The Economic Benefits of Fixing Our Broken Immigration System

By: National Economic Council, the Domestic Policy Council, the President’s Council of Economic Advisers, and the Office of Management and Budget

Commonsense immigration reform would improve productivity and boost economic growth by increasing various types of investment, including investments not currently made by undocumented workers.

Investment takes place when one expends resources today, whether in the form of time or money, in the expectation of a greater return in the future. Education is a form of investment. Of course, students do not typically earn much while in school, but they pursue higher education expecting that, in the future, they will earn a higher return, or a better living, as a result. Putting time or money into starting a business is another form of investment. New businesses rarely earn significant revenue in their first year or two, but their owners press on, expecting the enterprise to grow and generate profits over time. As with entrepreneurship, it is this type of investment and risk-taking that has made the American economy as strong as it is today.

When individuals are insecure and uncertain about their position in the economy — whether they are living in the shadows, afraid to enforce basic rights, or unsure if they will be able to stay in the U.S.— their incentives and ability to make such investments is undermined. Individuals may be less inclined to save or invest money today, or to spend on education now, if they doubt that they will be able to enjoy the benefits of such investments in the future.

This is another reason why immigration reform is so important for the economy. When workers avoid investing due to uncertainty about their future, it decreases capital available for all Americans. When immigrants feel they can’t invest in their own education or in the education of their children, it hurts the quality of our workforce (Unleashing Immigrants’ Full Economic Potential, pp. 8-19).

Link to full report