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Immigration Policy and Less-Skilled Workers in the United States

Reflections on Future Directions for Reform

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Document date: January 01, 2011
Released online: January 21, 2011


This paper reviews the evidence on the effects of less-skilled immigration to the U.S., and considers the implications of this evidence for immigration reform ideas. It begins with a review of the costs of less-skilled immigration, in terms of competition to native-born American workers and fiscal costs; as well as the benefits of such immigration in the form of lower prices to consumers, higher profits for employers, and greater efficiency for the U.S. economy. The paper then reviews various reform ideas that have been proposed in Congress in recent years, and also considers a range of other ideas, that would likely raise the net benefits associated with less-skilled immigration to the U.S.

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Though comprehensive immigration reform has receded from the public and policy debate, undoubtedly at some point, the United States will have to take up a set of legislative proposals for reform of the still-dysfunctional US immigration system. The usual claims and counterclaims will be made about how legislation would affect the labor market, with advocates on all sides claiming to know its effects with virtual certainty.

In light of this, it is worth reviewing what is known from the research literature on immigration and the labor market and what has yet to be learned. I do so in this report from the personal perspective of a labor economist who has spent time in both the academic and policy worlds. As such, I have some understanding of how good policy can and should be informed by rigorous research, but I also know that policymaking in the real world often requires us to make our best judgments without all the information we would ideally like to have.

This paper focuses primarily on immigration in the labor market for less-skilled or less-educated workers in the United States — i.e., those with a high school diploma or less. There seems to be little disagreement among economists and immigration analysts more broadly that attracting and retaining more highly educated foreign "talent" would be beneficial to the US economy,2 even if these individuals compete somewhat with US-born highly educated workers and graduate students. Highly skilled immigrants clearly add to the potential for economic innovation and national competitiveness, and there seems to be little dispute among respected scholars and analysts about the potential benefits of encouraging more of them to reside here.

In contrast, stronger disagreements characterize the research on the economic costs and benefits of less-educated immigrants, both legal and unauthorized. The most divisive policy proposals in the immigration reform debate also focus on this population.

Accordingly, the report begins with a review of what I consider to be the general goals of US immigration policy, as well as the most important questions that should drive reform. It then turns to the research literature to review the extent to which these questions have or have not been convincingly answered, and also considers a range of policy proposals whose impacts we may or may not be able to predict with some precision. The paper closes with some discussion of how we should proceed on immigration reform in light of what we do and do not know on this

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Topics/Tags: | Employment | Immigrants

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