Tag Archives: illegal immigration

Effects of Immigration

The United States Department of Justice filed a request to a Texas Federal Judge to allow the Obama Administration to allow for the implementation of President Obama’s immigration plan. The plan was recently blocked by a Texas judge as many people feel the plan would cause an increase in the number of undocumented immigrants, forcing many programs in the United States to incur added costs to provide education, health care and other services to these illegal immigrants. If the Obama administration is able to continue with their plan of actioning for laying the ground work for this proposal it would positively effect some four million people. Although illegal immigrants are technically not allowed in our country, I believe that they contribute positively to the well being of citizens in the United States.

Obama’s plan, according to the article, “would allow the administration to continue laying the groundwork for its Deferred Action for Parents of Americans and Lawful Permanent Residents program, which would allow about four million people currently in the country illegally to apply for deferred deportation and work authorizations.” http://www.wsj.com/articles/white-house-seeks-stay-of-ruling-on-immigration-actions-1424711188. This would allow relief for millions of illegal immigrants in the US. The fact that immigrants are already here means instead of deporting all of them, we should grant them citizenship and get them “into the system.” This would enable them to pay taxes and contribute positively to society. While there would be added costs, these costs would be largely offset by the taxes paid. Many people argue illegal immigrants are bad because they get to use public goods without paying for them or that they take jobs. The first problem would be solved by taxes. If they contributed their far share like we all do, then they would not be able to capitalize on “free” public good like parks. Regarding the second argument, I do not see many of us lining up to go work some of the worst jobs imaginable. The fact that immigrants take these jobs allow two things to happen. First, when paid, these immigrants go to local stores and spend their income in ways that positively enhance national GDP. Secondly, and arguably more importantly, illegal immigrants work jobs that must be done that no one wants, for less. This allows goods that we buy everyday to be priced cheaper. Because labor is such a large cost for any industry, employing cheap labor creates better margins for the producers, which in the end, get passed to us as consumers.

The article also states, “In its motion seeking a stay while it appeals the injunction, the Obama administration said its immigration program will allow it to focus its limited resources on deporting those who pose national security risks and threats to public safety.” This allows for the good to stay and the bad illegals to leave. The real problem lies with how far the president is allowed to go regarding his authority as president. Mr. Péndola and Ms. Benítez, two immigrants highlighted in a recent NY Times article, “now stand on two sides of a sharp divide created by disagreements over how far a president can change immigration policy by executive action.” I believe this is just another example of both parties flexing their muscles and not letting the other “win.” I hope for the sake of our country and the illegal immigrants in it, Obama is able to expand and implement this program. Because at the end of the day, we are all illegal immigrants in the United States.

 

 

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The Impact of Illegal Immigrants on the U.S Economy.

Almost every developed country in the world keeps on an eye on the number of illegal immigrants for various reasons. In the U.S., there are many illegal immigrants mainly coming from Mexico, China, and other developing countries. According to the Pew Hispanic Center’s estimation, the size of unauthorized immigrants increased from 3.5 to 11.7 million between 1990 and 2012. As the number of illegal immigrants have been significantly growing over time, it is important to understand its effect on the economy.

Immigration

Before we go any further, it is crucial to know why it is important for economists to know the composition of skills of immigrants in order to examine the effect of illegal immigrants on the labor market. This is because illegal immigrants may affect relative wages for the entire workforce. For instance, wages of unskilled native workers would decrease if the supply of unskilled migrants increases dramatically. Many research papers about unauthorized immigrants in the U.S. show that illegal immigrants are mostly less educated people than native people. However, does it necessarily mean that illegal immigrants always exacerbate the U.S. economy?

Let’s begin with the negative economic effects that are occurred by illegal immigrants. We can start examining this question by assuming that most illegal immigrants are low-skilled workers. This is because it is unlikely that high skilled immigrants are undocumented workers since it is much easier for them to get working visas. Thus, increase in the supply of migrants mostly undercut wages and take jobs from low-skilled natives. In this case, low-skilled native-born workers only have two options, which are accepting lower pay or looking for other jobs. According to labor economists, their finding suggests that illegal immigrants have lowered the wages of native born workers without high school diploma by anywhere between 0.4 to 7.4 percent. In addition, the fiscal effect of a migrant is initially negative because most illegal immigrants work in low-pay jobs, hence pay little income tax and send their children to school. Thus, undocumented workers pay a little tax but receive great benefits from the welfare including education and other government services.

Illegal immigration, however, also has a positive impact on the U.S. economy. Some economists claim that illegal immigrants lower the wage of low-skilled natives born workers but Ottaviano and Peri’s findings suggest that the effect of the immigration on wages are as following:

  1. Wages of native high school dropouts decrease only by 1.1%
  2. On average the US born wages increase by 1.8%
  3. Foreign-born wages drop by 19.8%

These findings show that the effect of illegal immigrants on the native workers’ wage is not significantly negative but only lowers the wages of foreign-born workers. This implies that manufacturing companies can make their products at cheaper prices since their hiring costs decrease as well, meaning that the price of normal goods that are consumed by average U.S. citizens also go down. In addition, the fiscal effect of a migrant becomes positive as their earnings increase. Although the fiscal impact is initially negative, it becomes greater as their children become more educated, hence earning goes up. George Mason University economist Bryan Caplan writes, “Contrary to popular stereotypes, welfare states focus on the old, not the poor. Social Security and Medicare dwarf means-tested programs. Since immigrants tend to be young, they often end up supporting elderly natives rather than ‘milking the system.’ Illegal immigrants who pay taxes on fake Social Security numbers are pure profit for the Treasury. In 2005, Social Security’s chief actuary estimated that without all the taxes paid on invalid Social Security numbers, ‘the system’s long-term funding hole over 75 years would be 10 percent deeper”, claiming that illegal immigrants are not the economic burden to the U.S.