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The Indirect Fiscal Benefits of Low-Skilled Immigration

Author

Listed:
  • Dominik Sachs

    (LMU Munich)

  • Mark Colas

    (University of Oregon)

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.

Suggested Citation

  • Dominik Sachs & Mark Colas, 2023. "The Indirect Fiscal Benefits of Low-Skilled Immigration," Rationality and Competition Discussion Paper Series 281, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:281
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