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  5. The Indirect Fiscal Benefits of Low-Skilled Immigration

The Indirect Fiscal Benefits of Low-Skilled Immigration

  • Mark Colas
  • Dominik Sachs
American Economic Journal: Economic Policy (Forthcoming)

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.

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