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ANALYSIS: How will Obama's immigration reforms affect the US economy?

While millions rejoiced as the US president Barrack Obama introduced immigration reforms last nig...
Newstalk
Newstalk

13.26 21 Nov 2014


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ANALYSIS: How will Obama&#...

ANALYSIS: How will Obama's immigration reforms affect the US economy?

Newstalk
Newstalk

13.26 21 Nov 2014


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While millions rejoiced as the US president Barrack Obama introduced immigration reforms last night, it is hard to predict the long-term effects that they will have on the US economy.

Many of the key economic issues that the rule changes raise were touched on in the Mr Obama's address to the US people. He also implored the Republican-controlled House of Representatives and Senate to contribute to the introduction of broader reforms. 

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1. Employment migration

During his speech last night the US president commented on what he called the "hypocrisy" of the current system where "the workers who pick our fruit, and make our beds, never have a chance to get right with the law."

Past studies show that the workers who are picking fruit and making beds are likely to try and move out of these positions once the reforms go through. Being an illegal worker acts as a barrier to obtaining better paid jobs - when that barrier is removed workers look for new positions.

It is worth noting that the new rule will only apply 2 or 3 percent of the US population (that still amounts to roughly five million workers) and the majority of them have nine years of education - but the trickle down effect of these new rules will be interesting to watch.

2. The growing middle

This could lead to more immigrants, or future generations of Americans who are born to people affected by this law, moving into skilled and specialised employment. As they move from unskilled positions into better-paid jobs many will move into the middle classes.

3. Room at the top

US population growth is naturally in a mature state. Classic economic theory tells us that when the population grows, the economy grows - so bringing immigrants into the economy should lead to growth by artificially growing population.

Families born to non-US born parents are already twice as likely to start their own businesses - they are also more likely to work in high-tech industries and to register new patents.

This harks back to the country's 'founding ideals,' and the ideology that informs the county's foundation myth, that the US is a place where the best and the brightest come together to make something new. Obama's speech claimed that for over 200 years immigration had kept America "youthful, dynamic, and entrepreneurial".

4. Further reforms

The debate over immigration in the US has often been heated and emotive. Many feel little sympathy for workers who illegally entered the system and now find themselves settled and working in the country.

Obama spent a portion of his speech reaching out to this section of the population, saying the US is a "nation of immigrants, but also [one] of laws" - stating that with the reforms there would also be increased resources being put into policing the country's borders.

He argued that these people are already in the US, and contributing to the economy, so it makes sense to offer them an opportunity to come clean and register with the system.

In the long term, well regulated increases in the number of legal immigrants in the US could help the economy grow. However, in the short term it is hard to see the federal system agreeing to more reforms while a significant amount of Americans fear the immediate impact that these changes would have. 


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