When immigrants become US citizens, they benefit significantly, but so do the cities in which they live. Our new analysis shows how naturalization can improve the economic well-being of immigrants and allow cities to harness the full economic contribution of immigrants.

According to our study of naturalization-eligible immigrants in 21 cities, becoming a US citizen can

• increase individual earnings by 8.9 percent, or $3,200 on average (using 2012 numbers);
• raise the employment rate by 2.2 percentage points; 
• increase homeownership by 6.3 percentage points; and
• reduce the self-employment rate by 2 percentage points. 

These earnings and employment gains would total $5.7 billion in the 21 cities we studied and could generate over $2 billion in tax revenues for federal, state, and city income and payroll taxes.

For New York and San Francisco, we conducted a detailed analysis of how tax revenue and public benefit programs would be affected if all naturalization-eligible immigrants became citizens. In New York, benefit expenditures would decline by $34 million, but annual tax revenue would rise by $789 million, for a net benefit of $823 million.

In San Francisco, expenditures on public benefits would increase by $4 million, but tax revenue would go up by $90 million, for a net benefit of $86 million. In both cities, the net fiscal impact of naturalization would be overwhelmingly positive.

Promoting citizenship

But here’s the thing. The extent to which these gains are realized depends on how many eligible immigrants become citizens.

The naturalization rate—the ratio of those naturalized to the sum of the naturalized and those eligible to naturalize—is 60 percent in the United States as a whole, and 64 percent in the 21 cities we studied. Our findings assume that all those who are eligible to naturalize do so. If only 60 percent naturalize, the gain in earnings in our 21 cities would be $3.4 billion and tax revenues would increase by $1.2 billion.

Becoming a US citizen is a deeply democratic idea. Most people who have been legal permanent residents for five years or more can become a US citizen. The wait time is shorter for some permanent residents, such as those serving in the military or those whose spouses are US citizens.

In the past few years, cities across America have being adopting programs to promote naturalization. One of the best-known is Cities for Citizenship, a multi-city initiative aimed at increasing citizenship and encouraging municipalities to invest in citizenship programs. Recently, President Obama launched the “Stand Stronger” Citizenship Awareness Campaign, a national, multilingual public awareness campaign to promote citizenship.

Our findings on the economic effects of naturalization could support these initiatives and motivate local governments who are on the fence about whether engaging in naturalization is worth the effort. Cities should look closely at what works best to encourage more eligible immigrants to become citizens, realizing the economic benefits of naturalization for themselves and their communities.