Immigration and Economic Growth

10 Pages Posted: 6 Apr 2013

See all articles by Gordon H. Hanson

Gordon H. Hanson

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS); National Bureau of Economic Research (NBER)

Date Written: January 1, 2012

Abstract

As the 2012 presidential campaign gets under way, there will be intense public debate about the direction of economic policy. The continuing torpor of the U.S. economy and mounting government debt oblige candidates to detail how they would improve prospects for economic growth and reduce the federal budget deficit. We are sure to hear a great deal about plans to lower taxes, reduce government regulation, improve U.S. education, and rebuild infrastructure. But it is a near certainty that no candidate will make immigration part of his or her vision for achieving higher rates of long-run economic growth. To be sure, stump speeches will contain pat pronouncements about securing American borders, restoring the rule of law, or bringing undocumented immigrants out of the shadows, depending on the candidate’s political orientation. Yet, it is a safe bet that after getting through these bullet points candidates will seek to change the subject. Immigration is a divisive issue that most national politicians prefer to avoid. President Obama checked his immigration box by making a halfhearted call for immigration reform in May 2011. That proposal was quickly buried under many more pressing items in his legislative outbox.

Ignoring immigration may make short-run political sense but it is a mistake if the goal is to build a coherent economic strategy. Immigration policy affects the pace of innovation in the U.S. economy, the supply of labor by high-skilled workers, the ability of regional economies to adjust to business cycle fluctuations, and the integrity of local, state, and federal government finances. While current policies tend to do a poor job on these counts, designing a system that would make immigration good for America is easily within reach.

Keywords: immigration and innovation, U.S. labor market, immigration and tax burden, economic growth, skilled immigrants, unskilled immigrants, illegal immigrations

JEL Classification: J15, J61, K37

Suggested Citation

Hanson, Gordon H., Immigration and Economic Growth (January 1, 2012). Cato Journal, Vol. 32, No. 1, 2012. Available at SSRN: https://ssrn.com/abstract=2245000

Gordon H. Hanson (Contact Author)

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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