Immigration and the Welfare State

16 Pages Posted: 11 Apr 2013

See all articles by Daniel T. Griswold

Daniel T. Griswold

Mercatus Center at George Mason University

Date Written: January 15, 2012


Among the more serious arguments against liberalizing immigration is that it can be costly to taxpayers. Low-skilled immigrants in particular consume more government services than they pay in taxes, increasing the burden of government for native-born Americans. Organizations such as the Center for Immigration Studies, the Heritage Foundation, and the Federation for American Immigration Reform have produced reports claiming that immigration costs taxpayers tens of billions of dollars a year, with the heaviest costs borne by state and local taxpayers. No less a classical liberal than Milton Freidman mused that open immigration is incompatible with a welfare state. Responding to a question at a libertarian conference in 1999, Friedman rejected the idea of opening the U.S. border to all immigrants, declaring that “You cannot simultaneously have free immigration and a welfare state” (Free Students 2008).

Contrary to those concerns, immigration to the United States does not pose a long-term burden on U.S. taxpayers. The typical immigrant and his or her descendants pay more in taxes than they consume in government services in terms of net present value. Lowskilled immigrants do impose a net cost on government, in particular on the state and local level, but those costs are often exaggerated by critics of immigration and are offset by broader benefits to the overall economy. And with all due respect to Milton Freidman, practical steps can be taken to allow nations such as the United States to reap the benefits of a more open immigration system while maintaining certain welfare programs for citizens.

Keywords: illegal immigration, immigration reform, lowskilled immigrants, Mexican immigrants, DREAM Act, welfare programs, welfare benefits, unemployment

JEL Classification: K37, D60, H53, H75

Suggested Citation

Griswold, Daniel T., Immigration and the Welfare State (January 15, 2012). Cato Journal, Vol. 32, No. 1, 2012, Available at SSRN:

Daniel T. Griswold (Contact Author)

Mercatus Center at George Mason University ( email )

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