The Indirect Fiscal Benefits of Low-Skilled Immigration

Mark Colas and Dominik Sachs

American Economic Journal: Economic Policy, 2024, vol. 16, issue 2, 515-50

Abstract: Low-skilled immigrants indirectly affect public finances through their effect on resident wages and labor supply. We operationalize this indirect fiscal effect in a model of immigration and the labor market. We derive closed-form expressions for this effect in terms of estimable statistics. An empirical quantification for the United States reveals an indirect fiscal benefit for one average low-skilled immigrant of roughly $750 annually. The indirect fiscal benefit may outweigh the negative direct fiscal effect that has previously been documented. This challenges the perception of low-skilled immigration as a fiscal burden.

JEL-codes: H24 H75 J15 J24 J61 J82 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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DOI: 10.1257/pol.20220176

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