-
Essay / Effects of Immigration on the Economy - 1050
There are many benefits that immigration has created in the American economy. Immigrants who migrate to America create a larger labor force and in turn reduce the long-run equilibrium unemployment rate. Steven A. Camarota's research findings explain that "the presence of immigrant workers (legal and illegal) in the labor market grows the U.S. economy (GDP) by approximately 11% ($1.6 trillion) each year." year (Camarota). ยป Immigrants most often come to America because they don't have the opportunity to earn money in their home country like they would here. This makes immigrants more inelastic labor suppliers. They are more motivated to work, are more flexible and, if less educated, work for lower wages. Well-educated immigrants help grow our economy by creating new businesses. These new businesses create more jobs for Americans, increase productivity, generate increased spending, increased production, and downward pressure on inflation. With this increase in real wealth and more job opportunities for Americans to earn money, people will spend more. Increasing productivity will shift short-run aggregate supply to the right and aggregate demand to the right as well. We could also see a rightward shift in aggregate supply in the long run. While these theories provide insight into how immigration positively impacts our economy, there are also ways in which immigration negatively impacts our economy.