Pro-Growth, Pro-American: How Immigration Helps All Americans Thrive

By Dr. Douglas Holtz-Eakin

Immigration expands opportunities for everyone, including the native-born.

How can immigration improve our overall standard of living?

Total income in the economy stems from the total number of workers and the average output per worker, or productivity. The pace of overall population growth will raise the number of workers, and thus raise overall income. In addition, the structure of the population—by age, gender, and education—can influence the fraction of the population at work. Growth in the labor force participation rate can, in turn, raise the rate of incomes above the rate of population growth. Plus, at higher rates of overall growth, there will be greater replacement of existing capital goods and investment in new capital goods.

How large might these effects be?

To get a feel, consider that greater immigration in the U.S. Census projections amounts to more rapid population growth of nearly 0.2 percent annually. Since labor force participation rates are higher among the foreign-born, and rates of entrepreneurship among immigrants are higher than among the native-born population, there will be a double bonus in more workers and greater productivity from immigration reform. 

Immigration reform is a tremendous economic policy opportunity

The more rapid population growth translates directly into more rapid GDP growth rates by 0.25 percent annually over the first 10 years. In addition, the bonus to labor force growth and productivity could lead the overall impact to be as much as 0.9 percentage points annually.

The upshot is that immigration reform can shape the future population, the future labor force, and the future U.S. economy for everyone. Immigration reform is a tremendous economic policy opportunity.

Dr. Douglas Holtz-Eakin is the president of the American Action Forum and a speaker at Leading the Way: An American Approach to Immigration.

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