one of fear.
When we take comments made by politicians and use that as our whole foundation of knowledge
we will often see that they have skewed the facts to fit their point of view. We all need to
research and understand what we voting for and supporting, immigration can not only help other
people find a better life but can also help our own economy.

IMMIGRATION POLICY AND ITS EFFECTS ON THE ECONOMY

References
Camarota, S. A. (2013, May). The Fiscal and Economic Impact of Immigration on the
United States. Retrieved from Center for Immigration Studies:
http://cis.org/node/4573#1
Economic Policy Institute. (2014, August 12). Facts About Immigration and the U.S.
Economy. Retrieved from Economic Policy Institute:
http://www.epi.org/publication/immigration-facts/
Kane, T. (2015, February 17). The Economic Effect Of Immigration. Retrieved from
Hoover Institution: http://www.hoover.org/research/economic-effectimmigration
Krogstad, J. M. (2015, November 19). 5 facts about illegal immigration in the U.S.
Retrieved from Pew Research Center: http://www.pewresearch.org/facttank/2015/11/19/5-facts-about-illegal-immigration-in-the-u-s/
Looney, M. G. (2012, May 4). What Immigration Means For U.S. Employment and
Wages. Retrieved from Hamilton Project:
http://www.hamiltonproject.org/papers/what_immigration_means_for_u.s._em
ployment_and_wages
Mastrorillo, G. F. (2014, May 14). Does Human Migration Affect International Trade?
A Complex-Network Perspective. Retrieved from PLOS One:
http://journals.plos.org/plosone/article/authors?
id=10.1371%2Fjournal.pone.0097331
The U.S. Census Bureau. (2013, June 19). Foreign Born. Retrieved from The U.S.
Census Bureau: http://www.census.gov/topics/population/foreignborn/about.html
Trump, D. (2016, April 1). IMMIGRATION REFORM THAT WILL MAKE AMERICA GREAT
AGAIN. Retrieved from Donald J Trump:
https://www.donaldjtrump.com/positions/immigration-reform