Effects of Legal and Unauthorized Immigration on the US Social Security System

摘要

Research Scholar Selcuk Eren and Hugo Benitez-Silva and Eva Carceles-Poveda of SUNY Stony Brook analyze the effects that the legalization of undocumented immigrants would have on the economy and social insurance system in the United States. In order to tackle this multifaceted question, the authors develop a multiperiod overlapping generations model of legal and undocumented immigrants' decisions. This is a general equilibrium model focused on three key dimensions: (1) remittances, (2) social insurance benefit usage, and (3) labor productivity. As there is no single US data source for remittances, the authors rely on datasets from the Mexican Migration Project and the Latin American Migration Project. Their calculations show that legal immigrants send, on average, 40 percent of their savings out of the country as remittances, while undocumented immigrants send 62 percent of their savings. Although undocumented immigrants often pay Social Security taxes, they are ineligible for benefits, and those who receive unemployment insurance benefits do so at a lower replacement rate (a smaller fraction of the value of their wages) than natives and legal immigrants. Finally, the labor productivity of undocumented immigrants is lower (80 percent) than that of natives and legal immigrants, a consequence of inferior skill matching.