Mariia Poliushkina | 23.09.2026
Can Immigration Actually Help the U.S. Economy Grow?
Immigrants and immigration are good for the United States, its communities, and its economy. New arrivals to the U.S. help drive business creation, fuel innovation, fill essential workforce needs, and strengthen the middle class. Family-based immigration promotes family unity and integration, all core principles of American values. And many immigrants will go on to become citizens, taking the solemn oath of allegiance to America and the Constitution (FWD.us, 2020).
One common argument is that immigrants take jobs away from local workers and reduce their career opportunities. However, this concern has existed for more than a century and continues to shape debates about whether companies may replace American workers with immigrants. According to Boston University economist Tarek Hassan, immigration can stimulate local economies by encouraging innovation and increasing wages. His research also suggests that the economic effects of immigration can persist for decades, making regions more attractive to foreign investors and creating opportunities for greater international trade. Immigration may also attract native workers to areas experiencing an influx of newcomers, as they respond to new economic opportunities (Thurston & Ricciardi, 2024).
But how exactly does immigration contribute to economic growth? Research by Hernandez offers a useful framework for exploring this question. This research shows that immigrants increase the magnitude and variety of the five key inputs that produce economic growth and jobs. These are consumption, investment, innovation, talent, and taxes.
Consumption Variety and Purchasing Power
One way immigration contributes to economic growth is by increasing consumer demand. Immigrants bring additional purchasing power into the economy as they earn and spend money on goods and services. According to the report, first-generation immigrants had an estimated $1.3 trillion in purchasing power in 2019, representing approximately 7.5% of total U.S. purchasing power. Immigration also expands the variety of products and services available, as immigrants introduce different tastes and preferences, creating demand for a wider range of foods, entertainment, and other goods. Immigrants introduce all kinds of new categories of products and services into the economy (Wharton Impact, n.d.).
Investment
Firms are more likely to expand into foreign locations with large communities from their home countries and are more successful when they do so, as measured by survival and profits. These investments can create jobs and revitalize economically declining parts of the U.S. For example, a county with a large German community is more likely to attract investment from a German manufacturer (Wharton Impact, n.d.).
Similarly, U.S.-based companies in communities with more immigrants tend to invest more successfully in the regions where those immigrants came from. A 2019 study by Konrad Burchardi, Thomas Chaney, and Tarek Hassan, analyzing all 3,141 U.S. counties, found that counties with more residents of foreign ancestry receive more investment from companies from those countries and also invest more in them.
Immigrants also increase investment through entrepreneurship. They are 80% more likely to start businesses than native-born people, and businesses founded by immigrants create more jobs regardless of company size (Wharton Impact, n.d.).
Innovation and Entrepreneurship
Newcomers to the U.S. have a long history of innovation and business formation. Immigrants or their children founded 44 percent of Fortune 500 companies, including Apple, Levi’s, and Google. Today, immigrants are 80 percent more likely than natives to start businesses and, despite representing only 14 percent of the U.S. population, start 25 percent of all new businesses (Wharton Impact, n.d.).
Immigrant entrepreneurship is closely linked to innovation. By working alongside immigrants, native-born people are exposed to new products, technologies, ideas, and ways of solving problems, while gaining access to global networks of innovators. These interactions generate significant innovation: although immigrants account for only 16 percent of U.S. patent inventors, they are responsible for 36 percent of patented inventions - 23 percent through their own inventions and another 13 percent through collaborations that increase innovation by native-born inventors (Wharton Impact, n.d.).
Talent
Research shows that immigrants are net job creators and do not, on average, reduce native employment or wages. This is largely because immigrants increase demand for products and services, creating a need for more workers, while often filling different positions than native-born workers (Wharton Impact, n.d.).
A recent study by the National Association of Manufacturers and Deloitte estimated that more than two million manufacturing jobs could remain unfilled by 2030. Firms have increasingly turned to immigrant workers to address these labor shortages, particularly in hard-to-fill positions such as overnight shifts, temporary jobs, and low-paying entry-level roles. By filling these positions in sectors such as construction, farming, meatpacking, and household care, immigrants also allow native-born workers to move into supervisory, sales, and accounting positions. In 2017, immigrants represented 29% of U.S. STEM workers with at least a bachelor’s degree, including 45% of those with doctoral degrees. Immigrants can also help fill positions that employers struggle to staff, supporting industries such as construction, agriculture, and healthcare. The effects can vary across occupations and groups of workers, so the benefits should not be assumed to be identical for everyone (Wharton Impact, n.d.).
Taxes
Another broadly held misconception is that immigrants drain public coffers by using schools, healthcare, and other taxpayer-funded services without contributing their fair share. While integrating newcomers creates short-term costs for public education, housing, infrastructure, and food assistance, these costs are outweighed by the long-term taxes paid by immigrants and their descendants. Although first-generation immigrants can be more costly to state and local governments than native-born residents, their children - the second generation - are among the strongest economic and fiscal contributors.
Research estimates that each immigrant makes a net positive contribution of $259,000 to public coffers over 75 years, in present-value terms. Even unauthorized immigrants contribute significantly, paying about 26% of their income in taxes, which totaled nearly $100 billion in federal, state, and local taxes in 2022. Immigration also helps sustain major programs such as Social Security, Medicaid, and Medicare (Wharton Impact, n.d.).
In conclusion, immigration can have a positive impact on the U.S. economy in a variety of ways, as immigrants create jobs, start businesses, attract investment, foster innovation, pay taxes, and help fill critical gaps in the labor force. Immigration may entail some short-term costs, but its long-term economic benefits can be more significant, as numerous studies and reports have shown. An analysis of all these contributions shows that immigrants contribute to the growth of businesses, communities, and the economy as a whole.
Sources:
Wharton Impact. (n.d.). The economic benefits of immigration. https://impact.wharton.upenn.edu/wp-content/uploads/2025/08/The-Economic-Benefits-of-Immigration.pdf
FWD.us. (2020, July 21). Immigration facts: The positive economic impact of immigration. https://www.fwd.us/news/immigration-facts-the-positive-economic-impact-of-immigration/
Thurston, A., & Ricciardi, J. (2024, April 4). Do immigrants and immigration help the economy? Boston University.
One common argument is that immigrants take jobs away from local workers and reduce their career opportunities. However, this concern has existed for more than a century and continues to shape debates about whether companies may replace American workers with immigrants. According to Boston University economist Tarek Hassan, immigration can stimulate local economies by encouraging innovation and increasing wages. His research also suggests that the economic effects of immigration can persist for decades, making regions more attractive to foreign investors and creating opportunities for greater international trade. Immigration may also attract native workers to areas experiencing an influx of newcomers, as they respond to new economic opportunities (Thurston & Ricciardi, 2024).
But how exactly does immigration contribute to economic growth? Research by Hernandez offers a useful framework for exploring this question. This research shows that immigrants increase the magnitude and variety of the five key inputs that produce economic growth and jobs. These are consumption, investment, innovation, talent, and taxes.
Consumption Variety and Purchasing Power
One way immigration contributes to economic growth is by increasing consumer demand. Immigrants bring additional purchasing power into the economy as they earn and spend money on goods and services. According to the report, first-generation immigrants had an estimated $1.3 trillion in purchasing power in 2019, representing approximately 7.5% of total U.S. purchasing power. Immigration also expands the variety of products and services available, as immigrants introduce different tastes and preferences, creating demand for a wider range of foods, entertainment, and other goods. Immigrants introduce all kinds of new categories of products and services into the economy (Wharton Impact, n.d.).
Investment
Firms are more likely to expand into foreign locations with large communities from their home countries and are more successful when they do so, as measured by survival and profits. These investments can create jobs and revitalize economically declining parts of the U.S. For example, a county with a large German community is more likely to attract investment from a German manufacturer (Wharton Impact, n.d.).
Similarly, U.S.-based companies in communities with more immigrants tend to invest more successfully in the regions where those immigrants came from. A 2019 study by Konrad Burchardi, Thomas Chaney, and Tarek Hassan, analyzing all 3,141 U.S. counties, found that counties with more residents of foreign ancestry receive more investment from companies from those countries and also invest more in them.
Immigrants also increase investment through entrepreneurship. They are 80% more likely to start businesses than native-born people, and businesses founded by immigrants create more jobs regardless of company size (Wharton Impact, n.d.).
Innovation and Entrepreneurship
Newcomers to the U.S. have a long history of innovation and business formation. Immigrants or their children founded 44 percent of Fortune 500 companies, including Apple, Levi’s, and Google. Today, immigrants are 80 percent more likely than natives to start businesses and, despite representing only 14 percent of the U.S. population, start 25 percent of all new businesses (Wharton Impact, n.d.).
Immigrant entrepreneurship is closely linked to innovation. By working alongside immigrants, native-born people are exposed to new products, technologies, ideas, and ways of solving problems, while gaining access to global networks of innovators. These interactions generate significant innovation: although immigrants account for only 16 percent of U.S. patent inventors, they are responsible for 36 percent of patented inventions - 23 percent through their own inventions and another 13 percent through collaborations that increase innovation by native-born inventors (Wharton Impact, n.d.).
Talent
Research shows that immigrants are net job creators and do not, on average, reduce native employment or wages. This is largely because immigrants increase demand for products and services, creating a need for more workers, while often filling different positions than native-born workers (Wharton Impact, n.d.).
A recent study by the National Association of Manufacturers and Deloitte estimated that more than two million manufacturing jobs could remain unfilled by 2030. Firms have increasingly turned to immigrant workers to address these labor shortages, particularly in hard-to-fill positions such as overnight shifts, temporary jobs, and low-paying entry-level roles. By filling these positions in sectors such as construction, farming, meatpacking, and household care, immigrants also allow native-born workers to move into supervisory, sales, and accounting positions. In 2017, immigrants represented 29% of U.S. STEM workers with at least a bachelor’s degree, including 45% of those with doctoral degrees. Immigrants can also help fill positions that employers struggle to staff, supporting industries such as construction, agriculture, and healthcare. The effects can vary across occupations and groups of workers, so the benefits should not be assumed to be identical for everyone (Wharton Impact, n.d.).
Taxes
Another broadly held misconception is that immigrants drain public coffers by using schools, healthcare, and other taxpayer-funded services without contributing their fair share. While integrating newcomers creates short-term costs for public education, housing, infrastructure, and food assistance, these costs are outweighed by the long-term taxes paid by immigrants and their descendants. Although first-generation immigrants can be more costly to state and local governments than native-born residents, their children - the second generation - are among the strongest economic and fiscal contributors.
Research estimates that each immigrant makes a net positive contribution of $259,000 to public coffers over 75 years, in present-value terms. Even unauthorized immigrants contribute significantly, paying about 26% of their income in taxes, which totaled nearly $100 billion in federal, state, and local taxes in 2022. Immigration also helps sustain major programs such as Social Security, Medicaid, and Medicare (Wharton Impact, n.d.).
In conclusion, immigration can have a positive impact on the U.S. economy in a variety of ways, as immigrants create jobs, start businesses, attract investment, foster innovation, pay taxes, and help fill critical gaps in the labor force. Immigration may entail some short-term costs, but its long-term economic benefits can be more significant, as numerous studies and reports have shown. An analysis of all these contributions shows that immigrants contribute to the growth of businesses, communities, and the economy as a whole.
Sources:
Wharton Impact. (n.d.). The economic benefits of immigration. https://impact.wharton.upenn.edu/wp-content/uploads/2025/08/The-Economic-Benefits-of-Immigration.pdf
FWD.us. (2020, July 21). Immigration facts: The positive economic impact of immigration. https://www.fwd.us/news/immigration-facts-the-positive-economic-impact-of-immigration/
Thurston, A., & Ricciardi, J. (2024, April 4). Do immigrants and immigration help the economy? Boston University.
