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Impact of immigration on US economy

By: Burhanuddin S. Naib, Yash Vardhan Jagnani, Ong Guan Da

Research Head: Ong Guan Da Editor: Akshat Daga

Illustration by Chen Hsuan Ju Abstract In this article, we will highlight the key matters regarding immigration in the United States (US). We will be covering the reasons why the matter of immigration is significant for the US economy, along with providing substantial information on the process of immigration the US. We would be elaborating on the different types of immigrants that enter US. Moreover, we dig deep into the impacts of illegal immigration into the US from countries like Mexico and deliberate whether there is a need to curtail it. Lastly, we conclude by evaluating the pros and cons of policies and the net effect of immigration on US.

1.0 How does the US Immigration system function? The first step in the process of immigration in US is filing a petition. Any US citizen and lawful permanent resident petitioner residing in the US must file Form I-130, Petition for Alien Relative with the U.S Citizenship and Immigration Services (USCIS) (Immigrate, 2020). Ordinarily, petitions are filed from inside the US, however, filing from outside is also possible. Once the petition is approved, the case is passed on to the National Visa Centre for pre-processing. A Welcome letter is sent to the applicant, who can then log in to (CEAC) website for further updates. An interview is then scheduled after scrutinizing the documents and fees. It is interesting to note that the US law limits the number of immigrant visas each year in certain visa categories. Moreover, it also limits the number of visas by country, date of petition filed, and number of others waiting for the same visa category. After payment of fees, an Affidavit of Support (Form I-864) is filed. It is a document which is an individual, called the sponsor, signs to accept the financial responsibility of the applicant. Provisions of a joint sponsor is also available(Immigrate,2020). Subsequently, an online registration is needed by completing the Application for Immigrant Visa and Alien Registration (Form DS-260). The civil documents need to be collected, scanned, and submitted properly to proceed with the process. The visa-application process is so strict that it requires a medical examination from an embassy-approved physician, before the interview(Immigrate, 2020). 2.0 Why is the matter of immigration so important to the United States? Immigration is quite an important matter when it comes to the US. Being “a nation of immigrants”, the laws and restrictions which modern US poses significantly affects is economy and the reputation of its heritage (Ruden, 2018). From an economic point of view, immigrants contribute 18% to the small enterprise sector. They play a significant role in setting up new businesses and creating more job opportunities. Another factor which calls for more immigration is the rising age-dependency ratio. In 2017, the age-dependency ratio crept up to 25% from 21% in 2010 and is expected to rise sharply to 35% by 2030 (Cassidy, 2018). This rise place pressure on the working population. Entry of immigrants eases this pressure and stabilizes the economy. Currently, President Trump’s policies cater against immigrants. Evidently, these policies do not have an economic support to them as they are driven merely by racism. Since, welcoming more immigrants is a great investment for the US in the long run, a revision of the current policies of U.S regarding immigration is crucial and urgent.

3.0 Different types of Immigration and their impact on the US economy Immigration can be divided into types- documented and undocumented. Both types of immigrants bring about different impacts on the US economy. Immigration contributes 15% of the economic growth in US between 1990 and 2014 (Amadeo, n.d.).

Source: Pew Research Center 3.1 Impact of Undocumented Immigration on the US economy The impact of undocumented immigration can be observed as both positive and negative. In an article by University of Michigan (Wallace&Kretman&Strogatz, n.d.), it is said that the overall impact is however unclear. Most of the illegal immigrants’ work is often the kind of work that people don’t normally want to do. There is no competition in these jobs as the Americans don’t compete for it as a result there is a significant change in the wage rate. It is estimated that undocumented immigration lowers wages by 3 to 8% for low skilled jobs. Therefore, this can have a positive as well as negative effect on the economy and labor force. Firstly, it can be negative because if an American competes for this job then he stands to make an additional $25 a week if the jobs for undocumented immigration was cut down, Secondly, it can be positive as lower wages cuts down the production costs and therefore provides goods and services to the American consumers at a lower rate. The other main argument in the article mentioned the use of government services. Since most of the undocumented workers receive their wages in cash, they are not subjected to federal taxes. However, they use the government facilities such as food assistance, healthcare, welfare. Their children who are born in the US are US citizens and are entitled to all government services. Therefore, it can be perceived that undocumented immigration can cost the government rather than benefitting it, 3.2 Impact of Documented Immigration on the US economy

The inflow of documented immigrants seems to have a positive impact on the US economy. Most of the immigrants are of working ages between 16 and 64, this is 50% more than the native Americans. As a result, they provide more taxes and the government can use it to roll out social programs for US citizens (Amadeo, n.d.). 4.0 Is there a need to curtail undocumented immigration? There can be two sides to these arguments. Firstly, the moral side, since undocumented immigrations comprises of refugees, asylum seekers who basically do not have a place to stay and come to the US for a better future, it can be argued that this policy is unjust. However, looking at the deportation from an economic point of view then it can be justified to a certain extent as it has a negative effect on the population without a college degree. In 2014, 33% of the jobs in the Agricultural Sector was taken by immigrants, half of them were undocumented. In construction, the number of jobs taken by immigrants was 24%, again half of them were undocumented. The largest segment was in domestic work, where 45% of the jobs were taken by immigrants and more than half of them were undocumented(Amadeo, n.d.).Therefore, illegal immigrants can take up a lot of potential jobs from Native Americans and decrease wages as mentioned in 3.1 and as a result have a negative impact on the economy. This can justify the deportation policy adopted by the government. 5.0 Conclusion In conclusion, the overall net benefit of both documented and undocumented immigrants into the US is rather mixed. While undocumented immigration lowers down the prices of goods and wages that can be beneficial for the consumers as well as the employers who employ them, but it can be detrimental for native US citizens who are willing to do these low-skilled jobs. The US has adopted a strong policy under President Trump to curtail the undocumented immigration in order to stop this negative effect. For the documented immigration, most of them are educated, resulting them being able to contribute to the society in terms of talent and with their naturally higher paying job, will pay more taxes that is beneficial for the US economy.


1,Amadeo, K. (n.d.). Immigration Pros and Cons. Retrieved from immigration-impacts-the-economy-4125413

2.Cassidy, J. (2018, June 22). Why the United States Needs More Immigrants. Retrieved from

3.Immigrate (2020). Retrieved from

4.Jeffrey, S. &D’vera, C.(2016, September 20) Overall Number of U.S. Unauthorized Immigrants Holds Steady Since 2009. Pew Research Centre. Retrieved from immigrants-holds-steady-since-2009/ph_2016-09-20_unauthorized-06/

5.Ruden, A. (2018, July 14).Why is Immigration Important in the United States of America? (2018, July 14). Retrieved from

6.Wallace, A., Kretman, M., & Strogat, S. (n.d.). The Immigration Debate. Retrieved from

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