The voices of Urban Institute's researchers and staff
November 7, 2013

New Urban Institute guide makes sense of immigration reform studies

November 7, 2013

 Is the Senate’s immigration reform bill a job-killer? Will it raise the deficit? Boost the economy? Add to federal, state, and local revenues? Will it lead to better wages and working conditions for immigrants?

Several studies have analyzed the bill to find answers—but their scope and methods differ, and, therefore, so do their findings. Maria Enchautegui, coauthor of “Understanding the Economic and Fiscal Impacts of Immigration Reform: A Guide to Current Studies and Possible Expansions,” urges caution in comparing one study with another, offering instead a roadmap for evaluating the studies influencing the debate.

1. Why create a guide to study the studies?  

The motivation behind the study came from hearing the media compare one study with another—CBO says this, but Heritage says that, and CAP says something else—but the studies aren’t comparable. You can’t just say one study contradicts or even validates the other when they’re looking at very different things. So our goal is empowering the public to read and evaluate the studies themselves.

To do that, we examined the six studies we thought were most relevant: five studies that looked at reform scenarios similar to the Senate’s bill and an older study that has become the standard reference on immigration reform. We didn’t review studies that looked at tax revenues but not outlays or that used policy scenarios that differed from the Senate’s bill. The Bipartisan Policy Center’s recent report on economic and fiscal impacts of immigration reform came out as our guide was being published, so we weren’t able to include it, but we did review the report in an earlier blog post.

2. What are the bill’s potential effects on our economy and government budgets?

The Senate’s bill (S. 744) lays out a plan for legalizing undocumented immigrants in the United States, tightening border security, increasing work visas, and shortening the visa backlog. The most controversial provision is the one about legalization.

In looking at economic impacts, some studies analyze all the different provisions laid out in the Senate’s bill. Other studies have focused just on the legalization of undocumented immigrants. The most direct impact of legalization may be to immigrants’ wages and working conditions. Some think that if you legalize undocumented immigrants, they will be able to move to better jobs and will therefore be more productive and earn higher wages, which generates benefits for the economy. As it stands now, the undocumented may be poorly matched to their jobs because they can’t search for them in the open labor market. Also, some believe working conditions will improve because employers who take advantage of undocumented workers will have to comply with labor force regulations. Improved working conditions would affect all workers, including native-born workers hired by the same employers.

Not enough studies look at what legalization means for government coffers—the fiscal impact. We also need to understand the potential effects on revenues and on outlays, especially at the state and local level.

3. What are the questions readers should ask before comparing studies? What are the big differences?

First, what’s the scenario being considered? Is it the whole immigration bill or just one aspect of it?

Also, what are the assumptions the researchers make? For instance, how many people will benefit from legalization? Some studies assume every undocumented immigrant will be legalized, but CBO, in their cost estimate, says it will be far fewer. Differences of 2 to 3 million people can lead to big differences between findings. And how much will the labor force grow? CBO says the bill will lead to an increase of 6 million workers over 10 years. And what does the study assume about immigrants’ wages? What will newcomers earn and what will legalization mean for the wages of the newly legalized? For instance, Heritage’s study assumes wages for legalized immigrants will go up by 5 percent and the Center for American Progress study assumes 15 percent. Those details could lead to differences in their findings.

You also have to pay attention to the time horizon and to the second generation. Is the study looking at the impacts over a short period of time, or much longer? Heritage’s study is the only one that considered the possible cost of Social Security for retiring legalized immigrants. But Heritage does not consider the future adult contributions of children of newly legalized immigrants. Studies measure the costs and benefits of the second generation in different ways.

4. What did the studies agree on?

They agreed that immigration reform would expand the economy and boost tax revenues. Economic studies of legalization also find positive effects for the economy. There’s more disagreement about the fiscal impacts.

5. What questions still haven’t been answered?

We do not know much about state and local fiscal impacts, especially of legalization. Since a larger labor force usually will make the economy grow, studies should address what immigration means in terms of improvements in per capita income or average wages. We also don’t know how workers already residing in the United States will benefit from increased immigration or how benefits would be distributed. Immigration may improve wages for some, but other groups may see their employment and wages shrink.

Photo by Bebeto Matthews/AP

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