Topic > Effects of Immigration on the Economy - 1050

There are many benefits that immigration has created in the United States economy. Immigrants migrating to America create a larger workforce and, in turn, reduce the long-run equilibrium unemployment rate. Steven A. Camarota's research findings explain that “the presence of immigrant workers (legal and illegal) in the labor market makes the U.S. economy (GDP) larger by 11% ($1.6 trillion) each year (Camarota)”. Immigrants most often come to America because they don't have the opportunities to make money in their home country that they would have here. This makes immigrants more inelastic labor suppliers. They have greater motivation to work, are more flexible and, if less educated, work for lower wages. Well-educated immigrants help expand our economy by creating new businesses. These new businesses create more jobs for Americans, increase productivity, generate increased spending, increased production, and downward pressure on inflation. With this increase in real wealth and more job opportunities for Americans to earn money, people will spend more. Increasing productivity will shift short-run aggregate supply to the right and also shift aggregate demand to the right. We may also see a rightward shift in long-run aggregate supply. As these theories provide insight into how immigration is positively affecting our economy, there are also ways that immigration is negatively affecting our economy.