Immigration is Essential for American Economic Development
Introduction
Immigration is one of the critical issues that frequently rock the United States political and economic arena. According to[1] The United States has the largest number of immigrants in the world, yet they fail to integrate into the American civilization properly. Immigrants face the quagmire of negative perception from a large quantity of American society. However, they make several contributions to the US, which makes them a significant part of the progress of the American economy. Perhaps, economic development depends on the ability of production, innovation, use of technology, quality labor supply, and an increase in GDP, among others. Immigrants are perceived to play an essential role in enhancing economic development. Therefore, this paper evaluates how immigration has shaped the labor supply market, innovation, and creativity as well as enhancing the increase of US GDP.
Increase in labor supply
Immigrants are perceived to increase labor supply in the American markets. A study conducted by [2] Showed that in 2016, 16.6% of workers in the United States were foreigners. Millions of workers across the United States work in multiple positions in large firms, homes, and small businesses. The widespread view among American citizens is that immigrants ‘steal’ their jobs from them, but the fact is that industries take advantage of the cheap labor provided by immigrants. A study by[3] indicated that most immigrants, mainly from Mexico, are lowly educated. Low edification means that they ask for fewer wages, which firms see as an advantage to cut costs, thus hiring them. Either way, their employment means that they contribute to the productivity and profitability of these firms, which in turn, through the payment of taxes and Corporate Social Responsibility activities, contribute to the economic development of the United States.
It is prudent to note that while the capital stock retains average stocks from falling, immigrants have greatly affected the relative wages of different types of workers, which has been enhanced by changes in supplies. For the last few decades, immigration has been perceived to assume a bimodal impact across various education groups. Due to educational growth in the US, there has been a shortage of workers, especially in small and medium enterprises and casual workers. However, small and medium enterprises play a significant impact on economic growth in the US. Immigrants help to supply the labor force to these labor areas and thus enhancing economic development in the US. Also, based on the labor force, immigrants have created diversification of jobs as well as creating competitive labor markets. This, in turn, has shaped the methods of executing duties among the employees.
However, a research study conducted by[4] Showed that immigration has a negative effect on labor markets in the US. Te study asserted that immigrants are likely to increase the level of competition in the US market where the local employees and workforce face stiff competition on job acquisition, and hence many have been rendered jobless. The study also showed that immigrants who are experienced are likely to be favored by many companies, which in turn has left many US citizens jobless due to high competition of the workforce. According to this study, immigration has a negative effect on the US economy. However, a study conducted by[5] Showed that immigration is likely to directly affect the welfare of immigrants themselves. The study showed that most of the immigrants come with an expectation they will gain the favor of job markets. The labor markets in the US are entirely defined by the competence and academic qualifications of the workforce regardless of the race and nationality of the workforce.
Immigration has increased innovation in the US economy
Immigration is one of the utmost contributors to innovation in the US economy. Immigrants hold several patents in academic institutions and other sectors in the United States. American universities are continually searching for talent across the globe due to increased competitive pressure[6] and immigration simplifies such. It is, therefore, evident that negative immigration policy would significantly impact the pace of innovation in the United States[7]. For instance, in the year 2013, 51% of patients in the United States were non-local. The strict protection of non-intellectual property by US law is an immense contributor to the large number of foreign-owned patents filed locally; therefore, the country should make it its aim to enhance its immigration policies. One of the most significant innovations in US history by an American immigrant was the telephone, brought to be by Alexander Graham Bell, who was an immigrant from Scotland.
Notably, immigration has enhanced innovation and creativity in various sectors in the US, such as technology, production, and manufacturing, as well as the financial industry. Due to technological advancement and globalization, business activities have integrated, which in turn has increased competition in US markets[8]. This requires companies and other business entities to embrace innovation and creativity to enhance competitive advantage. Perhaps, an increase in immigrants has increased the rate of innovation, which in turn has increased productivity and hence enhancing economic development. For instance, immigration has enhanced innovation of technological gadgets such as the Internet of Things, artificial intelligence, and the use of robotics, among others. These have simplified the methods of executing duties and hence effective production and operation of companies. Innovation has also enhanced to identify new business opportunities, which has created employment opportunities[9]. Immigration has created work diversification and sharing of ideas, which in turn has improved the rate of innovation and creativity and hence increasing productivity in US markets. Therefore, it can be noted that immigration has enhanced creativity and innovation, which in turn has improved productivity and operation of business entities and hence improving the US economy.
Immigration has increased the American GDP
Subsequently, small and family-owned businesses owned by immigrants contribute immensely to the American GDP. According to Fairlie (2012), the business ownership rate in the US by immigrants stands at 10.5% compared to 9.3% for native US citizens. It has also been noted that immigrants undertake higher levels of economic activity than non-immigrants. Such could be attributed to the idea of self-employment sounding more appealing among immigrants, who have lesser opportunities for getting hired in contrast to natives[10]. Likewise, a study conducted by[11] Indicated that immigrant businesses are more likely to export their goods to foreign countries, standing at 7.1% concerning a 4.4% export rate among non-immigrant owned businesses. The export of local goods means an occurrence of domestic production and manufacturing and the creation of an international market and, therefore, the growth of local industries. The higher economic activity among such businesses leads to an improvement in the economic development of the United States.
Immigrants also attract foreign investment to the United States, which in turn has an enhanced increase in US GDP. A study by[12] Indicated that for every 1% of the foreign population moving to the United States, 50% of firms in their homeland are willing to follow them to their location. Some international firms in the US may also feel more comfortable hiring workers from their birthplace. When such firms set up operations in the United States, they pay taxes and relevant fees, in addition to the employment of native citizens and an improvement in infrastructure. Such contributes immensely to the betterment of the American economy and hence increasing the GDP[13]. A large population of immigrants is an incentive for any firm to set up shop close to a source of cheaper skilled labor, therefore contributing to an increase in the GDP of the located State. The entry of new firms also stimulates competition and entry of new products into the market.
A research study conducted by[14] Showed that immigration has a great negative effect on the US economy through the reduction of the US GDP. The study asserted that most of the immigrants in the US are likely to increase the dependency ratio. Perhaps, an increase in immigrants is likely to strain the economy due to the government allocation to the immigrants. The study also showed that an increase in immigration in the US has increased the rate of refugees, which in response has increased government allocation and hence reducing the US GDP and hence poor economy. However, according to the US GDP and the immigration sector, the research has shown that immigration has little influence on the increase in refugees in the US. This shows that the US government does not allocate any money to immigrant refugees. It is worth noting immigrants are perceived to increase the labor force in the US and hence enhance the increase in American GDP.
Conclusion
In conclusion, it can be noted that immigration plays an essential role in enhancing economic growth in America. Perhaps immigrants participate actively in the production of goods and services in various economic niches, which in turn has improved productivity in the US markets. This has been enhanced by the diversity of the workforce. Immigration has also increased the labor force supply in the American markets. This has increased production among the US industries and hence increasing the US economy. Immigration has also increased innovation and creativity due to the interaction and sharing of ideas among the diverse workforce, which in turn has enhanced quality production and execution of duties.
Bibliography
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[1] Abramitzky, Ran, and Leah Boustan. “Immigration in American economic history.” Journal of economic literature 55, no. 4 (2017): 1311-45.
[2] Borjas, George J. “The economics of immigration.” Journal of economic literature 32, no. 4 (1994): 1667-1717.
[3] Hirschman, Charles. “Immigration to the United States: Recent trends and future prospects.” Malaysian Journal of economic studies: journal of the Malaysian Economic Association and the Faculty of Economics and Administration, University of Malaya 51, no. 1 (2014): 69.
[4] Wozniak, Abigail, and Thomas J. Murray. “Timing is everything: Short-run population impacts of immigration in US cities.” Journal of Urban Economics 72, no. 1 (2012): 60-78.
[5] Glitz, Albrecht. “The labor market impact of immigration: A quasi-experiment exploiting immigrant location rules in Germany.” Journal of Labor Economics 30, no. 1 (2012): 175-213.
[6] Kerr, William R. US high-skilled immigration, innovation, and entrepreneurship: Empirical approaches and evidence. No. w19377. National Bureau of Economic Research, 2013.
[7] Hanson, Gordon H. “Immigration and economic growth.” Cato J. 32 (2012): 25.
[8] Hinojosa-Ojeda, Raúl. “The economic benefits of comprehensive immigration reform.” Cato J. 32 (2012): 175.
[9] Zavodny, Madeline. “Who benefits from the minimum wage—natives or migrants?.” IZA World of Labor (2014).
[10] Irastorza, Nahikari, and Iñaki Peña-Legazkue. “Immigrant entrepreneurship and business survival during the recession: evidence from a local economy.” The Journal of Entrepreneurship 27, no. 2 (2018): 243-257.
[11] Fairlie, Robert W. “Immigrant entrepreneurs and small business owners, and their access to financial capital.” Small Business Administration 396 (2012): 1-46.
[12] Muysken, Joan, and Thomas Ziesemer. “The effect of net immigration on economic growth in an aging economy: transitory and permanent shocks.” (2011).
[13] Wadhwa, Vivek. “others. 2008.“.” Skilled Immigration and Economic Growth.” Applied Research in Economic Development 5, no. 1: 6-14.
[14] Boubtane, Ekrame, Dramane Coulibaly, and Christophe Rault. “Immigration, unemployment, and GDP in the host country: Bootstrap panel Granger causality analysis on OECD countries.” Economic Modelling 33 (2013): 261-269.