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Snap AV: immigration and the US labour force

Summary:
The net effect of immigration on the employment and wages of US-born workers is often the source of contentious debates.Less in dispute, which is unsurprising given that it’s a matter of simple arithmetic, is the effect of immigration on the growth of the US population and prime-age labour force. From a recent note by Goldman Sachs economists, emphasis ours:Immigration plays an important role in US population dynamics. Net immigration has contributed 0.3- 0.4pp to total annual US population growth over the last 25 years (Exhibit 1). As the rate of natural population increase—the birth rate minus the death rate—has declined from 0.9 percentage points (pp) in the early 1990s to about 0.4pp recently, the contribution from net immigration to total population growth has risen from 30% in the

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The net effect of immigration on the employment and wages of US-born workers is often the source of contentious debates.

Less in dispute, which is unsurprising given that it’s a matter of simple arithmetic, is the effect of immigration on the growth of the US population and prime-age labour force. From a recent note by Goldman Sachs economists, emphasis ours:

Immigration plays an important role in US population dynamics. Net immigration has contributed 0.3- 0.4pp to total annual US population growth over the last 25 years (Exhibit 1). As the rate of natural population increase—the birth rate minus the death rate—has declined from 0.9 percentage points (pp) in the early 1990s to about 0.4pp recently, the contribution from net immigration to total population growth has risen from 30% in the 1990s to 40-50% recently. The Census Bureau projected in 2014 that the contribution from immigration to total population growth would rise to 60% by 2030.

Snap AV: immigration and the US labour force

The effect of immigration on growth of the working age population is even more pronounced as immigrants are usually young relative to the aging domestic population (left panel of Exhibit 2). As a result, net immigration currently accounts for virtually all of the 0.5pp trend increase in the working age population. According to Census projections, the level of the US working age population would actually fall by about 0.2% per year in 2020-2030 in the absence of immigration (Exhibit 2, right panel). The tendency for immigrants to be younger is also reflected in labor force participation data as the participation rate of foreign-born individuals (65.9%) is a bit higher than that of their native-born counterparts (62.2%).

Snap AV: immigration and the US labour force
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Cardiff Garcia
Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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