Among large immigrant groups, Indian immigrants are the most economically beneficial immigrant group in the U.S., according to a new study on the fiscal impact of immigration by Manhattan Institute, a New York think tank.
An average Indian immigrant reduces the national debt by over $1.6 million over 30 years and increases GDP more than immigrants from any other country, according to the study by Daniel Di Martino.
Behind Indian immigrants are the Chinese, who reduce the debt by over $800,000 over 30 years, notes Marttino, a PhD candidate in economics at Columbia University and a graduate fellow at the Manhattan Institute focused on high-skill immigration policy
Next, Filipinos reduce the debt by over $600,000. Colombians and Venezuelans reduce the debt by $500,000 and $400,000, respectively.
The most fiscally burdensome immigrants are Salvadorans, who increase the national debt by over $50,000 over 30 years, followed by the largest immigrant group, Mexicans, who, on average, increase the national debt by $10,000 each over 30 years.
The positive fiscal impact of immigrants from both Asia and Europe is driven specifically by South Asians—predominantly Indian immigrants—and Western Europeans, rather than East Asian and Eastern European immigrants, according to the study.
Arguing against ending the H-1B visa program coveted by Indians, the report says it would expand the debt by $185 billion over 10 years while shrinking the economy by $26 billion, and it would grow the national debt by $4 trillion over 30 years and shrink the economy by $55 billion.
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Overall, ending the H-1B visa program would have a negligible effect on the size of the U.S. population because of the high emigration rate and low fertility among these groups of immigrants, but it would increase the debt-to-GDP ratio of the U.S. by 0.5% over 10 years and 4.8% over 30 years.
This policy has the most negative consequence of any single immigration restriction because the U.S. would lose the tax revenue paid by these immigrants, it says.
Although doubling the H-1B visa cap would increase the U.S. population by only 70,000 over 10 years and reduce the debt by $130 billion, admitting 100,000 more refugees annually would increase the U.S. population by 860,000 people and reduce the debt by just $32 billion.
One more H-1B visa annually reduces the debt by $1.8 million over 10 years, while each additional refugee per year reduces the debt by $37,000 over the same period.
Introducing wage-ranking for H-1B visas would be the most positive single immigration reform that does not change the flow of immigrants, reducing the federal debt by nearly $2.9 trillion over 30 years and reducing the debt-to-GDP ratio by 3.4%, according to the report.
After wage-ranking for H-1B visas, other solutions that introduce market incentives for green-card grants would also result in significant economic and fiscal gains for the U.S. as well as all proposals that shift family or diversity visas into the employment-based categories.
Overall, the average new immigrant reduces the federal budget deficit and expands the economy, but this is not true of all categories of immigrants, according to the report.
Immigrants without college degrees receive more government benefits than they pay in taxes, even when only their preretirement years are considered.
By contrast, immigrants who finished college or obtained an advanced degree contribute millions of dollars more in federal taxes than they receive in government benefits, and they save substantial amounts of interest on the debt while growing the economy.
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The Manhattan Institute immigration reform proposal combines low-skilled immigration reductions with high-skilled expansions and market-based visa allocations
It offers a blueprint for a conservative immigration reform that prioritizes merit and protects public finances, with the additional benefits of reducing crime and bringing about more assimilated immigrants.
Key Findings
Education and age drive immigrant fiscal impact. Immigrants with bachelor’s or graduate degrees, particularly those who arrive before age 40, produce large fiscal surpluses over 10- and 30-year windows.
Low-skilled immigration is costly in both the short and long term. Immigrants with just a high school diploma or no high school education, along with their descendants, tend to receive more in benefits than they pay in taxes.
Legal status matters. From the perspective of the fiscal impact, employment-based immigrants are the most positive legal category, and parents of U.S. citizens are the most negative. The average legal immigrant will reduce the budget deficit and grow the economy, while the average unlawful immigrant will expand the national debt and grow the economy but to a lesser extent.
Targeted reforms can yield major fiscal gains. Shifting visas toward high-skilled categories, wage-ranking H-1B visas, and recapturing unused employment-based green cards from previous years can reduce deficits while boosting GDP.
Comprehensive high-skilled immigration reform can stabilize debt.