The Economic Effects of Granting Legal Status and Citizenship to Undocumented Immigrants

7/29/2019 The Economic Effects of Granting Legal Status and Citizenship to Undocumented Immigrants

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The Economic Effects of Granting

Legal Status and Citizenship toUndocumented ImmigrantsRobert Lynch and Patrick Oakford March 20, 2013

Te movemen oward comprehensive immigraion reorm has acceleraed signicanly

in recen monhs. A biparisan Gang o 8 in he Senaea group o our Democraic

senaors and our Republican senaorsreleased a ramework or immigraion reormon January 28, and he nex day Presiden Barack Obama gave a speech launching

Whie House eors o push or immigraion reorm. Boh proposals conained srong

language regarding he need o provide legal saus or he 11 million undocumened

immigrans living in he counry, as well as a road map o ull ciizenship.1

Some lawmakers, however, do no wan o exend legal sausle alone ciizenshipo

he unauhorized. Ohers have expressed ineres in sopping jus shor o providing ull

ciizenship or he 11 million undocumened immigrans, insead calling or a so-called

middle-ground opiono leave undocumened immigrans in a permanen subciizen sa-

us.2

o be sure, he debae over immigraion reorm has imporan legal, moral, social, andpoliical dimensions. Providing or denying legal saus or ciizenship o he undocumened

has implicaions or geting immigrans in compliance wih he law, aecs wheher or no

immigran amilies can say in heir counry o choice, and deermines wheher hey have

he opporuniy o become ull and equal members o American sociey.

Bu legal saus and ciizenship are also abou he economic healh o he naion as a

whole. As our sudy demonsraes, legal saus and a road map o ciizenship or he

unauhorized will bring abou signican economic gains in erms o growh, earn-

ings, ax revenues, and jobsall o which will no occur in he absence o immigraion

reorm or wih reorm ha creaes a permanen sub-ciizen class o residens. We also

show ha he iming o reorm maters: Te sooner we provide legal saus and ciizen-

ship, he greaer he economic benes are or he naion.

Te logic behind hese economic gains is sraighorward. As discussed below, legal sa-

us and ciizenship enable undocumened immigrans o produce and earn signicanly

more han hey do when hey are on he economic sidelines. Te resuling produciviy

1 Center or American Progress | The Economic Eects o Granting Legal Stat us and Citi zenship to Undoc umented Immigrants


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and wage gains ripple hrough he economy because immigrans are no jus workers

hey are also consumers and axpayers. Tey will spend heir increased earnings on he

purchase o ood, clohing, housing, cars, and compuers. Ta spending, in urn, will

simulae demand in he economy or more producs and services, which creaes jobs

and expands he economy.

Tis paper analyzes he 10-year economic impac o immigraion reorm under hreescenarios. Te rs scenario assumes ha legal saus and ciizenship are boh accorded

o he undocumened in 2013. Te second scenario assumes ha he unauhorized are

provided legal saus in 2013 and are able o earn ciizenship ve years hereaer. Te

hird scenario assumes ha he unauhorized are graned legal saus saring in 2013

bu ha hey are no provided a means o earn ciizenshipa leas wihin he 10-year

imerame o our analysis.

Under he rs scenarioin which undocumened immigrans are graned legal saus

and ciizenship in 2013U.S. gross domesic produc, or GDP, would grow by an

addiional $1.4 rillion cumulaively over he 10 years beween 2013 and 2022. Whasmore, Americans would earn an addiional $791 billion in personal income over he

same ime periodand he economy would creae, on average, an addiional 203,000

jobs per year.3 Wihin ve years o he reorm, unauhorized immigrans would be earn-

ing 25.1 percen more han hey currenly do and $659 billion more rom 2013 o 2022.

Tis means ha hey would also be conribuing signicanly more in ederal, sae, and

local axes. Over 10 years, ha addiional ax revenue would sum o $184 billion$116

billion o he ederal governmen and $68 billion o sae and local governmens.

Under he second scenarioin which undocumened immigrans are graned legal

saus in 2013 and ciizenship ve years hereaerhe 10-year cumulaive increase inU.S. GDP would be $1.1 rillion, and he annual increases in he incomes o Americans

would sum o $618 billion. On average over he 10 years, his immigraion reorm would

creae 159,000 jobs per year. Given he delay in acquiring ciizenship relaive o he rs

scenario, i would ake 10 years insead o ve or he incomes o he unauhorized o

increase 25.1 percen. Over he 10-year period, hey would earn $515 billion more and

pay an addiional $144 billion in axes$91 billion o he ederal governmen and $53

billion o sae and local governmens.

Finally, under he hird scenarioin which undocumened immigrans are graned legal

saus saring in 2013 bu are no eligible or ciizenship wihin 10 yearshe cumula-

ive gain in U.S. GDP beween 2013 and 2022 would sill be a signicanbu compar-

aively more modes$832 billion. Te annual increases in he incomes o Americans

would sum o $470 billion over he 10-year period, and he economy would add an

average o 121,000 more jobs per year. Te income o he unauhorized would be 15.1

percen higher wihin ve years. Because o heir increased earnings, undocumened

immigrans would pay an addiional $109 billion in axes over he 10-year period$69

billion o he ederal governmen and $40 billion o sae and local governmens.



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If undocumented immigrants acquire legal status in 2013 and citizenship in five years

If undocumented immigrants acquire legal status and citizenship in 2013

If undocumented immigrants acquire legal status in 2013 but no citizenship within 10 years

No reform: $0 for all scenarios

Cumulative increasein earnings of

undocumented immigrants

Increase in taxes paid byundocumented immigrants

$515B

$659B

$144B

State taxes

Federal taxes

53B

91B

$184B

68B

116B

Cumulative

increase in GDP Cumulative increase in theincome of all AmericansAverage annualincrease in jobs

$1.1T

$1.4T

$618B

$791B

159,000

203,000

$392B

$109B

40B

69B

$832B

$470B

121,000

$0 $0 $0 $0 0

Economic gains over 10 years:

Tese immigraion reorm scenarios illusrae ha unauhorized immigrans are cur-

renly earning ar less han heir poenial, paying much less in axes, and conribuing

signicanly less o he U.S. economy han hey poenially could. Tey also make clear

ha Americans sand o gain more rom an immigraion reorm policy o legalizaion

and ciizenship han hey do rom one o legalizaion aloneor rom no reorm a all.

Finally, he magniude o poenial economic gains depends signicanly on how quickly

reorms are implemened. Te sooner ha legal saus and ciizenship are graned o heunauhorized, he greaer he gains will be or he U.S. economy.


The nature and timing of immigration reform matters


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Analyzing the economic effects of legal status and citizenship

Numerous sudies and governmen daa ses have shown ha posiive economic

oucomes are highly correlaed wih legal saus and ciizenship. Large and deailed

governmen daasessuch as he U.S. Census Bureaus American Communiy Survey

and Curren Populaion Surveyhave documened, or example, ha U.S. ciizens have

average incomes ha are 40 percen greaer or more han he average incomes o non-ciizen immigrans, boh hose here legally and he unauhorized.4

Wihin he immigran communiy, economic oucomes also vary by legal saus. A sudy

done by George Borjas and Mara ienda ound ha prior o 1986 Mexican immigran

men legally in he Unied Saes earned 6 percen more han unauhorized Mexican

male immigrans.5 Research suggess ha undocumened immigrans are urher

underground oday han hey were in 1986and ha hey experience an even wider

wage gap.6 Kaherine Donao and Blake Sisk, or example, ound ha beween 2003 and

2009, he average hourly wage o Mexican immigrans legally in he Unied Saes was

28.3 percen greaer han i was or undocumened Mexican immigrans.7

In addiion, a U.S. Deparmen o Labor sudybased on a careully consruced and

large longiudinal survey o he nearly 3 million unauhorized immigrans who were

graned legal saus and given a road map o ciizenship under he Immigraion Reorm

and Conrol Ac o 1986ound ha hese previously undocumened immigrans

experienced a 15.1 percen increase in heir average inaion-adjused wages wihin

ve years o gaining legal saus.8 Sudies have also repored ha ciizenship provides

an added economic boos above and beyond he gains rom legalizaion. Manuel Pasor

and Jusin Scoggins, or insance, ound ha even when conrolling or a range o acors

such as educaional atainmen and naional origin, nauralized immigrans earned 11percen more han legal nonciizens.9

Tere are several reasons why legalizaion and ciizenship boh raise he incomes o

immigrans and improve economic oucomes. Providing a road map o ciizenship o

undocumened immigrans gives hem legal proecions ha raise heir wages. I also

promoes invesmen in he educaion and raining o immigrans ha evenually pays

o in he orm o higher wages and oupu; grans access o a broader range o higher-

paying jobs; encourages labor mobiliy which increases he reurns on he labor skills

o immigrans by improving he efciency o he labor marke such ha he skillses o

immigrans more closely mach he jobs ha hey perorm; and makes i more possible

or immigrans o sar businesses and creae jobs. Each o hese reasons is explained in

more deail below.



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Legal protections

Legalizaion allows he newly auhorized o invoke he numerous employmen righs

ha hey previously could no bene rombu were in mos cases eniled odue

o heir consan ear o being depored.10 Providing unauhorized workers wih legal

saus increases heir bargaining power relaive o heir employers, which in urn lowers

he likelihood o worker exploiaion and suppressed wages. Tis means ha newly legalimmigrans will be beter equipped o cones an unlawul erminaion o employmen,

o negoiae or air compensaion or a promoion, and o le a complain i hey believe

hey are being misreaed or abused. Ciizenship provides even greaer proecions han

legalizaion. Ciizens, or example, canno be depored, while immigrans who are legal

residens are sill subjec o deporaion under cerain circumsances.

Investment in education and training

Legal saus and a road map o ciizenship boh provide a guaranee o long-erm mem-bership in American sociey and cause nonciizen immigrans o inves in heir English

language skills and in oher orms o educaion and raining ha raise heir produciviy.

Research shows ha legal saus and a road map o ciizenship boh creae he opporu-

niy and incenive or workers o inves in heir labor-marke skills a a greaer rae han

hey oherwise would: Nearly 45 percen o he wage increases experienced by newly

legalized immigrans is due o upgrades in heir human capial.11 Similarly, a Deparmen

o Labor sudy o newly legalized immigrans ound ha hey had signicanly improved

heir English language skills and educaional atainmen wihin ve years o gaining legal

saus and a road map o ciizenship.12

Access to better jobs

Undocumened immigrans are no legally living in he counry, nor are hey legally

permited o work here. Expensive ederal- and sae-level employer sancions on he

hiring o undocumened workers urher resric heir access o airly compensaed and

legal work opporuniies because employers are relucan o hire immigrans. I hey do

hire immigrans, hey may use he hrea o hese sancions o jusiy paying immigrans

lower wages han hey are due.

Legal nonciizen immigrans also suer rom resriced job access due o lack o ciizen-

ship. Many jobsincluding many public-secor jobs, as well as high-paying privae-

secor jobsare eiher available only o ciizens or require securiy clearances ha

nonciizens canno obain. In addiion, employers oen preer ciizens o nonciizens

a orm o discriminaion ha is someimes permissible under U.S. labor laws. Even

where i is unlawul o discriminae, some employers may hire ciizens over nonciizens

or a variey o reasons, including:



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o ensure ha hey are no violaing he law by misakenly hiring undocumened

immigrans Because hey may believe ha ciizens are beter employees han nonciizens Because hey would preer o hire a co-naional raher han a nonciizen

Labor mobility and increasing returns

Legalizaion, invesmen in educaion and raining, and access o beter jobs leads o

greaer reurns on he labor skills and educaion o undocumened immigrans. Te

undocumened also experience increasing reurns rom he improved labor-marke mobil-

iy ha ollows legalizaion. Prior o legalizaion, unauhorized immigrans are subjec

o deporaion i hey are apprehended and, hereoreregardless o heir skillshey

end o pursue employmen in low-paying occupaions, such as arming, child care, and

cleaning services, where heir legal saus is less likely o be discovered. Tus, unauhorized

workers do no receive he same marke reurns on heir skills ha comparable bu legal

workers receive.13

Prior o legalizaion, a high school diploma does no resul in a saisi-cally signican wage premium over hose wihou his educaion.14 Aer legalizaion,

however, having a high school diploma or educaion beyond high school resuls in an

11 percen wage premium.15 In oher words, he reurns on he labor skills o he legalized

improve in par because workers move o secors where heir skills and educaion are boh

valued and relevan o he work being conduced.16 Hence, legalizaion and ciizenship

improve he efciency o he labor marke by ensuring ha people are working in elds

where heir skillses and raining are being used o he ulles exen.

Fostering entrepreneurship

Legal saus and ciizenship aciliae nonciizen-immigran enrepreneurship by providing

access o licenses, permis, insurance, and credi o sar businesses and creae jobs. Despie

he legal obsacles o enrepreneurship ha nonciizens currenly ace, he U.S. economy

benes signicanly rom immigran innovaors. Immigransboh legal and unauhor-

izedare more likely o own a business and sar a new business han are nonimmigrans. 17

Immigraion reorm ha unehers he creaive poenial o immigran enrepreneurs here-

ore promoes economic growh, higher incomes, and more job opporuniies.

Comparing the undocumented to naturalized citizens

In his sudy, we reach similar ndings on he posiive earnings impacs o legalizaion

and ciizenship on immigrans. We exend he analysis o repor he eec ha hey have

on U.S. ax receips and he overall U.S. economy. Specically, we analyze wha happens

o U.S. GDP, personal income, jobs, ax revenues, and he earnings o he 11 million

unauhorized immigrans under he hree immigraion scenarios described above.



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A good place o sar examining he eec o he undocumened ollowing a road map o

ciizenship is o compare hem o a group ha has already ollowed a similar map: hose

immigrans who are currenly nauralized ciizens.18 In doing such an analysis, we canno

simply assume ha he curren undocumened populaion would earn and conribue

as much as he presen class o nauralized-immigran ciizens has should hey obain

he same saus. Te immigrans who have already become ciizens are no necessarily

he same in oher economically relevan wayshey may, or example, dier in heireducaional atainmen and age.

We deal wih his possibiliy by using a regression analysis ha conrols or hese acors o

esimae he economic impac ha legal saus and ciizenship have on he naion and is

unauhorized immigran populaion. As a rs sep, we provide an esimae o he income

eec o providing ciizenship o all nonciizen immigrans, including boh hose here

legally and he unauhorized. We hen disaggregae his esimae o calculae he income

eec o providing legal saus and ciizenship o unauhorized immigrans only.

The income effect of citizenship for all immigrants

In our analysis, we esimae ha he income premium o ciizenship or all immigrans

boh documened and undocumenedby comparing he earnings o nauralized and

nonciizen immigran populaions while saisically conrolling or observable dierences

oher han ciizenship ha may aec income-level dierences beween he wo groups.19

We conrol or educaion level; work experience; age; year o arrival in he Unied Saes;

race/ehniciy; gender dierences; counry o origin; sae o residency; rural versus urban

residence; and marial saus o nauralized and nonciizen immigran populaions o esi-

mae he eec ha ciizenship has on earnings. We do so because hese acors are likelyo be responsible or dierences in he earnings o nauralized immigrans and nonciizen

immigransdierences ha would remain even i all nonciizens acquired ciizenship.

We know, or example, ha nonciizen immigrans are younger, less educaed, and less

advanced in heir careers han nauralized ciizensdierences ha would coninue o

aec he relaive earnings o boh groups aer acquisiion o ciizenship.

We nd ha ciizenship is associaed wih a saisically signican boos in he

incomes o immigransan average o 16 percen (17.1 percen or women and 14.5

percen or men) in 2011.20 O course, here is no policy being conemplaed oday

whereby al l nonciizens would become ciizens. And since our regression analysis

mixes already-documened legal nonciizens w ih undocumened nonciizens, i

does no measure he eec o a policy change aimed only a he undocumened. Bu

i does give a good indicaion o he impac over ime o moving people rom being

unauhorized o legal nonciizens o nauralized ciizenshe deails o which we

disaggregae in he nex secion o his paper.



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Our nding ha he income eec o ciizenship is posiive and signican is consisen

wih he resuls o oher sudies. We provide more deails on he ndings o hese oher

sudies in he appendix.

The economic effect of citizenship on unauthor ized immigrants: Income

gains from legalization and citizenship

I we made he assumpion ha he income eec o legalizaion and ciizenship

combined or he unauhorized is he same as he income eec o ciizenship ha we

esimaed or he enire nonciizen immigran populaion, hen we would conclude ha

he unauhorized would experience an average increase in income o 16 percen rom

legalizaion and ciizenship. Tis esimae, however, undersaes he rue income eec

or he unauhorized populaion because i aggregaes he relaively smaller income

gains ha legal nonciizens ge rom ciizenship alone wih he relaively larger income

gains ha he unauhorized ge rom legalizaion and ciizenship. In addiion, our regres-

sion esimae urher undersaes he income eec o ciizenship or he unauhorizedbecause he unauhorized are undercouned in he daase.21

Ciizenship or he unauhorized provides wo clearly disinc bu inerconneced

benes ha signicanly impac heir earnings and mus be aken ino accoun: legal

sanding and ciizenship. We know rom he larges and bes sudy o he income eec

o legalizaionhe 1996 U.S. Deparmen o Labor sudy ha analyzed he earnings o

he nearly 3 million unauhorized immigrans who were graned legal saus and given a

road map o ciizenship under he Immigraion Reorm and Conrol Ac o 1986ha

he average hourly wage o he newly legalized (bu no ye ciizen) populaion increased

by 15.1 percen ve years aer legalizaion.22

Unorunaely, he Deparmen o Labor sudy did no coninue o measure he wage

increases ha he newly legalized populaion gained aer hey acquired ciizenship.

An addiional income eec rom ciizenship would have occurred on op o he 15.1

percen income increase ha ollowed legalizaion, which implies ha undocumened

immigrans would have gained more han a 15.1 percen increase in heir earnings rom

acquiring boh legal saus and he oher benes o ciizenship. For a review o sudies

ha have shown he addiional income eec o ciizenship, see he appendix.

Noneheless, wih an appropriae adjusmen o accoun or he undercoun o unau-

horized immigrans, we can use our regression resuls, he Deparmen o Labors 1996

sudy, and a se o reasonable assumpions o esimae he likely ull income eec o

ciizenship or he unauhorized, aking ino accoun boh he legalizaion eec and he

urher increase in earnings due o he acquisiion o ciizenship. We can hen illusrae

he GDP, earnings, job growh, and ax-revenue implicaions o our esimae or hree

orms o immigraion reorm ha could sar in 2013.23



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o esimae he eec o ciizenship on he earnings o unauhorized immigrans, we

decompose he income eec o ciizenship ha we esimaed or all nonciizens16

percenino wo componens: one o esimae he percenage gain in income ha

he unauhorized experience as a consequence o ataining legal saus and he oher

o esimae he percenage gain in income ha hey obain rom becoming nauralized

ciizens. We hen add hese componens and adjus or he undercoun o he unauhor-

ized in he daase o arrive a a likely esimae o he ull income eec o ciizenship orunauhorized immigrans.

For he rs componen, we assume ha he unauhorized would gain he same 15.1

percen increase in income ha unauhorized immigrans experienced rom 1986 o

1992 when hey obained legal saus, as measured by he Deparmen o Labor.24 Tis

15.1 percen increase in wages over ve years was due o he immediae impac on

earnings o he acquisiion o legal saus and he subsequen eecs on earnings o he

acquisiion o more educaion, urher masery o English, access o a broader range o

jobs, and oher acors ha legalizaion encouraged and made possible.25

For he second componen, we hold consan he oal ciizenship eec16 percen

and hen calculae he eec o moving rom legal saus o ciizenship, weighing he

eec o reec he disribuion o legal and unauhorized nonciizen immigrans in our

sample and he average incomes o he wo groups.26 Our esimae o he second com-

ponen suggess ha previously unauhorized and newly legalized immigrans would

experience an addiional 10 percen gain in income i hey acquired ciizenship.27

aking ino accoun boh componens, our mos likely esimae o he ull eec o

graning legal saus and ciizenship o unauhorized immigrans is an income gain o

25.1 percen.28

O his boos in income, abou hree-hs comes rom legalizaion andabou wo-hs is atribuable o ransiioning rom legal saus o ciizenship.29

10-year projections of the economic gains from immigration reform

Applying our 25.1 percen ciizenship eec on he income o he undocumened, we

projec he economic gains rom immigraion reorm under hree scenarios. Te rs

and mos poliically unlikely scenariobu one ha is noneheless useul or com-

parison purposesassumes ha legal saus and ciizenship are boh conerred on

he undocumened in 2013. Te second scenario assumes ha he unauhorized are

provided legal saus in 2013 and ciizenship ve years hereaer. Te hird scenario

assumes ha he unauhorized are graned legal saus saring in 2013 bu ha hey are

no given a road map o ciizenship.

Under he rs scenarioboh legal saus and ciizenship in 2013U.S. GDP would

grow by an addiional $1.4 rillion cumulaively, and he personal income o Americans



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would grow an addiional $791 billion over he 10 years beween 2013 and 2022.30 Over

he same ime period, here would be an average o 203,000 more jobs per year.3132

Unauhorized immigrans would also be beter o. Wihin ve years hey would be

earning 25.1 percen more annually. As a consequence, over he ull 10-year period, he

ormerly unauhorized would earn an addiional $659 billion and pay a leas $184 bil-

lion more in ederal, sae, and local axes$116 billion more o he ederal governmenand $68 billion more o sae and local governmens.33

Under he second scenariolegal saus in 2013 ollowed by ciizenship ve years

hereaerhe 10-year cumulaive increase in he economy o he Unied Saes would

be $1.1 rillion, and he annual increases in he incomes o Americans would sum o

$618 billion.34 Over he 10 years, his immigraion reorm would creae an average o

159,000 jobs per year.35 Given he delay in acquiring ciizenship relaive o he rs sce-

nario, i would ake 10 years insead o ve years or he incomes o he unauhorized o

increase 25.1 percen. Over he 10-year period, hey would earn $515 billion more and

pay an addiional $144 billion in axes$91 billion o he ederal governmen and $53billion o sae and local governmens.

Finally, under he hird scenariolegal saus only saring in 2013he cumulaive

gain in U.S. GDP beween 2013 and 2022 would be a more modes $832 billion. 36 Te

annual increases in he incomes o residens o he Unied Saes would sum o $470

billion over he 10 years, and he economy would have an average o 121,000 more

jobs per year.37 Te income o he unauhorized would be 15.1 percen higher wihin

ve years. Over he 10-year period, hey would earn $392 billion more and pay an

addiional $109 billion in axes$69 billion o he ederal governmen and $40 bil-

lion o sae and local governmens.38

In each o the three scenarios we have almost certainly understated the

amount o additional taxes that will be paid by undocumented immigrant

workers because the tax estimates include only taxes rom the increased

earnings o the previously undocumented. While it has been widely

documented that unauthorized workers are contributing billions o dollars

in ederal, state, and local taxes each year, the Congressional Budget Oce

estimates that between 30 percent and 50 percent o the undocumented

population ails to declare their income.39 To the extent that some o these

immigrantswho are working in the underground economyare not re-porting their incomes or ear o being discovered and deported, however,

legal status and citizenship is likely to push them into the legal economy

where they will be declaring their income and paying billions o dollars

in taxes in addition to the amounts that we have calculated above.40 The

reporting o this income, however, may increase business deductions or

labor compensation, osetting part o the tax gain. In addition, some cu

rently unauthorized immigrants who have income taxes withheld may

upon attaining legal statusfle returns and claim reunds or deduction

and exemptions that will oset some o the tax revenue gained rom the

higher reporting o income.



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Conclusion

Te posiive economic impacs on he naion and on undocumened immigrans o gran-

ing hem legal saus and a road map o ciizenship are likely o be very large. Te naion as

a whole would bene rom a sizable increase in GDP and income and a modes increase

in jobs. Te earnings o unauhorized immigrans would rise signicanly, and he axes

hey would pay would increase dramaically. Given ha he ull benes would phase inover a number o years, he sooner we gran legal saus and provide a road map o ciizen-

ship o unauhorized immigrans, he sooner Americans will be able o reap hese benes.

I is also clear ha legalizaion and a road map o ciizenship besow greaer gains on he

American people and he U.S. economy han legalizaion alone.

About the authors

Robert G. Lynch is he Everet E. Nutle proessor and chair o he Deparmen oEconomics a Washingon College. His areas o specializaion include public policy,

public nance, inernaional economics, economic developmen, and comparaive

economics. He is he auhor o several papers and books ha have analyzed he eec-

iveness o governmen economic policies in promoing economic developmen and

creaing jobs. He holds a bachelors degree in economics rom Georgeown Universiy

and a masers degree and docorae in economics rom he Sae Universiy o New York

a Sony Brook.

Patrick Oakford is a Research Assisan a he Cener or American Progress. His

research ocuses on he economics o immigraion policy, labor migraion, and heinersecion o immigraion and employmen laws. Parick received he award or bes

disseraion in he eld o migraion sudies in 2012 and his work has appeared in Te

New York imes, Naional Journal, and Te Hill. He holds a maser o science degree

in migraion sudies rom he Universiy o Oxord and a bachelors degree in indusrial

and labor relaions rom Cornell Universiy.

Tis sudy was made possible by he generous suppor of he JBP Foundaion. Te views

expressed are hose of he auhors and no necessarily he JBP Foundaion.Te auhors would

like o hank John Schmit, Michael Etlinger, Heidi Sheirholz, Josh Bivens, Angela Maria

Kelley, Marshall Fiz, and Philip Wolgin for heir helpful commens and suggesions.



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Appendix: Review of the literature on the income effect of citizenship

Manuel Pastor and Justin Scoggins

Pasor and Scoggins ound in heir 2012 sudy ha nauralized ciizens in 2010 earned

11 percen more hanlegal nonciizens aer conrolling or acors oher han ciizen-ship ha may be responsible or heir income dierences.41 Pasor and Scoggins waned

o measure he eec o ciizenship on legal nonciizen immigrans only and atemped

o conrol or he inuence o unauhorized immigrans by using several conrols.42

Tis is imporan o noe because he earnings increases rom ciizenship or unauhor-

ized immigrans may be higher han hey are or legal nonciizen immigrans since he

undocumened receive wo disinc ses o beneshe benes o legal saus and he

benes o ciizenshipwhereas legal immigrans gain only he benes o ciizenship.

In ac, a 1996 U.S. Deparmen o Labor sudy suggess ha he earnings gains or

unauhorized immigrans rom legalizaion alone may ousrip he earnings gains romciizenship or already-legal immigrans.43 Given ha he income eec ha Pasor and

Scoggins esimaed did no atemp o measure he income eec o ciizenship on all

nonciizensas well as he probabiliy ha, i used as a proxy or such an eec, heir

income eec would probably undersae he income eec o ciizenship on all noncii-

zen immigransheir esimae should no be compared direcly o ours. Unlike Pasor

and Scoggins, we sough o measure he ciizenship eec on all nonciizen immigrans.

Heidi Shierholz

Shierholzs 2010 sudy measured he income eec o ciizenship on all nonciizen

immigrans, no jus on legal nonciizens. Hence, her esimae can be compared o ours.

Using daa rom 2006 o 2007, Shierholz ound ha nauralized ciizens had amily

incomes ha were abou 15 percen higher han he amily incomes o all nonciizen

immigrans once acors aside rom ciizenship were aken ino accoun.44

Ather Akbari

In his 2008 sudy, Akbari, ound a wage eec o ciizenship or legal immigrans rom

developing counrieswho represen he large majoriy o U.S. immigransha

varied rom abou 9 percen o 12 percen depending on he specicaion he used.45

Akbari explicily atemped o conrol or he biasing eec o he presence o unau-

horized immigrans in he daase he used by excluding Mexican immigrans because

a large number o hem are unauhorized.46 Because he daase excludes mos o he

undocumened, Akbaris esimae o he income eec o ciizenship on legal immigrans



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probably undersaes he income eec o ciizenship on all nonciizens and should no

be used as a proxy or such an eec or compared o our esimae.

Bernt Bratsberg, James Ragan, and Zafar Nasir

In a 2002 longiudinal sudy, Brasberg, Ragan, and Nasir ollowed a sample o 332young male legal immigrans rom 1979 hrough 1991 and ound ha ciizenship was

associaed wih a wage gain o around 5.6 percen.47 Tey measured he impac o cii-

zenship on legal immigrans only, and heir resuls hereore probably also undersae

he ciizenship eec on all nonciizen immigrans.

Barry Chiswick

Tis much older cross-secional sudy done in 1978 using 1970 Census daa ound ha

ciizenship had a 15 percen eec on he earnings o oreign-born whie men.48

Bu heeec o ciizenship ell o 7 percen and los saisical signicance once he conrolled

or he duraion o residence in he Unied Saes. Given ha whie men consiue less

han 8 percen o nonciizen immigrans oday, however, i is no clear how relevan

his sudy is o he presen circumsances. In a 1992 analysis using 1980 Census daa on

oreign-born men o all races, Chiswick and co-auhor Paul Miller repored a signican

income eec o abou 4 percen.49

Tese later hree sudies probably undersae he bene o ciizenship because hey

exclude women, or whom he ciizenship eec was ound o be larger han or men

in boh he Shierholz sudy17 percen or women versus 12 percen or menandPasor and Scoggins sudy13 percen or women and 9 percen or men I was also

larger in our esimaes.50



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Endnotes

1 Sen. Charles Schumer and others, Bipartisan Frameworkor Comprehensive Immigration Reorm (2013), available athttp://s3.documentcloud.org/documents/562528/reorm-0128principlessenatenal.pd; Ezra Klein, READ: PresidentObamas immigration proposal, Wonk Blog, January 29,2013, available at http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immi-

gration-proposal/.

2 See, or example: Russell Berman, In rst immigration hear-ing, House GOP seeks middle ground on c itizenship path,The Hill, February 5, 2013, available at http://thehill.com/homenews/house/281187-in-rst-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-path;Ashley Parker, House G.O.P. Open to Residency or Ill egalImmigrants, The New York Times, February 5, 2013, availableat http://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-o-citizenship.html?_r=0.

3 The Current Population Survey denes total personalincome as each respondents total pre-tax personal incomegains and losses rom all sources or the previous calendaryear. In our analysis, we only include those with positivetotal personal income.

4 See: U.S. Census Bureau,American Community Survey: 1 Year

Estimates (U.S. Department o Commerce, 2011); U.S. CensusBureau, 2012 March Current Population Survey(U.S. Depart-ment o Commerce, 2012).

5 George J. Borjas and Marta Tienda, The Employment andWages o Legalized Immigrants,International MigrationReview27 (4) (1993): 712747.

6 See: Katharine M. Donato and Blake Sisk, Shits in theemployment outcomes among Mexican migrants to theUnited States, 19762009, Research in Social Stratifcationand Mobility30 (1) (2012): 6377; Matthew Hall, EmilyGreenman, and George Farkas, Legal Status and Wage Dis-parities or Mexican Immigrants,Social Forces 89 (2) (2010):491514; Katharine M. Donato and Douglas S. Massey,Eect o the Immigration Reorm and Control Act on theWages o Mexican Migrants, Social Science Quarterly74 (3)(1993): 523541; Douglas S. Massey and Julia Gelatt, Whathappened to the wages o Mexican immigrants? Trends andinterpretations,Latino Studies 8 (3) (2010): 328354.

7 Donato and Sisk, Shits in the employment outcomesamong Mexican migrants to the United States, 19762009.

8 U.S. Department o Labor, Characteristics and Labor MarketBehavior o the Legalized Population Five Years FollowingLegalization (1996).

9 Manuel Pastor and Justin Scoggins, Citizen Gain: TheEconomic Benets o Naturalization or Immigrants and theEconomy(Los Angeles: Center or the Study o ImmigrantIntegration, University o Southern Caliornia, 2012).

10 Kati L. Grith, U.S. Migrant Worker Law: The Interstices oImmigration Law and Labor and Employment Law,Com-

parative Labor Law & Policy Journal31 (125) (2009): 125161;Shannon Gleeson, Labor Rights or All? The Role o Undocu-mented Immigrant Status or Worker Claims Making,Lawand Social Inquiry35 (3) (2010): 562.

11 Francisco L. Rivera-Batiz, Undocumented Workers in the

Labor Market: An Analysis o the Earning o Legal and IllegalMexican Immigrants in the United States,Journal o Popula-tion Economics 12 (1) (1999): 91116.

12 U.S. Department o Labor, Characteristics and Labor MarketBehavior o the Legalized Population Five Years FollowingLegalization.

13 Sherrie A. Kossoudji and Deborah A. Cobb-Clark, Comingout o the Shadows: Learning about Legal Status and Wagesrom the Legalized Population,Journal o Labor Economics20 (3) (2002): 598628.

14 Ibid, p. 617.

15 Ibid.

16 Sherrie A. Kossoudji and Deborah A. Cobb-Clark reportedthat 38.8 percent o Mexican men who received l egal statusunder the Immigration Reorm and Control Act had moved

on to higher-paying occupations by 1992. See: Sherrie A.Kossoudji and Deborah A. Cobb -Clark, IRCAs Impact onthe Occupational Concentration and Mobility o Newly-Legalized Mexican Men,Journal o Population Economics 13(1) (2000): 8198.

17 See: Robert W. Fairlie, Immigrant Entrepreneurs and SmallBusiness Owners, and their Access to Financial Capital,(Washington: U.S. Small Business Administration, 2012);Robert W. Fairlie, Open or Business: How Immigrants areDriving Small Business Creation in the United States (NewYork: Partnership or a New American Economy, 2012).

18 O the approximately 40 million oreign-born immigrantsliving in the United States, 18 million are naturalized citizenimmigrants and 22 million are noncitizen immigrants. Othe 22 million noncitizen immigrants, about hal have l egalstatus while the other halapproximately 11.1 millionpeopleare unauthorized. See: U.S. Census Bureau, 2012March Current Population Survey(U.S. Department o Com-

merce, 2012); Jerey S. Passel and DVera Cohn, Unauthor-ized Immigrants: 11.1 Million in 2011, Pew Hispanic Center,December 6, 2012, available at http://www.pewhispanic.org/2012/12/06/unauthorized-immigrants-11-1-million-in-2011/.

19 Specically, we perorm a regression analysis on the March2012 Current Population Survey compiled by the U.S.Census Bureau, which estimated total personal incomein the United States in 2011. We used the March CurrentPopulation Survey instead o other datasets suc h as theAmerican Community Survey because the best estimateso the unauthorized population are derived rom the MarchCurrent Population Survey in conjunction with other U.S.Census data. As a consequence, we have estimates o theundercount o the unauthorized in the Current PopulationSurvey, which are needed or the analysis we do in thispaper. We do not have these estimates or the AmericanCommunity Survey or other datasets.

20 The estimated eect was statistically signicant at the 1 per-

cent level. Our model, however, may somewhat understateor overstate the eect o citizenship on income. The datasetundercounts the number o undocumented immigrants,which is likely to cau se our regression analysis to understatethe citizenship eect. Furthermore, regression analysessuch as ours can control or observable and measurablecharacteristics, but they cannot control or unobservableor unmeasurable actors that may explain the eect theyattempt to measure. So, or example, our model may be a-ected by unobservable selection bias and by unmeasurablelanguage characteristics.

In terms o unobservable selection bias, it is possible thatlegal immigrants who naturalize have unobservable charac-teristics that enable them to earn moreor lessthan legalimmigrants who do not naturalize. I there is a selectionbias, our model will overstateor understatethe incomegains that citizenship is likely to provide to noncitizens.

In terms o unmeasurable language characteristics, our

dataset does not contain specic inormation on theEnglish language ability o immigrants and, thereore, ourmodel does not directly c ontrol or English language ability.I the English language ability o naturalized citizens isgreater than that o noncitizen immigrantswhich is likelyto be the casethen ailing to control or language abilitywill cause our model to overstate the true impact o citizen-ship on income. Several variables that we do control or,howeversuch as year o arrival in the United States andcountry o originare strongly correlated with English lan-guage ability. Thus, the eect o English language ability onearnings is, at least partly, accounted or in our regression.

http://s3.documentcloud.org/documents/562528/reform0128principlessenatefinal.pdfhttp://s3.documentcloud.org/documents/562528/reform0128principlessenatefinal.pdfhttp://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immigration-proposal/http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immigration-proposal/http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immigration-proposal/http://thehill.com/homenews/house/281187-in-first-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-pathhttp://thehill.com/homenews/house/281187-in-first-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-pathhttp://thehill.com/homenews/house/281187-in-first-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-pathhttp://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-of-citizenship.html?_r=0http://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-of-citizenship.html?_r=0http://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-of-citizenship.html?_r=0http://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-of-citizenship.html?_r=0http://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-of-citizenship.html?_r=0http://www.nytimes.com/2013/02/06/us/politics/house-gop-explores-immigration-changes-short-of-citizenship.html?_r=0http://thehill.com/homenews/house/281187-in-first-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-pathhttp://thehill.com/homenews/house/281187-in-first-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-pathhttp://thehill.com/homenews/house/281187-in-first-immigration-hearing-house-gop-seeks-middle-ground-on-citizenship-pathhttp://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immigration-proposal/http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immigration-proposal/http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29/read-president-obamas-immigration-proposal/http://s3.documentcloud.org/documents/562528/reform0128principlessenatefinal.pdfhttp://s3.documentcloud.org/documents/562528/reform0128principlessenatefinal.pdf


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We tested or the eect on our results o omitting an Englishlanguage control by running our regression modelwiththe exception o the urban/rural dummy variable becausethe data were not availableon the 2011 American Com-munity Survey dataset, which contains inormation on thelanguage ability o immigrants. We ran our specicationtwiceonce with and once without a language control. Thedierence in the income eect between the two modelswas less than 5 percent. This implies that our estimated in-come eect o citizenship on all noncitizens may have beenabout 15.2 percent had a language control b een included,instead o the 16 percent we measured in the absence o alanguage control.

21 Careul analyses suggest that the March CurrentPopulation Survey datasets undercount the number ounauthorized immigrants by an estimated 10 percent to15 percent. Jerey Passel, Unauthorized Migrants in theUnited States: Estimates, Methods, and Characteristics.OECD Social, Employment and Migration Working Paper57 (OECD Publishing, 2007), available at http://dx.doi.org/10.1787/110780068151.The 16 percent citizenshipeect that we measured or all noncitizens thus dispropor-tionately refects the income eect o granting citizenshiptolegal noncitizens. This means that our regression estimateunderstates the ull income eect o granting citizenshipto all noncitizensboth documented and undocu mentedalikeliving in the United States. The ull income eec tshould include the boost in income derived rom acquiringlegal status or all unauthorized noncitizens and the urtherincrease in income or all noncitizens rom becomingnaturalized citizens. By the same logic, the citizenship eectthat we measured overstates the income gain that legal

noncitizen immigrants would obtain rom acquiring citizen-ship to the extent that our measure incorporates some othe benet rom acquiring legal status that accrues only tothe unauthorized.

22 Given that undocumented immigrants are urther under-ground today than they were in 1986and that the gapin earnings between legal and unauthorized immigrants isestimated to be larger today than it was in 1986it is pos-sible that unauthorized immigrants would gain even morethan a 15.1 percent wage boost today rom legalization. See:Donato and Sisk, Shits in the employment outcomes amongMexican migrants to the United States, 19762009; Hall,Greenman, and Farkas, Legal Status and Wage Disparities orMexican Immigrants; Donato and Massey, Eect o the Im-migration Reorm and Control Act on the Wages o MexicanMigrants; Massey and Gelatt, What happened to the wageso Mexican immigrants? Trends and interpretations.

It is also interesting to note that this real wage increase oc-curred even though the economy went through a recession

and the overall wage picture or U.S. workers was grim overthis period. The infation-adjusted average hourly wage oproduction and nonsupervisory workers rom 1987 to 1992declined by 3.7 percent. Research also indicates that theImmigration Reorm and Control Acts legalization programdid not cause the wages o native workers to decline. Thus,the real wage decline between 1986/87 and 1992 is notthe result o the undocumented population receiving legalstatus. See: Elaine Sorensen and Frank D. Bean, The Immi-gration Reorm and Control Act and the Wages o MexicanOrigin Workers: Evidence rom Current Population Surveys,Social Science Quarterly75 (1) (1994): 117; Deborah A.Cobb-Clark, Clinton R. Shiells, and B. Lindsay Lowell, Im-migration Reorm: The Eects o Employer Sanctions andLegalization on Wages,Journal o Labor Economics 13 (3)(1995): 472498.

23 Immigration reorm could grant legal status and citizenshipsimultaneously. It would more likely, however, grant legalstatus and then require a waiting periodsuch as ve

yearsbeore citizenship could be acquired. Hence, it isnot possible to know how much time would have to elapsebeore the ull benets o citizenship would be obtained.The 1996 Department o Labor study, however, measuredthe benets o legalization ve years ater l egalization,and the 2002 study authored by Bratsberg and othersaswell as the 2012 Pastor and Scoggins studysuggests thatthe bulk o the benets o citizenship take eect within aew years o acquiring citizenship. Pastor and Scoggins, orexample, estimate that roughly 64 percent o the incomegains due to the acquisition o citizenship occur within therst two years o naturalization. Hence, or the purpose o

this analysis, we assume that the income benets o legal-ization and citizenship both occur over the rst ve yearso the newly acquired status and that they are rontloaded,such that 32 percent o the income eect occurs in each othe rst two years and 12 percent occurs in each o the nextthree years.

24 As we noted earlier, this may understate the gain rom legal-ization that the unauthorized would receive today becausethey are more underground now: The wage gap betweenthem and legal noncitizens is wider today than it was beorethe passage o the Immigration Reorm and Control Act. Intheir 2010 study based on data rom 2003 to 2004, Laura

Hill, Magnus Lostrom, and Joseph M. Hayes reported thatthe earnings o unauthorized immigrants were 18.7 percentto 20.5 percent higher ater they acquired legal permanentresidency. A direct comparison to the gai ns reported in the1996 Department o Labor study cannot be made becausethe study undertaken by Hill and others examined the di-erence in the earnings o the unauthorized rom their rstU.S. job to their earnings 4 to 13 months ater they acquiredlegal status. The Department o Labor study examinedgains rom just beore the acquisition o legal status to veyears ater the acquisition o legal status. See: Laura E. Hill,Magnus Lostrom, and Joseph M. Hayes, Immigrant Legal-ization: Assessing the Labor Market Eects (San Francisco:Public Policy Institute o Caliornia, 2010).

In their 2010 study, Manuel Pastor, Justin Scoggins, JennierTran, and Rhonda Ortiz estimated that the immediate eecto authorization would be a 9.5 percent increase in thewages o unauthorized Latino immigrants who were ul l-time workers in Caliornia in 2009. They urther projected

that the earnings o the ormerly unauthorized workerscould increase over timeby nearly ve times the immedi-ate gainas the newly authorized increased their levels oeducational attainment and improved their English fuency.See: Manuel Pastor and others, The Economic Benets oImmigrant Authorization in Caliornia (Los Angeles: USCCenter or the Study o Immigrant Integration, 2010).

25 We do not disaggregate these multiple actors. EconomistFrancisco Rivera-Batiz, however, estimated in 1999 thatlegal status alone was responsible or a wage increase o 8.4percent or male beneciaries o the Immigration Reorm andControl Act by 1992. He estimated a 13 percent or emalebeneciaries by 1992. Similarly, economists Catalina Amuedo-Dorante, Cynthia Bansak, and Stephen Raphael estimatedin 2007 that legalization alone resulted in real hourly wageincreases o 9.3 percent or male beneciaries o the Im-migration Reorm and Control Act and 2.1 percent or emalebeneciaries by 1992. Likewise, Kossoudji and Cobb-Clark es-timated in 2002 that authorization alone had raised the wageso male beneciaries o the Immmigration Reorm and Control

Act 6 percent by 1992. See: Rivera-Batiz, UndocumentedWorkers in the Labor Market; Catalina Amuedo-Dorantes,Cynthia Bansak, and Stephen Raphael, Gender Dierences inthe Labor Market: Impact o IRCA,American Economic Review97 (2) (2007): 412416; Sherrie A. Kossoudji and Deborah A.Cobb-Clark, Coming out o the Shadows.

26 We assume that there are 8 million unauthorized immigrantsin the labor orce. See: Passel and Cohn, UnauthorizedImmigrant Population: National and State Trends, 2010. Forthe distribution o legal and unauthorized noncitizen im-migrants in our sample we assume a 10 percent undercounto the unauthorized. See: Passel, Unauthorized Migrants inthe United States: Estimates, Methods, and Characteristics.For the average incomes o the two groups, we assume thatlegal noncitizens earn 28.3 percent more than unauthorizedimmigrants. See: Donato and Sisk, Shits in the employmentoutcomes among Mexican migrants to the United States,19762009. We subsequently adjust the total citizenshipeect on the unauthorized to refect the undercount o

unauthorized immigrants. Failure to do so would cause usto understate the likely economic eect o providing legalstatus and citizenship to the undocumented.

27 We assume that the 10 percent income eect o movingrom legal status to citizenship is the same or the newlylegalized but previously unauthorized immigrants as it is orall legal noncitizens. Our estimate o the 10 percent incomeeect o citizenship on legal immigrants is about the sameas the 11 percent estimated by Pastor and Scoggins andthe 9 percent to 12 percent calculated by Akbari. See: AtherH. Akbari, Immigrant Naturalization and its Impacts on

http://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Fdx.doi.org%2F10.1787%2F110780068151;h=repec:oec:elsaab:57-enhttp://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Fdx.doi.org%2F10.1787%2F110780068151;h=repec:oec:elsaab:57-enhttp://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Fdx.doi.org%2F10.1787%2F110780068151;h=repec:oec:elsaab:57-enhttp://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Fdx.doi.org%2F10.1787%2F110780068151;h=repec:oec:elsaab:57-en


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Immigrant Labour Market Perormance and Treasury. InPieter Bevelander and Don J. DeVoretz, eds, The Economicso Citizenship (Malm, Sweden: Malm University, 2008).

28 Varying the undercount o the unauthorized rom 10percent to 15 percent and the wage dierential rom 6percentper Borjas and Tienda, 1993to 28.3 percentcauses the total eect o citizenship on the incomes o theunauthorized to vary rom 24.4 percent to 25.6 percent.

29 We assume that all o the unauthorized immigrants whogain legal status eventually become citizens. To the extentthat some o the newly authorized immigrants do not

acquire citizenship, the economic benets would b e smaller.

30 These gains in total personal income and GDP were calcu-lated in the ollowing way. First, we calculated the boost inthe total personal income o the unauthorized that wouldresult rom a 25.1 percent increase in their income in 2011,as derived rom the March 2012 Current Population Survey.Following the convention that economists generally use, weassumed that this initial income gain resulted entirely romthe higher productivity o the unauthorized. Then, holdingconstant the 2011 relationship between total personalincome and GDP, we calculated an initial increase in GDP in2011. Next, we assumed that part o the initial income gainwould be spent, thereby inducing a boost in total spend-ing and economic activity that would ripple through theeconomy and urther increase GDP, earnings, jobs, and taxrevenues. We assumed a modest induced-spending or mul-tiplier eect o 1.2, which is consistent with the multipliersthat CBO and Moodys Analytics estimated or two programsin 2011 aimed at workers with relatively low incomes that

are similar to the incomes o the unauthorized: the earnedincome tax credit and the making work pay tax credit. Aterapplying the multiplier, we calculated the percentage changein GDP in 2011 and applied it to projections o GDP rom2013 to 2022. These projections are based on the economicorecast o: Congressional Budget Oce, Baseline EconomicForecastFebruary 2013 Baseline Projections (2013). Finally,we assumed that the income benets o legalization andcitizenship both occur over the rst ve years o the newlyacquired status and are rontloaded, such that 32 percent oc-cur in each o the rst two years and 12 percent occur in eacho the next three years.

Our 10-year cumulative GDP-growth estimate is consistentwithbut should not be compared tothe ndings o RalHinojosa-Ojeda, who concluded that comprehensive immi-gration reorm would add 1.5 trillion to GDP over 10 years.The Hinojosa-Ojeda study has a dierent scope o analysis.It considers the economic impact o providing legaliza-tion and a road map to citizenship or the undocumentedpopulation while also accounting or uture immigration

fows. See: Ral Hinojosa-Ojeda, Raising the Floor orAmerican Workers (Washington: Center or AmericanProgress and Immigration Policy Center, 2010), availableat http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-foor-or-american-workers/.

31 As noted in the previous endnote, we assumed that theinitial output, or GDP, gain derived entirely rom the higherproductivity o the previously unauthorized due to amultiplicity o interrelated actors: With legalization andcitizenship there will be a better match between workersskills and the jobs they perorm, which will enhance theeciency o the labor market. It will also lead to an increasein the education and trainingthe human capitalo thenew citizens, making them more productive, and it willallow a acilitation o entrepreneurship that will lead to newbusiness startups. Since the initial GDP gain is a unction othe higher productivity o the existing wo rkorce, the initialGDP increase cannot cause a gain in jobs. The induced

increase in GDP that occurs when part o the earnings boosto the unauthorized is spent, however, requires additionalworkers and thus creates new jobs. This induced increasein GDP was the dierence between the initial productivity-caused increase in GDP and the nal increase in GDP, whichincluded the induced-spending, or multiplier, eect. Wethen calculated the jobs gain by assuming one new jobwould be created or each $115,000 increase in outpu t, orGDP. The job impact estimation methods used here canbe ound in: Josh L. Bivens, Method memo on estimatingthe jobs impact o various policy changes (Washington:Economic Policy Institute, 2011), available at http://www.

epi.org/publication/methodology-estimating-jobs-impact/;Doug Hall and David Cooper, How raising the ederalminimum wage would help working amilies and give theeconomy a boost (Washington: Economic Policy Institute,2012), available at http://www.epi.org/publication/ib341-raising-ederal-minimum-wage/.

I it is the case that some o the initial income gains are dueto a redistribution o income to unauthorized immigrantemployees, then the true impacts on jobs and GDP arelikely to be larger than those we have estimated, as theunauthorized are likely to have relatively high marginalpropensities to consume. In addition, our estimate o the

additional jobs in the economy may u nderstate the growthin ocially documented jobs because some o the undocu-mented immigrant workers may move rom the inormal,underground, and undocumented economy to the ormaland documented employment sector, where they will beocially counted in government surveys o employment.

32 The annual jobs increase averages 203,000 jobs, but itranges rom a low o 56,000 jobs in 2013 to a high o287,000 jobs in 2022.

33 These gains in tax revenue are likely to be partially osetby additional government expenditures on services thatthe newly authorized immigrants might become eligible toreceive, such as Medicare, Medicaid, supplemental nutritionassistance, unemployment insurance, and Social Security.Research indicates, however, that the additional taxes paidby newly legalized residents are greater than the additionalgovernment expenditures they cause by participating insocial programs. In other words, even when accou nting

or increased government expenditures, legalization yieldsa net increase in tax revenue. CBOs cost estimate o theComprehensive Immigration Reorm Act o 2007 estimatedthat the ratio o increases in revenue to increases in directspending would be more than 2-to-1 over the rst 10 years:$48 billion in tax revenues versus $22.7 billi on in additionalexpenditures. See: Congressional Budget Oce, CostEstimate: Senate Amendment 1150 to S. 1348, the Compre-hensive Immigration Reorm Act o 2007, As a mended bythe Senate through May 24, 2007 (2007), available at http://www.cbo.gov/sites/deault/les/cboles/tpdocs/81xx/doc8179/sa1150_june4.pd.

34 In this second scenario, we phase in the 15.1 percentincome eect o legalization over the rst ve years and theadditional 10 percent income eect o citizenship over thelast ve years. For both income eects, we rontload them,such that 32 percent occur in eac h o the rst two years and12 percent occur in each o the next three years.

35 The annual jobs increase averages 159,000 jobs, but it

ranges rom a low o 34,000 jobs in 2013 to a high o283,000 jobs in 2022.

36 In this third scenario, we phase in the 15.1 percent incomeeect o legalization over the rst ve years and rontloadit, such that 32 percent occurs i n each o the rst two yearsand 12 percent occurs in each o the next three years.

37 The annual jobs increase averages 121,000 jobs, but itranges rom a low o 34,000 jobs in 2013 to 169,000 jobs in2022.

38 We may have overstated the gains rom scenario three: le-galization alone. The 15.1 percent wage increase measuredby the Department o Labor in its 1996 study o the newlylegalized but not yet citizen population was not simply aconsequence o legalization: It was also a consequence othe guarantee o a road map to citizenship. Without a roadmap to citizenship, the recently legalized may have investeddierentlyit is reasonable to assume lessin their human

capital. This may lead to a smaller than 15.1 percent wageincrease rom legalization alone.

39 See, or example: Unauthorized Immigrants Pay TaxesToo, Immigration Policy Center, April 18, 2011, available athttp://www.immigrationpolicy.org/just-acts/unauthorized-immigrants-pay-taxes-too. Congressional Budget Oce, TheImpact o Unauthorized Immigrants on the Budgets o Stateand Local Governments (U.S. Department o Labor, 2007).

40 Congressional Budget Oce, Cost Estimate: SenateAmendment 1150 to S. 1348.

http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-floor-for-american-workers/http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-floor-for-american-workers/http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-floor-for-american-workers/http://www.epi.org/publication/methodology-estimating-jobs-impact/http://www.epi.org/publication/methodology-estimating-jobs-impact/http://www.epi.org/publication/ib341-raising-federal-minimum-wage/http://www.epi.org/publication/ib341-raising-federal-minimum-wage/http://www.immigrationpolicy.org/just-facts/unauthorized-immigrants-pay-taxes-toohttp://www.immigrationpolicy.org/just-facts/unauthorized-immigrants-pay-taxes-toohttp://www.immigrationpolicy.org/just-facts/unauthorized-immigrants-pay-taxes-toohttp://www.immigrationpolicy.org/just-facts/unauthorized-immigrants-pay-taxes-toohttp://www.epi.org/publication/ib341-raising-federal-minimum-wage/http://www.epi.org/publication/ib341-raising-federal-minimum-wage/http://www.epi.org/publication/methodology-estimating-jobs-impact/http://www.epi.org/publication/methodology-estimating-jobs-impact/http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-floor-for-american-workers/http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-floor-for-american-workers/http://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the-floor-for-american-workers/


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41 Pastor and Scoggins, Citizen Gain: The Economic Benetso Naturalization or I mmigrants and the Economy.Whenthey control or industry/occupation, their model nds acitizenship eect o 8 percent. This specication does notallow their model to capture any income eects o citizen-ship that may result rom job mobility. It is not clear to usthat this control should be used because one o the keyways citizenship leads to higher earnings is by enabling im-migrants to get jobs in industries and occupations that werepreviously closed to them. (For a theoretical discussion othis point, see: Bernt Bratsberg, James F. Ragan, and Zaar M.Nasir, The Eect o Naturalization on Wage Growth: A PanelStudy o Young Male Immigrants,Journal o Labor Econom-

ics 20 (3) (2002): 568597.) Indeed, Sherrie Kossoudji andDeborah Cobb-Clark reported that 38.8 percent o Mexic anmen who received legal status under the ImmigrationReorm and Control Act had moved on to higher-payingoccupations by 1992. See: Kossoudji and Cobb -Clark, IRCAsImpact on the Occupational Concentration and Mobility oNewly-Legalized Mexican Men.

42 As Pastor and Scoggins acknowledge, however, it is unclearthat the citizenship eect they identiy is strictly restrictedto legal immigrants.

43 U.S. Department o Labor, Characteristics and Labor MarketBehavior o the Legalized Population Five Years FollowingLegalization.

44 Heidi Shierholz, The Eects o Citizenship on Family Incomeand Poverty (Washington: Economic Policy Institute, 2010).

45 Akbari, Immigrant Naturalization and its Impacts on Im-migrant Labour Market Perormance and Treasury.

46 This control does not, however, exclude all the unauthor-ized rom nations other than Mexico in the data set.

47 Bratsberg, Ragan, and Nasir, The Eect o Naturalization onWage Growth: A Panel Study o Young Male Immigrants.

48 Barry R. Chiswick, The Eect o Americanization on theEarnings o Foreign-born Men,Journal o Political Economy86 (5) (1978): 897921.

49 Barry R. Chiswick and Paul W. Miller, Language in the LaborMarket: The Immigrant Experience in Canada and theUnited States, In Barry Chiswick, ed., Immigration, Languageand Ethnic Issues: Canada and the United States (Washington:American Enterprise Institute, 1992).

50 Akbari ound a slightly larger income eect o citizenshipon men than on women: 11 percent to 12 percent or menversus 9 percent to 10 percent or women among immi-grants rom developing countries. See: Akbari, ImmigrantNaturalization and its Impacts on Immigrant Labour MarketPerormance and Treasury.

The Economic Effects of Granting Legal Status and Citizenship to Undocumented Immigrants

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