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Immigration and Economy the United States


Immigration to the United States has been a major source of population growth and cultural change throughout the country’s history. The United States, created by settlers, continues today to accept a huge number of immigrants. The sharp increase in the scale of the entry of foreigners in the 70s of the last century was often called the beginning of a new wave of immigration, In fact, it became the starting point of a real evident stage. It was growing from decade to decade and showing no significant signs of recession even in years of economic crises. At the same time, in general, the United States derives tangible benefits from immigration, despite some negative features of this process. The country has accumulated vast experience in the practice of streamlining migration processes and attracting immigrants, some aspects of which can be successfully applied in regulating migration in other countries.

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Historical Aspects of the Immigration in the USA

US immigration policy can be roughly divided into 5 stages: the colonial era, the era of “open doors,” the era of regulation, the era of restrictions, and the era of liberalization. During the period of colonial development of North America and up to 1861, the participation of the authorities in the regulation of immigration processes was minimal. At that time, immigration was seen as the main source of economic growth and prosperity for the country, that is why the regulatory bodies of each state were actively involved in attracting new immigrants. At the beginning of 1861, the regulation of immigration became the prerogative of the federal authorities, establishing general rules for the admission of new immigrants into the country. In the 1920s, this regulation turned into tight quantitative restrictions – quotas based on the ethnicity of immigrants. Only in 1965, a new course aiming at liberalizing US immigration law was adopted, abolishing the quota system based on the ethnicity of immigrants (Zornberg, 2018). The basis of modern immigration policy is the 1990 Act, which, with some additions and amendments, is still in force today.

Current State of the Art

The widespread use of cheap low-skilled labor by foreigners is an important factor in the functioning of a number of traditional industries. This is, for example, the agricultural sector, the share of immigrants in which is 70% of the total employed (Pozo, 2018). Orrenius and Nicholson (2009) note that “by 2007, immigrants made up 15.6 percent of the U.S. labor force. Over the last decade or so, foreign-born workers have contributed roughly half of annual labor force growth” (p. 36). At the same time, nowhere has the contribution of immigrants been more evident than in the high-tech and knowledge-intensive sectors. Silicon Valley and other high-tech sectors might not exist if the borders were closed to skilled and highly educated immigrants (Hanson, 2012). In general, the impact of immigration on the dynamics of economic growth is assessed as ambiguous. A highly skilled labor force generally has a positive impact on economic development, while the impact of an unskilled one is questionable.

Despite the fact that immigrant workers compete with domestic workers in the low-skilled labor market, some of them specialize in areas of business that have not existed in the country at all. Therefore, their activities are beneficial for all residents of the country. Another positive aspect of immigration is that the entrepreneurial activity index (Kauffman Foundation index) of immigrants is 40% higher than that of the “indigenous” residents (Kerr, 2018). Immigrants have helped in the foundation of many well-known American high-tech companies such as Google, Yahoo, Sun Microsystems, and others.

At the same time, researchers note the negative consequences of immigration, which are manifested, first of all, in a significant load on the budgets of all levels. 31% of adult immigrants do not have a secondary education and about the same number do not have health insurance (Zornberg, 2018). Mexican immigrants account for a large percentage of the increase in the number of people without health insurance (Kerr, 2018). Among those living in poverty, most of them belong to this category of immigrants.

The mortgage-backed securities crisis in the United States in 2008-2009 hit the “Spanish” immigrants especially hard. During the period of the mortgage boom, banks often issued loans to immigrants who did not have documentary evidence of creditworthiness. According to some sources, 5 million illegal immigrants bought houses on mortgages issued with falsified documents (Kerr, 2018). As a result, when the crisis struck, the areas where these immigrants live had a particularly high rate of property arrests for non-payment of debts (Xu, 2020). As Kerr (2018) points out, comparisons of European immigrants from earlier decades with recent “Spanish” immigrants are not in favor of the latter. Being poor on arrival in the United States, “Europeans,” by the third generation, became fully economically assimilated. As for the “Spaniards,” the process of their economic formation usually ends in the second generation, and the third generation is still significantly poorer than, for example, the white population.

Ethnic enclaves, especially in the quarters of the poor, which are characterized by increased criminality, low capacity, and insufficient profitability of markets that are unattractive for large national entrepreneurship should be noted. Immigrants, there are developing specific types of business that would not have appeared there at all without them. For example, the areas of Los Angeles, where immigrants from Central America are concentrated, should be mentioned. Not only Salvadoran and Nicaraguan restaurants, Guatemalan markets, and shops selling Central American goods were opened, but also transport agencies and post offices were.

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Future Prospects of Immigration Policy and Its Economic Implications

Today the problem of immigration has acquired serious social significance and has become the subject of heated discussions. In general, immigration plays a positive role in the development of production. It supplies not only the necessary human capital (labor, specialized knowledge, high and, at times, rare professional qualifications, managerial experience, striving for business success) but also investment resources while saving some of the costs. Immigration not only supports the traditional industries that are an integral part of the host country’s economy. It increasingly “supplies” with highly skilled professionals into the latest high-tech sectors that drive the entire economy (Delener & Ventilato, 2008). At the same time, the effect of immigration has diverse manifestations that differ in time and space (by regions), among various ethnic and socio-professional groups, and largely depend on the structural parameters of immigration.

The long-term positive effects of immigration on the labor market are closely related to the shifts it causes in the professional structure of local workers towards more productive and higher-paid occupations. Moreover, it implies an increase in the quality of employment of Americans. Newcomers fill jobs that are characterized by poorer working conditions and wages, not in demand among Americans.

Immigrants unwittingly contribute to the designated shifts in the professional structure of the latter. The economic effects of immigration are far from being exhausted by those described above, but the latter is most significant in terms of its impact on the employment and incomes of the local population. Labor supply shocks caused by immigration, especially in regions where low-skilled workers are concentrated and, in a downturn in the economy, can have a negative short-term and sometimes medium-term impact on the labor market. In the long term, as production adapts to changes in the size and composition of the labor force, investment, output, and labor demand, as a rule, all workers, or at least a significant part of them, benefit.


Delener, N., & Ventilato, J. (2008). Immigration and the U.S. economy: A strategic perspective. Proceedings of the Northeast Business & Economic Association 35th Annual Conference. Northeast Business & Economics Association

Hanson, G. H. (2012). Immigration and economic growth. Cato Journal, 32(1), 25-34.

Kerr, W. R. (2018). The gift of global talent: How migration shapes business, economy & society. Stanford Business Books.

Orrenius, P., & Nicholson, M. (2009). Immigrants in the U.S. economy: A host-country perspective. Journal of Business Strategies, 4, 35-53.

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Pozo, S. (2018). The human and economic implications of 21st century immigration policy. W.E. Upjohn Institute.

Xu, D. (2020). The effects of immigration restriction laws on immigrant segregation in the early twentieth century U.S. Journal of Comparative Economics, 48, 422-447.

Zornberg, I. (2018). Immigration wars: The history of U.S. immigration policies. CreateSpace Independent Publishing Platform.

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