United States: Citizenship for Undocumented Immigrants Would Boost U.S. Economic Growth

Introduction and summary

Today, 10.2 million undocumented immigrants are living and working in communities across the United States. On average, they have lived in this country for 16 years and are parents, grandparents, and siblings to another 10.2 million family members. At the same time, it has been nearly 40 years since Congress has meaningfully reformed the U.S. immigration system, leaving a generation of individuals and their families vulnerable. Poll after poll has illustrated that the vast majority of Americans support putting undocumented immigrants on a pathway to citizenship. And as the nation emerges from the COVID-19 pandemic and looks toward the future, legalization is a key component of a just, equitable, and robust recovery.

As the Biden administration and Congress craft their recovery legislation and consider how best to move the nation’s policies toward a more fair, humane, and workable immigration system, the Center for American Progress and the University of California, Davis’s Global Migration Center modeled the economic impacts of several proposals that are currently before Congress. Using an aggregate macro-growth simulation, the model illustrates the benefits to the whole nation from putting undocumented immigrants on a pathway to citizenship. Such legislation would increase productivity and wages—not just for those eligible for legalization, but for all American workers—create hundreds of thousands of jobs, and increase tax revenue.4

To help inform policymakers and advocates, this report looks at four potential scenarios where Congress grants a pathway to citizenship to: all undocumented immigrants; undocumented immigrants working in essential occupations; Dreamers and those eligible for Temporary Protected Status (TPS); and a combination of Dreamers, those eligible for TPS, and essential workers.5

The report finds that during the next decade:

Scenario 1: Providing a pathway to citizenship for all undocumented immigrants in the United States would boost U.S. gross domestic product (GDP) by a cumulative total of $1.7 trillion over 10 years and create 438,800 new jobs.6

  • Five years after implementation, those eligible would earn annual wages that are $4,300 higher.
  • Ten years after implementation, those annual wages would be $14,000 higher, and all other American workers would see their annual wages increase by $700.7

Scenario 2: Providing a pathway to citizenship for undocumented immigrants who are essential workers would boost the GDP by a cumulative total of $989 billion over 10 years and create 203,200 new jobs.

  • Five years after implementation, those eligible would experience annual wages that are $4,300 higher.
  • Ten years after implementation, those annual wages would be $11,800 higher, and all other American workers would see their annual wages increase by $300.

Scenario 3: Enacting the American Dream and Promise Act (H.R. 6) would increase U.S. GDP by a cumulative total of $799 billion over 10 years and create 285,400 new jobs.

  • Five years after implementation, those eligible would experience annual wages that are $4,300 higher.
  • Ten years after implementation, those annual wages would be $16,800 higher, and all other American workers would see their annual wages increase by $400.

Scenario 4: Providing a pathway to citizenship for H.R. 6-eligible and undocumented essential workers would boost the GDP by a cumulative total of $1.5 trillion over 10 years and create 400,800 new jobs.8

  • Five years after implementation, those eligible would experience annual wages that are $4,300 higher.
  • Ten years after implementation, those annual wages would be $13,500 higher, and all other American workers would see their annual wages increase by $600.

Importantly, this analysis considers only these direct economic benefits. The model does not capture the potentially large additional benefits to eligible immigrants’ children in education, health, and future productivity gains, as these effects would take place likely more than 10 years from implementation.

As the findings above show, creating a pathway to citizenship for undocumented immigrants not only is the right thing to do but also would be a substantial stimulus to the U.S. economy. Undocumented immigrants are critical to the nation’s social infrastructure—a fact that has become even more widely understood amid the coronavirus pandemic. Across the country, they are building families and starting businesses, they are keeping hospitals open and functioning, and they are caring for Americans’ loved ones. To that extent, legalization and a pathway to citizenship—which would raise wages for all workers, create hundreds of thousands of new jobs, and boost the GDP—is an investment in the country’s infrastructure in and of itself. As the United States continues to address the coronavirus pandemic and works toward a just and equitable recovery, Congress must consider these proposals.

Road map to the report

This report begins with the parameters that the model uses when estimating the economic impacts of legalization and a pathway to citizenship for undocumented immigrants. From there, it discusses the short-term (implementation to five years) and long-term (five to 10 years post-implementation) nature of the effects, before presenting the simulation’s economic effects for four scenarios protecting different subsets of undocumented immigrants.

The report is followed by a methodological appendix detailing how the undocumented population is measured, a discussion of the impacts of the coronavirus pandemic on employment rates, and a review of literature measuring the impacts of legalization and citizenship on wages and human capital of undocumented immigrants. Lastly, a technical appendix includes summary tables of data included in the model, additional detail on model inputs, and technical definitions.

Parameters used to model impacts of legalization and citizenship for the undocumented

In order to model the economic effects of legalization and a pathway to citizenship for undocumented immigrants, one must first identify who would be eligible. Using the 2019 and 2020 Current Population Survey’s (CPS) Annual Social and Economic Supplement (ASEC) conducted by the U.S. Census Bureau, the authors identified 10.2 million undocumented immigrants living in the United States. Using an average of these two years of data allowed the authors to establish a picture of the undocumented workforce both before and at the onset of the pandemic, providing a more realistic picture of the undocumented labor force as the country recovers.

Once the authors established the eligible population, they considered the previous literature on the economic impacts of legalization and citizenship for undocumented immigrants on a host of different inputs. The authors based calculations on a model of economic growth with documented and undocumented workers; human capital depending on labor effectiveness and schooling; and total factor productivity, which depends positively on average human capital.11 They include:

  • A 10 percent wage bump from legalization12
  • An additional 5 percent wage bump that comes from citizenship13
  • Productivity increases resulting from additional educational attainment and on-the-job training14

For more details, see the methodological appendix.

What this model measures

Using the conditions described above, the model simulates the effects that legalization and naturalization would have on four segments of the undocumented adult population. Such policies result in permanent changes in labor effectiveness, productivity, and capital investments that are evaluated in a model of an economy growing in a balanced trajectory. The model includes estimates of the effect on average wages of eligible workers, average wages of all other workers, GDP, and number of permanent new jobs using—as base measure of employment—an average of the 2019 and 2020 CPS ASEC.

These effects are estimated for two time frames: the short- to medium-term run (the first five years after implementation) and the long-term run (five to 10 years after implementation).

Short- to medium-run effects

Short-run effects derive mainly from increased productivity of legalized workers. These individuals can move to higher-paying jobs, improve the effectiveness and productivity of their skills, and are less constrained in job searches and opportunities. At the same time, their increased income and spending leads to businesses in their communities being more willing to invest and to take advantage of increased purchasing power that raises returns to investments. This generates increased consumption and demand and higher returns to investment, and it leads to additional investment and production capacity.

Long-run effects

Additional effects need to be considered in the longer run of these policy implementations. On this time horizon, younger undocumented immigrants see their additional schooling translate to higher wages and productivity, especially as one of the ways through which Dreamers can pursue citizenship is by attaining additional education or degrees. These educational advances generate higher efficiency and adoption of better technology and innovation. Other legalized workers are likely to improve their on-the-jobs skills, including their language abilities. In addition to these gains, naturalization, which is likely to occur in this five- to 10-year window, leads to further gains, access to more jobs, and additional wage gains.15

This increased human capital in turn increases productivity at established businesses and in local economies. It will also stimulate investments in new businesses and increase productivity and wages of other workers as well as generate permanent new jobs.

Findings from the 4 scenarios

Scenario 1: All undocumented immigrants

Who is eligible in this scenario?

Under this scenario, all undocumented immigrants would be eligible for immediate legalization and a five-year path toward naturalization. The model includes all undocumented workers along with Dreamers, regardless of work status. The authors estimate that 7.7 million of the 10.2 million undocumented individuals eligible for protection using 2019–2020 CPS data were either employed in the year prior to the COVID-19 crisis or were Dreamers.16

Short-run impacts (implementation to year five):

  • Increase in annual wages of undocumented workers: $4,300 (10 percent)17

Long-run impacts (year five to year 10):

  • Increase in annual wages of undocumented workers: $14,000 (32.4 percent)
  • Increase in annual wages of all other workers: $700 (1.1 percent)

Total cumulative GDP increase through the decade: $1.7 trillion

Total number of new jobs created: 438,800

Scenario 2: Undocumented immigrants working in essential roles

Who is eligible in this scenario?

Under this scenario, all undocumented immigrants working in essential jobs, as defined by the U.S. Department of Homeland Security (DHS), would be eligible to legalize immediately and access a pathway to citizenship after five years.18 The authors estimate that 5 million undocumented individuals are eligible for protection using 2019–2020 CPS data.

Short-run impacts (implementation to year five):

  • Increase in annual wages of undocumented workers: $4,300 (10 percent)

Long-run impacts (year five to year 10):

  • Increase in annual wages of undocumented workers: $11,800 (27.3 percent)
  • Increase in annual wages of all other workers: $300 (0.5 percent)

Total cumulative GDP increase through the decade: $989 billion

Total number of new jobs created: 203,200

Scenario 3: Undocumented immigrants eligible for the American Dream and Promise Act

Who is eligible under this scenario?

Undocumented immigrants are considered eligible for a conditional permanent resident status under the Dream provisions of the law if they arrived in the United States prior to 2021 at the age of 18 or younger and have a high school diploma or are enrolled in high school. They are eligible for permanent residency after completing any of the following three criteria: two years of study toward an advanced degree or technical training; two years of military service; or three years of employment, 75 percent of which must be performed while work authorized.19 The authors estimate that 2 million undocumented individuals are eligible for protection using 2019–2020 CPS data.

Undocumented immigrants are considered eligible under the Promise provisions of the law if they were eligible for either TPS as of September 2017 or Deferred Enforced Departure as of January 2021.20

Short-run impacts (implementation to year five):

  • Increase in annual wages of undocumented workers: $4,300 (10 percent)

Long-run impacts (year five to year 10):

  • Increase in annual wages of undocumented workers: $16,800 (38.9 percent)
  • Increase in annual wages of all other workers: $400 (0.7 percent)

Total cumulative GDP growth through the decade: $799 billion

Total number of new jobs created: 285,400

Scenario 4: Undocumented immigrants who are either essential workers or eligible for the American Dream and Promise Act

Who is eligible under this scenario?

Undocumented immigrants who were either employed as essential workers or eligible for the American Dream and Promise Act are eligible for legalization and a pathway to citizenship. Undocumented immigrants are considered eligible for a conditional permanent resident status under the Dream provisions of the law if they arrived in the United States prior to 2021 at the age of 18 or younger and have a high school diploma or are enrolled in high school. They are eligible for permanent residency after completing any of the following three criteria: two years of study toward an advanced degree or technical training; two years of military service; or three years of employment, 75 percent of which must be performed while work authorized. Undocumented immigrants are considered eligible under the Promise provisions of the law if they were eligible for either TPS as of September 2017 or Deferred Enforced Departure as of January 2021.21 The authors estimate that 6 million undocumented individuals are eligible for protection using 2019–2020 CPS data.22

Short-run impacts (implementation to year five):

  • Increase in annual wages of undocumented workers: $4,300 (10 percent)

Long-run impacts (year five to year 10):

  • Increase in annual wages of undocumented workers: $13,500 (31.3 percent)
  • Increase in annual wages of all other workers: $600 (1 percent)

Total cumulative GDP growth through the decade: $1.5 trillion

Total number of new jobs created: 400,800

Conclusion

Undocumented immigrants are longtime members of their communities, and the nation as a whole, and have made significant economic contributions. By putting them on a pathway to citizenship, Congress and the administration can turn those contributions into massive gains for the entire economy and for all workers—by as much as a cumulative $1.7 trillion during the next decade. As Congress debates further recovery and immigration reform legislation, it must include legalization in those discussions.

Source: americanprogress.org

Published: 14 June 2021

Skip to content