Economist Holtz-Eakin: Immigration Reform Will Boost Economy

The increase in foreign workers that would result from immigration reform represents a net benefit for the economy, according to a new study by conservative economist Douglas Holtz-Eakin.

Immigration reform would boost economic output and curb budget deficits, the former director of the Congressional Budget Office and president of the American Action Forum says in a new study.

“Immigration reform can raise population growth, labor force growth, and thus growth in GDP,” he writes. “New entrepreneurial vigor embodied in new capital and consumer goods can raise the standard of living.”

During the first 10 years following immigration reform the nation's GDP would increase annually by a 0.25-percentage point, and at the end of that period per-capita GDP would be $1,700 higher, Holtz-Eakin estimates. He said budget deficit would be reduced by a total of $2.7 trillion over the 10 years.

“Immigrants have traditionally displayed an entrepreneurial bent, with rates of small business ownership above that of the native born population,” Holtz-Eakin writes.

“New entrepreneurial vigor offers the potential for productivity‐enhancing innovations. In addition, to the extent that new innovation is ‘embodied’ in new capital and consumer goods,
more rapid economic growth per se means that more output will have these advances embedded
within, and productivity per worker will rise.”