In the United States, the economic impact of immigration is a lightning-rod topic that sparks strong feelings on both sides. Opponents have long held that immigrants take away jobs from American citizens and lower wage standards. Proponents dismiss that idea, saying immigrants expand the economy through their hard work and determination. The truth is somewhere in the middle, according to new research from Wharton’s J. Daniel Kim.
To be sure, immigrant workers ramp up competition for jobs, creating a surplus in labor supply for some sectors. But immigrant entrepreneurs have a more profound impact on overall labor demand by starting companies that hire new workers, creating a positive ripple-effect on the economy.
“The problem with the ongoing discussion is that it’s largely one-sided,” Kim says. “In order for us to have a systematic understanding of the role of immigration on job creation, you need to take both accounts together. And this is what we do in the study.”
Kim is co-author of “Immigration and Entrepreneurship in the United States,” along with MIT’s Pierre Azoulay, Northwestern’s Benjamin F. Jones, and Javier Miranda, an economist with the U.S. Census Bureau. In their research, the scholars use comprehensive administrative data from 2005 to 2010 on all new firms in the U.S., the U.S. Census Bureau’s 2012 Survey of Business Owners, and data on firms listed in the 2017 edition of the Fortune 500 ranking to paint a more accurate picture of the economic impact of immigrants in America.
“This paper works to fill in the picture through the lens of entrepreneurship,” the authors write. “By looking in a more comprehensive manner at the U.S. economy, the analysis helps balance the ledger in assessing immigrants’ economic roles.”
“What we find,” says Kim, “with overwhelming evidence, is that immigrants act more as job creators than they act as job takers in the United States.”
Read more at Knowledge@Wharton.