TY - JOUR AU - Auerbach,Alan J. AU - Oreopoulos,Philip TI - Generational Accounting and Immigration in the United States JF - National Bureau of Economic Research Working Paper Series VL - No. 7041 PY - 1999 Y2 - March 1999 UR - http://www.nber.org/papers/w7041 L1 - http://www.nber.org/papers/w7041.pdf N1 - Author contact info: Alan J. Auerbach Department of Economics 508-1 Evans Hall, #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/643-0711 Fax: 510/643-0413 E-Mail: auerbach@econ.berkeley.edu Philip Oreopoulos Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 Canada E-Mail: philip.oreopoulos@utoronto.ca AB - In recent years, the renewed strength of immigration to the United States has sparked a debate about the economic effects of immigration. A central issue in this debate has been the fiscal impact of immigrants. Most research in this area has adopted a static, cross-section approach in assessing the net impact of immigrants on the economy's fiscal position. However, a dynamic approach is important because of the age dependency of many government tax and expenditure programs, and necessary to take the descendents of immigrants into account. This paper reconsiders the fiscal impact of immigrants over time, using the technique of generational accounting. We may summarize our results with three findings: 1. Because new immigrants represent a larger fraction of future generations than of present ones, shifting the burden onto future generations also shifts it, relatively, onto new immigrants. Thus, if the entire fiscal imbalance currently estimated for the United States is placed on future generations, then the presence of new immigrants reduces the burden borne by natives. 2. When a policy of fiscal responsibility' is followed, whether there is a fiscal gain from immigration depends on the extent to which government purchases rise with the immigrant population. 3. The impact of immigration on fiscal balance is extremely small relative to the size of the overall imbalance itself. Thus, immigration should be viewed neither as a major source of the existing imbalance, nor as a potential solution to it. ER -