Immigrant Competition Reduces Wages

Immigrant Competition Reduces Wages - BUSN 5620 Economic...

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BUSN 5620 Economic Impact of Immigration Economic Impact of Immigration
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Even though the entry of immigrants reduces the wage of comparable citizen workers, it insignificantly increases the income of the U.S. Of course, not everyone benefits equally from immigration; workers with competing skills lose, while owners of land and capital gain. It is believed that a large percentage of immigrants go on welfare, and the total cost of assistance programs for immigrants is about $56 billion, but immigrants also pay taxes. “The present value of lifetime earnings for the typical immigrant man is $380,000. With 7.6 million working immigrants (both men and women), total earnings of immigrants are at most $2.9 trillion, of which about 40 percent, or $1.2 trillion, are paid in taxes of all forms. Because 3 percent of total revenues are allocated to cash welfare benefits, immigrants pay about $36 billion ($1.2 trillion times .03) in taxes to fund welfare programs. Comparing the $36 billion that immigrants contribute to welfare to the $56 billion they consume, immigrants consume $20 billion more over their lifetimes than they contribute. Thus, the welfare system causes U.S. natives to lose about $1.1 billion per year (in present value terms). Subtracting this $1.1 billion from the $5 billion annual increase in national income, the United States benefits from immigration, but the economic gains are small”. ¹
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Based on the studies by Harvard economist George Borjas, mass immigration drives down wages in the United States and increases profits for business owners and shareholders. The wage income has been dropped of many American workers as a result
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This note was uploaded on 06/09/2011 for the course BUSINESS 5970 taught by Professor Jhon during the Spring '09 term at Webster.

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Immigrant Competition Reduces Wages - BUSN 5620 Economic...

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