State and local fiscal impacts of US immigrants: Evidence from New Jersey

Abstract

This paper uses a household-level estimation strategy to develop new evidence on the state and local fiscal impacts of US immigration. The methodology is applied to 1980 census microdata for New Jersey, a state that now ranks fifth in the nation in the size of its foreign-born population. All New Jersey households combined in 1980 imposed a net fiscal burden on state government of more than US$2.1 billion, and a net burden on the aggregate of all local governments totaling nearly $ 690 million. Both native- and immigrant-headed households received government benefits worth more than they paid in taxes. The typical immigrant-headed household imposed an average fiscal burden of $ 350 on local governments throughout New Jersey, versus roughly $ 225 for each native-headed household. At the state level, however, net fiscal impacts of immigrants and natives were similar: an average annual deficit of $ 841 for immigrants compared with $ 846 for native households. There are larger disparities among the foreign-born population than between native-headed and immigrant-headed households. Latin American households have the most unfavorable fiscal implications of any immigrant subgroup. Taken together, our findings illustrate the overriding importance of household income and number of school-age children as determinants of taxes paid, benefits received and, ultimately, of net fiscal impacts.