The Indirect Fiscal Benefits of Low-Skilled Immigration

Dominik Sachs and Mark Colas
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Dominik Sachs: LMU Munich
Mark Colas: University of Oregon

No 281, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Low-skilled immigrants indirectly affect public finances through their effect on native wages & labor supply. We operationalize this indirect fiscal effect in various models of immigration and the labor market. We derive closed-form expressions for this effect in terms of estimable statistics. Empirical quantifications for the U.S. reveal that the indirect fiscal benefit of one low-skilled immigrant lies between $770 and $2,100 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.

Keywords: immigration; fiscal impact; general equilibrium (search for similar items in EconPapers)
Date: 2023-01-16
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:281

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