Generational Accounting and Immigration in the United States

Alan Auerbach and Philip Oreopoulos

No 7041, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In recent years, the renewed strength of immigration to the United States has sparked a debate about the economic effects of immigration. A central issue in this debate has been the fiscal impact of immigrants. Most research in this area has adopted a static, cross-section approach in assessing the net impact of immigrants on the economy's fiscal position. However, a dynamic approach is important because of the age dependency of many government tax and expenditure programs, and necessary to take the descendents of immigrants into account. This paper reconsiders the fiscal impact of immigrants over time, using the technique of generational accounting. We may summarize our results with three findings: 1. Because new immigrants represent a larger fraction of future generations than of present ones, shifting the burden onto future generations also shifts it, relatively, onto new immigrants. Thus, if the entire fiscal imbalance currently estimated for the United States is placed on future generations, then the presence of new immigrants reduces the burden borne by natives. 2. When a policy of fiscal responsibility' is followed, whether there is a fiscal gain from immigration depends on the extent to which government purchases rise with the immigrant population. 3. The impact of immigration on fiscal balance is extremely small relative to the size of the overall imbalance itself. Thus, immigration should be viewed neither as a major source of the existing imbalance, nor as a potential solution to it.

JEL-codes: H6 J1 (search for similar items in EconPapers)
Date: 1999-03
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published as "Tax Policy and Business Fixed Investment in the United States", Journal of Public Economics, Vol. 47, no. 2 (1992): 141-170.

Downloads: (external link)
http://www.nber.org/papers/w7041.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:7041

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w7041

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().