The Indirect Fiscal Benefits of Low-Skilled Immigration

Authors:

Colas, Mark (University of Oregon)
Sachs, Dominik (LMU Munich)

Abstract:

Low-skilled immigrants indirectly affect public finances through their effect on native wages & labor supply. We operationalize this indirect fiscal effect in various models of immigration and the labor market. We derive closed-form expressions for this effect in terms of estimable statistics. Empirical quantifications for the U.S. reveal that the indirect fiscal benefit of one low-skilled immigrant lies between $770 and $2,100 annually. The indirect fiscal benefit may outweigh the negative direct fiscal effect that has previously been documented. This challenges the perception of low-skilled immigration as a
fiscal burden.

Keywords:

immigration; fiscal impact; general equilibrium

JEL-Classification:

H20; J31; J62; J68

Download:

Open PDF file

The Indirect Fiscal Benefits of Low-Skilled Immigration
Tagged on: