Strength in Numbers; the Senate Plan Promises New Growth

The Washington Times (Washington, DC), April 17, 2013 | Go to article overview

Strength in Numbers; the Senate Plan Promises New Growth


Byline: Douglas Holtz-Eakin, SPECIAL TO THE WASHINGTON TIMES

The immigration reform debate has begun. With the release of a framework for Senate legislation, voices are being heard on national security (especially on the southern border), legal issues (protection for employers who attempt to follow hiring laws), the future of the undocumented in the United States, and sector concerns (high-tech and agriculture).

Few Americans are aware, though, of the key fact that should drive the reform debate: Without immigration, the United States will shrink.

America's birth rate has fallen to its lowest level since 1920. Native-born women are having fewer than the average of 2.1 children needed to keep the population size stable. In the absence of immigration, the population of the United States will decline, and the size of its economy will contract.

Immigrants have a much higher birthrate than native-born women - 87.8 per 1,000 women compared to 58.4 for native-born women. In recent years, 23 percent of all U.S. births were from foreign-born mothers, up from 16 percent in 1990.

The upshot is that immigration reform can shape the population, labor force and U.S. economy. Immigration reform is a tremendous economic policy opportunity.

The United States lags in taking advantage of this opportunity, as immigration policy has primarily been concerned with family reunification, which accounted for 74 percent of immigrants in 2010. The rest of the developed world promotes reunification less, and competitors like Australia, Canada and the United Kingdom have undertaken reforms to focus their system on economic growth. In 2010, the United States issued a mere 6.4 percent of visas for economic reasons, compared to the United Kingdom's 33 percent.

How can immigration reform aid growth? Total gross domestic product (GDP) stems from the total number of workers and the average output per worker, or productivity. The pace of overall population growth will raise the number of workers, and thus raise GDP. In addition, the structure of the population - by age, gender and education - can influence the fraction of the population at work. Growth in the labor force participation rate can, in turn, raise the rate of GDP above the rate of population growth. In addition, at higher rates of overall GDP growth, there will be greater replacement of existing capital goods and investment in new capital goods.

How large might these effects be? To get a feel, consider that greater immigration in the U. …

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