The Indirect Fiscal Benefits of Low-Skilled Immigration


Mark Colas (University of Oregon)
Dominik Sachs (University of St. Gallen)


Low-skilled immigrants indirectly affect public finances through their effect on resident wages & labor supply. We operationalize this indirect fiscal effect in a model of immigration and the labor market. We derive closed-form expressions for this effect in terms of estimable statistics. An empirical quantification for the U.S. reveals an indirect fiscal benefit for one average low-skilled immigrant of roughly $750 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.


immigration; fiscal impact; general equilibrium


H20; J31; J61


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The Indirect Fiscal Benefits of Low-Skilled Immigration
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