The Payoff Of Amnesty

Alex Nowrasteh claims that the “economic impact of this legalization will be positive”:

In the wake of the 1986 Reagan amnesty, wages for legalized immigrants increased – sometimes by as much as 15 percent – because legal workers are more productive and can command higher wages than illegal workers.[i]  Being legal also allows these immigrants to invest in U.S.-specific human capital, like learning English, which will increase their productivity and wages.  Unlawful immigrants are less likely to make these investments in human capital because they could be deported, thus wiping out such investment.  We will likely see a similar increase in the wages of many of the unlawful immigrants legalized today.  This benefit would likely accrue to all of the working unlawful immigrants who would be legalized under this executive order.

Professor Raul Hinojosa-Ojeda of UCLA wrote a paper for Cato in 2012 in which he employed a dynamic model called the GMig2 to study comprehensive immigration reform’s impact on the U.S. economy.  He found that a full legalization of unlawful immigrants will increase U.S. GDP by about $700 billion dollars over the next ten years, primarily by allowing the legalized workers to be more productive.  Any impact of legalizations on GDP would be smaller under an executive order because many of them would be temporary and it would not cover the entire unlawful immigrant population, but it would still produce hundreds of billions of dollars of more GDP within ten years.

In a piece we cited earlier today, Carl Hampe outlined other potential economic benefits:

Many U.S. companies provide goods and services that are purchased by the estimated 11 million undocumented. If half of them obtain work authorization, their purchasing power should increase, and this would benefit the U.S. economy generally. Many U.S. companies hire unskilled workers, and some of these companies expend significant resources ensuring that they do not knowingly hire undocumented immigrants when doing so. If the pool of authorized workers were expanded by 5 million people, some U.S. companies would have a larger pool of authorized labor from which to recruit, and their liability concerns would be diminished. Indeed, the president’s proposal would benefit compliance-minded U.S. companies that would now be able to attract newly work-authorized individuals away from companies that paid less competitive wages and were not as mindful of the hiring rules. This should benefit all unskilled U.S. workers, not merely those who are undocumented.