Shifting Immigration Toward High-Skilled Workers
Summary: We evaluate two immigration policies that shift 10 percent of future low-skilled immigration toward either: (i) high-skilled immigrants (“HSI”) that otherwise maintains the current share of STEM workers within the high-skilled group, or (ii) only high-skilled STEM workers (“HSI STEM”) that increases the share of STEM relative to other high-skill workers. The number of total immigrants remains the same under both policies. Both policies grow the economy, reduce federal debt, and increase wages across all income groups: lower-skilled, higher-skilled non-STEM workers, and higher-skilled STEM workers. In fact, this policy change affords the rare opportunity of a “Pareto improvement” benefitting all groups.
Key Points
10 percent of low-skilled immigrants equals just 25,000 workers in 2025, or about 0.01 percent (one percent of one percent) of the total U.S. working-age population. Over the next 30 years, 750,000 immigrant workers would be converted from low to high skill, still representing just 0.35 percent of the total U.S. working-age population in 2054. The total number of immigrant workers remains unchanged.
This policy has an outsized impact on economic growth relative to the size of the policy change. We project that the HSI policy would increase GDP by 0.1 percent by 2034 and 0.4 percent by 2054, while HSI STEM policy would increase GDP by 0.3 percent by 2034 and 0.7 percent by 2054.
Both policies reduce outlays and increase revenues over the 10-year budget window ending in 2034, decreasing primary deficits by $65.3 billion under the HSI policy and $152.6 billion under the HSI STEM policy.
All education, occupation, income, and age groups gain from both policy changes. The gains also benefit low-income workers the most relative to their earnings before these policy changes. Wages for low-skill workers increase by 0.5 percent within a decade and by 1.3 percent over the long run. Future low-skill workers born today gain between $10,000 and $16,000 in lifetime value from HSI and HSI STEM, respectively.
Shifting Immigration Toward High-Skilled Workers
https://budgetmodel.wharton.upenn.edu/issues/2025/3/27/shifting-immigration-toward-high-skilled-workers
