The Indirect Fiscal Benefits of Low-Skilled Immigration

Mark Colas and Dominik Sachs
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Mark Colas: University of Oregon
Dominik Sachs: University of St. Gallen

No 352, 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 resident wages & 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 U.S. 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.

Keywords: immigration; fiscal impact; general equilibrium (search for similar items in EconPapers)
JEL-codes: H20 J31 J61 (search for similar items in EconPapers)
Date: 2022-12-22
New Economics Papers: this item is included in nep-int and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:352

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