Immigration and the U.S. Labor Market: A Look Ahead
As aging and low birth rates drag on U.S. economic growth, expanding legal immigration offers a key tool to bolster the workforce, fill skill gaps, and spur entrepreneurship.
In the coming decades, the U.S. labor market will experience major transformations that challenge the country’s economic growth and competitiveness. The native-born workforce will age and shrink as baby boomers retire and birth rates decline. Technological innovations, though unlikely to result in mass unemployment as some observers fear, will displace some workers, particularly in low-skilled occupations. And traditional employer-employee relationships are becoming less common as contracting, outsourcing, and other alternative staffing arrangements spread.
While these forces may bring some productivity increases, they are also likely to result in rising inequality between skilled and unskilled workers, lower economic growth, and mismatches between the skills workers have and those that are increasingly in demand. What role, this think piece by a former chief economist for the U.S. Labor Department asks, can immigration play in mitigating these undesirable economic outcomes and supporting U.S. economic growth?
Immigration could help employers hire for hard-to-fill positions, and it could reduce the costs and increase the availability of goods and services, especially in growing sectors such as health and elder care. But while immigration may benefit employers and workers with complementary skills, particularly at the high end of the skills spectrum, it can negatively affect some low-skilled workers, who have already been hard hit by technological change, globalization, and weakening labor unions. Reforms of immigration policy to support economic growth should thus be paired with a broader agenda and investments to raise the skills and earnings of workers without college degrees, whether native born or immigrant.
The brief was commissioned for MPI’s multiyear Rethinking U.S. Immigration Policy initiative, which aims to generate a big-picture, evidence-driven vision for the role immigration can and should play in America’s future. To learn more about the initiative and read related research, check out the initiative's home page.
Table of Contents
I. Introduction
II. Supply and Demand in the U.S. Labor Market: Likely Future Trends
A. Labor Supply
B. Labor Demand
C. Likely Labor Market Outcomes
III. The Role of Immigration in the U.S. Labor Market
A. What Does Theory Say?
B. What Does Empirical Evidence Show?
C. The Non-Labor Impacts of Immigration to the United States
IV. Policy Implications: What Role Should Immigration Play in the Future U.S. Labor Market?
About the Global Skills and Talent Initiative
Anchored in the premise that immigration policy must be part of a broader skills and talent strategy, the Initiative has a particular focus on employment-based immigration and the supports that can help immigrants apply their full range of educational and professional skills.
About the U.S. Immigration Policy Program
The U.S. Immigration Policy Program provides analysis of U.S. immigration pathways, the impacts of enforcement and other policies, and the characteristics of immigrant populations.
Rethinking U.S. Immigration Policy Initiative
This Initiative is generating a big-picture, evidence-driven vision of the role immigration can and should play in America’s future by providing policy ideas that reflect new realities.
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