Thursday, September 2, 2010

The Effect of Immigrants on U.S. Employment and Productivity

A new report published by the Federal Reserve Bank of San Francisco analyzes the net impact of immigration on the US economy. The Effect of Immigrants on U.S. Employment and Productivity shows that immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that boosts productivity in the long run.  There is no evidence that these effects take place at the expense of jobs for workers born in the United States.

The Federal Reserve's "Economic Letter" summarizes recent research by Peri (2009) and Peri and Sparber (2009), which examined the impact of immigrants on the broader U.S. economy. These studies systematically analyze how immigrants affect total output, income per worker, and employment in the short and long run. Consistent with previous research, the analysis finds no significant effect of immigration on net job growth for U.S.-born workers.  This report suggests that the economy absorbs immigrants by expanding job opportunities rather than by displacing workers born in the United States.

At the state level, the presence of immigrants is associated with increased output per worker. This increase in productivity occurs when businesses adjust their  equipment and structures to take advantage of the labor supplied by new immigrants. 

The complete report is available on the FRBSF website.