How the RAISE Act Would Cut GDP and Jobs

["Dave Farber" <farber () gmail com>]

http://knowledge.wharton.upenn.edu/article/the-real-costs-of-the-raise-act/

The recently proposed immigration reforms in the U.S. that seek to raise the bar for skill sets but also aim to reduce 
the number of legal immigrants by 50% over the next 10 years could prove a big negative for the nation’s gross domestic 
product (GDP) and employment. 

Between now and 2040, the proposed RAISE (Reforming American Immigration for a Strong Economy) Act could shave two 
percentage points off GDP growth and cause a loss of more than four million jobs. However, in the short-term, reforms 
would have little negative impact on jobs and GDP, while wages would actually rise, although they would flatten out 
over time. Those are the top findings of a detailed simulator in the Penn Wharton Budget Model (PWBM), which helps 
analyze the potential impact of proposed policy changes. 

“Immigrants tend to work pretty hard, they tend to have a very high attachment rate to the labor force, they are less 
likely to be on unemployment insurance and things like that, and so they are really a net positive,” says Wharton 
professor of business economics and public policy Kent Smetters, who is faculty director of the PWBM. As younger 
members of the workforce, immigrants also help pay for Social Security and Medicare for the elderly. That is a crucial 
benefit as the U.S. — along with other countries — grapples with the so-called dependency ratio, he adds. The simulator 
is available online and is free for use by the general public.




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