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Discussion: (7 comments)

  1. Interesting point, but aren’t you assuming that the mix of immigrants under the G8 proposal remains the same? That is, if we assume that the current mix is more low-skilled (earning less) and lives longer, if the mix remains the same then it is certainly possible that the G8 bill will result in a negative impact on SS.

    However, it also seems reasonable to think that the mix of immigrants may change – under the points system, it is likely to shift to more high-skilled (higher-earning) immigration.

    On another note, I find it odd that immigrants tend to be both lower-earning and longer-lived. A bit odd given everything we know about the (positive) relationships between income and health, no?

  2. Andrew Biggs

    YF, you’re right and that’s a valid point (although I’m pretty sure SSA makes the same assumptions as I do). But my understanding from background reading has been that the skills mix of immigrants probably won’t change much overall. CBO’s recent score doesn’t specify what their assumed mix is, although they clearly have one as a background assumption in generating a variety of numbers for the score. But that’s something I’m going to look into further.

  3. Looks as though CBO is actually assuming that new immigrants will be less skilled (average wages fall in first 10 years), though wages start rising after 2025:

    Unclear whether they’re relatively higher or lower-skilled compared to the current mix, however.

    1. Andrew Biggs

      I think you’re right; but the CBO report isn’t very transparent in its assumptions, which is unfortunate. Hopefully if they do an update as the House looks at reform they’ll be clearer.

  4. Just one note: Some of the migrants remigrate and never claim their social security benefits. Wouldn’t this return migration (which is higher for high skilled immigrants) cover the extra years for those migrant who stay?

    1. Andrew Biggs

      I believe that return migration is actually highest for low-skilled employees — many come to the U.S. and return within a very short period. A 1998 paper by Gustman and Steinmeier estimated that around 5 percent of Social Security revenues come from workers who re-emigrate and don’t collect benefits. So it does improve the financing, but not by an enormous amount.

      1. To my memory the return migration was rather high right before retirement along with the first 5 years that you mention (though I am not very certain if this was a European data only or also verified for the US). My point was that perhaps 5 per cent of the revenues (as you mention) might be significant enough (given you discuss 8 versus 1 per cent of the deficit) factor, and might be important missing element in the model discussed above. And thank you for your reply!

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