Economic Report of the President

Box 4-1: Wage Impacts of ImmigrationThe labor market effects of immigration can be identified by usingreal-world events in which immigration occurs suddenly and is notdriven by economic factors. One such study measures native wages inMiami before and after the Mariel Boatlift in which approximately125,000 Cubans arrived between May and September of 1980. This influxadded 45,000 workers, or 7 percent, to Miami’s labor force in just a fewmonths. Despite the fact that a relatively high fraction of the new immigrantswere low-skilled, these immigrants had virtually no effect on thewages or unemployment rates of less-skilled workers in Miami.This result could have been driven by labor and capital responses.For example, natives and other immigrants who would otherwise havemoved to Miami to fill low-skill jobs may have decided not to do sobecause of the rapid influx of Cuban immigrants over this period. Inaddition, textile and apparel firms, industries that are well-suited toutilize low-skilled labor, expanded in Miami, thereby cushioning theadverse wage impact on Miami workers.Fiscal Impact of ImmigrationImmigrants—like all natives—affect the public finances, the revenues andexpenditures of local, state, and Federal governments. Immigrants contributemoney to public coffers by paying sales and property taxes (the latter areimplicit in apartment rents). Immigrants working “on the books” furthercontribute through income and payroll taxes. Immigrants consume publiclyprovided goods and services such as roads, police and fire protection, andpublic schools. If they are eligible, some legal immigrants, such as naturalizedcitizens and lawful permanent residents who have lived in the United Statesfor five years or more, may also receive assistance from programs such as foodstamps, Temporary Assistance to Needy Families (TANF), and Medicaid.Supplemental Security Income (SSI) is generally restricted to citizens and tolawful permanent residents who have worked in the United States for at least10 years. The fiscal impact of immigration is the difference between howmuch immigrants pay in to the government and the value of the public servicesthey consume.Some studies have calculated the fiscal impact of immigrants on an annualbasis and looked at whether the cost of providing public goods and services toimmigrant households increases the tax burden on native households in a givenyear. Such studies have found that, while immigrants do not impose a net highertax burden at the Federal level, natives in states with a heavy concentration of106 | Economic Report of the President