Is Immigration Good for the U.S. Economy?

Over the last few years, immigration has become an extremely divisive topic. On one side are those that see bringing immigrants into the country as a positive that expands our cultural identity, while others are bent on keeping foreigners from entering the country and keeping things as they are now. One of the arguments that the latter group raises is based on the country’s financial strengths: those who want immigration halted say that those “huddled masses yearning to breathe free” cost too much and represent an economic drain. But studies have shown that the exact opposite is true, and that immigration is an essential component to our continued economic growth.

One of these studies was conducted by the National Academy of Sciences. Titled “The Economic and Fiscal Consequences of Immigration,” it cited three major reasons that immigrants represent a significant financial contribution to the growth of the U.S. economy. Those three reasons are entrepreneurship, human capital and labor force growth. Let’s take a closer look at each.

  • Labor Force Growth refers to immigration supplying workers where demographic changes such as aging or a reduced birth rate have diminished their availability. By having more workers, you can increase the gross domestic product and keep the economy growing.
  • Entrepreneurship refers to immigrants who are innovators who start their own businesses or contribute new ideas that build our economy. A study by the National Foundation for American Policy found that more than half of startup companies valued at $1 billion or more had at least one founder who was an immigrant.
  • Human Capital is similar to entrepreneurship in that it refers to the significant boost to our economy that is created by the intelligence, creativity and innovation of immigrants. One economic study conducted out of the University of Colorado determined that for every 100 international students graduating with a Ph.D. from an American institution of higher learning, 62 patent applications will be filed at some point in the future.

The National Academy of Sciences study concluded by saying, “Innovation carried out by immigrants also has the potential to increase the productivity of natives, very likely raising economic growth per capita. In short, the prospects for long-run economic growth in the United States would be considerably dimmed without the contributions of high-skilled immigrants.”

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