Effects of Immigration on the US Economy - Term Paper Example

EFFECTS OF IMMIGRATION ON US ECONOMY The immigration debate in the US, so far, has revolved around a bi-partisan reform proposal by Congress, the President’s proposal towards a path for citizenship, and the opposition to these proposals by Republican House Representatives (Chiswick et al, 2009). This opposition has centered on various concerns that such a proposal would invite more undocumented immigrants into the US, while also rewarding illegal immigrants who have already violated US laws.

While these discussions are important to have, the economy of the US is still fragile, and the main question should be what effect immigration will portend to the US economy (Chiswick et al, 2009). This paper will argue that immigration increases the overall wages and standard of living, has no negative impact on the welfare state, and contributes to economic growth. Most arguments against pro-immigration policies in the US have held that immigration leads to a reduction in wages for American citizens, particularly since a supply and demand model would indicate that more workers result in lower wages.

However, this issue is not as simple as this model holds. According to Martin (2013), “immigration adds to the population and the labor force.” On average, this leads to an increase in overall living standards for Americans through lowering prices and boosting wages. This is because immigrant workers are not all in competition for the same jobs. In deed, immigration leads to changes in the jobs that need to be filled by employers. Influx of immigrants and cheap labor makes enterprises like restaurants and farming more feasible since these firms would find it difficult to compete against foreign companies in the absence of cheap labor.

In addition, immigrants do not only bring labor to the US but also demand labor. Therefore, a larger population domestically via immigration would lead to an enlarged potential consumer base for enterprises (Chiswick et al, 2009). Another argument against allowing the influx of immigrants into the US is that an unskilled workforce will enter the US and take advantage the robust welfare state. While some studies indicate that immigrants get more welfare benefits than they actually pay in the form of taxes, Bodvarsson (2013) argues that the US welfare system is designed to dissuade immigration purely for welfare benefits.

This is because the welfare state focuses mainly on the old, rather than the poor. In addition, most of the government spending is non-rival, meaning that the government serves a larger population at minimal cost. For example, if the US population was to double in one day, the debt would stay the same, while per capita debt would decrease by 50% (Bodvarsson, 2013). As noted by Dummett, Hughes and Stephenson (2013), most immigrants in the US make sacrifices and work hard as an honor to the efforts of their parents, grandparents and great grandparents.

Thus, immigrants are able to carry their own fiscal weight, even though their tax bills are below the American average. Finally, the question on whether immigration aids economic growth is the most crucial in understanding the effect of immigration. Innovation is the most crucial factor driving economic growth and, if US firms could figure out more effective and efficient ways of doing business, there will be significant economic growth. Carter et al (2007) contends that highly skilled immigrants are important for innovation in the US.

The immigrants will be more likely to secure patents on new processes and inventions than native-born US citizens since they bring unique knowledge foreign markets. Low skilled immigrants can also help to boost the US economy by making it more efficient. They would be more willing to move to a different city to find employment than native-born US workers. Additionally, low-skilled immigrant workers also aid in making the higher-skilled end of the labor market more efficient. As more women enter the workforce as high skilled labor among native born Americans, an increase in low-skilled labor improves their efficiency by taking over everyday housework, such as child-care, cleaning, and laundry (Carter et al, 2007).

Overall, it is clear that a more liberal policy towards immigration would benefit the American economy. Although immigration will hurt low-skilled native-born Americans, benefits from immigration will be spread out amongst the American population in entirety with the costs born by a small group. Thus, on balance, immigration is good for the American economy, specifically because it increases the standard of living by increasing labor supply and product demand, has minimal effect on the welfare state, and makes the labor market and economy more efficient.

References Bodvarsson, O. B. (2013). The economics of immigration: Theory and policy. New York [u.a.: Springer. Carter, S. B., Sutch, R., & National Bureau of Economic Research. (2007). Historical perspectives on the economic consequences of immigration into the United States. Cambridge, Mass: National Bureau of Economic Research. Chiswick, C. U., Rapoport, H., & Polachek, S. W. (2009). Economics of immigration and social diversity. Bingley: Emerald Group Publishing Limited. Dummett, P.

, Hughes, J., & Stephenson, H. (2013). Life Upper intermediate. Hampshire, UK: National Geographic Learning. Martin, P. (May 01, 2013). Migration and US economic competitiveness. Migration Letters, 10, 2, 125-143.