Press Release

Immigrants contribute 3.2x as much to American public budgets as previously thought, new study finds

February 21, 2023

Even immigrants without high school education are net contributors to public budgets, experts find.

WASHINGTON – Immigrants, particularly those with low levels of education, contribute several times more to public government budgets in the US than previously thought, according to a working paper published today by the Center for Global Development.

The study finds that immigrants contribute about 3.2 times as much to public budgets at the US federal, state, and local level as previously thought, under a new analysis that better accounts for the broader economic effects of immigration. Previous estimates which have formed the basis of US immigration policy drastically understate the economic impact of immigration, with immigrants often portrayed as a drain on public coffers.

“The immigration debates in the US are based on numbers that don’t accurately capture immigrants’ economic contributions. There’s a great fear that immigrants will be a drain on public coffers, but that couldn’t be more wrong,” said Michael Clemens, a non-resident fellow at the Center for Global Development, George Mason University professor, and the author of the study.

Notably, even immigrants with low levels of education are net positive contributors to US budgets. The study finds that the average immigrant without a high school degree contributes a net of $128,000 to government budgets over their lifetime, in contrast to earlier estimates that had incorrectly found that immigrant to be a net drain.

“The conventional wisdom of US immigration policy is that we should only try to attract highly skilled immigrants. It’s now clear that’s wrong. Immigrants of all education levels grow our economy and create more tax revenue than they receive in benefits,” Clemens said.

The research that has been widely used to inform US immigration policy typically only accounts for the taxes paid by immigrants and the direct public benefits they receive, without capturing the broader economic activity created by an additional worker or business owner, according to Clemens. When businesses hire additional workers, they invest in the necessary capital goods to support that new worker, from computers and office space to vehicles and warehouses. The study uses data on capital taxes to better estimate the broader economic activity that the presence of immigrant workers enables.