Why immigration benefits the US economy, even 100 years later

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Historical immigration benefits the US economy today, according to a new study published in the Review of Economic Studies.

The research found that US counties with more historical immigration have higher incomes, less poverty, and lower unemployment today.

Immigration and American political discourse

The Oxford University Press USA notes the importance of the issue of the effect of immigrants on the communities where they settle in current American political discourse. However, the focus is generally on the short-term effects of immigration. What about the long-term consequences or benefits of immigration on communities?

The researchers studied the period of 1850 to 1920, investigating the effects of immigration into the US. This is a period in which there was a dramatic increase in immigration to the US, and immigration sources changed.

In 1850 over 90 percent of foreign-born people living in the United States were from Great Britain, Ireland, or Germany. This figure dropped to 45 percent by 1920.

The economic benefits of US immigration

The research suggests that increasing the percentage of immigrants in a county by 4.9 percent results in:

  • A 13 percent increase in average per capita income today, a 44 percent increase in average manufacturing output per capita from 1860-1920 (and a 78 percent increase in 1930);
  • A 37 percent increase in farm values; and
  • A 152 percent increase in the number of patents per capita.

The social backlash against immigration

The paper’s lead author, Sandra Sequeira, commented: “What is fascinating is that despite the exceptionalism of this period in US history, there are several important parallels that one could draw between then and now.”

According to Sequeira, these parallels are: “the large influx of unskilled labour, the small but important inflow of highly skilled innovators, as well as the significant short-run social backlash against immigration.”

“There is much to be learned from taking a longer perspective on the immigration debate”, she concluded.

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