Legalizing Immigrants Can Help Reduce Poverty

Some people oppose widespread legalization because they fear that it will hurt U.S. workers and the economy. However, most research indicates that immigration -- both legal and illegal -- benefits the economy and global development.
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With the President Obama sweeping the Latino vote by 71 percent, the issue of immigration reform is no longer an afterthought. It has now vaulted to the center of our national conversation. Days before the election, President Obama told the Des Moines Register that, other than deficit reduction, immigration reform will be the top policy objective of his second term.

The president had also promised to take on immigration reform in his first term, but that did not happen. There were multiple -- and debatable -- reasons for his failure to keep his campaign promise, but one certain factor is public ambivalence and discord on the issue.

The most contentious debate over immigration reform involves the potential legalization of the 11 million unauthorized immigrants now living in the United States. Some people opposed widespread legalization because they fear that it will hurt U.S. workers and the economy.

However, most research indicates that immigration -- both legal and illegal -- benefits the economy and global development. Legalization also increases economic opportunity for unauthorized immigrants who disproportionately live in poverty.

The 1986 Immigration Reform and Control Act legalized nearly 2.7 million immigrants, providing valuable data on how legalization affects income and poverty among immigrants. Social scientists across the political spectrum generally found that legalization increases immigrants' wages, putting more money into their hands and helping them support their families. A 2010 RAND study on the effects of legalization found that it led to a 5 percent increase in wages.

"Illegal status generates barriers that constrain the choices of both workers and employers," according to RAND. "In this sense, legalization could be interpreted as a removal of such barriers, which could potentially improve... the overall efficiency of the labor market."

A 2002 study by economists at the University of Michigan found similar results, concluding that the 1986 amnesty led to an average 6 percent increase in wages among legalized immigrants. While legalization alone will not lift all immigrants out of poverty, it wouldprovide them with opportunities to earn more and pursue higher education so that their families are not consigned to a life in the shadow economy.

Those researchers identified a "wage penalty" for unauthorized immigrants, primarily because they must keep a low profile: "The risk of apprehension... provides incentives to work in jobs thatrequire little investment and training, and have flat experience profiles. These features ofemployment impede future investment -- perpetuating and exacerbating wage differences," found the economists.

One of the most recent and comprehensive studies of the economic impact of legalization was published by the libertarian Cato Institute this year. Reviewing the literature on the economic impacts of legalization, researchers found even larger wage increases from legalization, ranging from 6 to 13 percent. The study also examined nearly two decades of research literature on the economic effects of legalization, including on workers born in the United States. It found mixed results.

On one hand, legalized workers who have comparable skills to U.S.-born workers could become labor market competitorsbecause they would no longer be held back by their legal status. On the other hand, legalization would likely spur increased employer compliance with labor and health and safety regulations. Thus, legalization could lead to increases in wages and benefits among some U.S.-born workers.

Legalization will undoubtedly have positive impacts on the children of unauthorized immigrants, 73 percent of whom were born in the United States.

According to the Cato study,

Increased family incomes and greater stability would promote assimilation and socio-economic advancement... Mexican-American young adults living in the United States completemore years of school if their parents were able to legalize their status. Having a father who was able to legalize his status is associated with better English proficiency and higher earnings... while having a mother who legalized her status... is positively associated with reading and math standardized test scores.

The effect of legalization on the labor market is not a closed research subject, and not all researchers agree. For instance, a 2010 study by the California Public Policy Institute found that legalization would have little effect on either immigrant or U.S.-born workers because many legalized workers remain in low-skill occupations.

Still, most analysis indicates that legalizing immigrants would provide momentum for their families to escape poverty. Twenty years of study has found that while education levels and English-language ability may constrain their earnings, legalized immigrants will tend to improve their economic situations and contribute to U.S. economic growth.

For more information on immigration, poverty, and hunger please visit Bread for the World Institute's publications on this issue.

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