congestible goods would double the positive NPV. Help from immigrants in paying the substantial costs of future population aging and rising health care costs for the elderly is also a major factor. Special characteristics of immigrants also act to raise the NPV: they tend to arrive in the early working years; some of their children are likely to be educationally upwardly mobile, and they receive lower benefits than others. By contrast, that immigrants have lower education than natives, and consequently pay less in taxes, reduces the NPVs.

While the average long-term fiscal impacts of immigration are generally found to be positive, an increase in the annual flow of immigrants would, for a couple decades, have a negative fiscal impact overall. The timing and extent of such a period would depend on federal fiscal policy. At the state and local level, the annual fiscal impact would remain negative for many decades, and the overall NPV would be negative. At the federal level, the annual fiscal impact would be positive from the start.

We have also calculated the annual fiscal impact per U.S. resident of an increase of 100,000 per year in the immigrant flow under the baseline assumptions (change the sign for a decrease). We found it to be roughly +$30 per person, composed of +$40 at the federal level and -$10 per person at the state and local level. This average amount per person strikes us as rather low, despite the large NPVs. However, it should be kept in mind that an earlier period of greater deficits is followed by a later period of greater returns. With due account taken of the many uncertainties in our estimates, it appears unlikely that immigrants and their descendants impose worrisome costs at the combined federal and state and local levels for the average U.S. resident. Indeed, our calculations suggest that immigrants may instead, on average and in the long run, have a positive fiscal impact. Nonetheless, immigrants with certain characteristics, such as the elderly and those with little education, may be quite costly. And residents of certain states with large shares of immigrants without doubt bear higher costs that in some cases may not be offset by the broadly shared gains at the federal level.

Key Conclusions

  • Households headed by immigrants include the native-born school-age children of immigrants, who incur high costs of public education. However, they do not include the working-age native-born children of immigrants, who typically have a positive fiscal impact. For this reason, cross-sectional or current fiscal impacts estimated for immigrant-headed households are biased toward negative numbers.
  • The relative intensity of program use by immigrants and natives at the federal, state and local levels varies significantly from one program to another. For example, immigrants and their young children use bilingual education, SSI, public assistance, and Medicaid more heavily than others in the population, but they also use Social Security and Medicare more lightly than do others.

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