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Title: The Fiscal Effect of Immigration: Reducing Bias in Influential Estimates

Citation Type: Working Paper

Publication Year: 2021

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Abstract: Immigration policy can have important net fiscal effects that vary by immigrants’ skill level. But mainstream methods to estimate these effects are problematic. Methods based on cash-ow accounting oer precision at the cost of bias; methods based on general equilibrium modeling address bias with limited precision and transparency. A simple adjustment greatly reduces bias in the most influential and precise estimates: conservatively accounting for capital taxes paid by the employers of immigrant labor. The adjustment is required by rms’ prot-maximizing behavior, unconnected to general equilibrium effects. Adjusted estimates of the positive net fiscal impact of average recent U.S. immigrants rise by a factor of 3.2, with a much shallower education gradient. They are positive even for an average recent immigrant with less than high school education, whose presence causes a present-value subsidy of at least $128,000 to all other taxpayers collectively.

Url: https://scholar.google.com/scholar_url?url=https://www.cream-migration.org/publ_uploads/CDP_34_21.pdf&hl=en&sa=X&d=8333620773204582320&ei=jnauYYKnCYiKmgG4xKGQCA&scisig=AAGBfm3jayCPR2ni9sxpiAi9H3Szee2UxA&oi=scholaralrt&hist=SD6T3SsAAAAJ:53769399313379119:A

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Authors: Clemens, Michael A

Series Title: CReAm Discussion Paper Series

Publication Number: CDP 34/21

Institution: Center for Global Development, IZA, and CReAM/UCL

Pages: 1-45

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Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Migration and Immigration

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