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Wharton Study Claims Trump-Backed Immigration Policy Would Reduce GDP and Jobs

By NexChange
Capital Markets

The RAISE Act, a new immigration policy proposed by Sens. Tom Cotton (R-Ark.), and David Perdue (R-Ga.) and backed by President Trump, has added another member to its list of detractors. A Wharton analysis obtained by CNBC has found that the plan would lower both GDP and jobs over the next 10-25 years.

The plan itself intends to cut legal immigration by 50 percent and alter the immigration policy to be more merit-based, as opposed to the current leading criterion of family presence in the U.S.

The analysis highlights both GDP and employment as areas that will suffer under the proposed policy. According to the study, GDP would drop by 0.7 percent by 2027, and there would be 1.3 million fewer jobs. By 2040, GDP would be down 2 percent and the job market would contain 4.6 million fewer jobs.

Per capita, GDP would initially rise 0.02 percent by 2027, but would drop 0.3 percent in 2040. The report states that the GDP would spike initially “because the capital stock will be similar to before the reform while the pool of workers will be smaller,” but, it continued, “over the long run, immigrants work and contribute to savings.”

“The RAISE Act also reduces employment because the domestic worker participation rate won’t increase enough to fill the jobs that would have been held by immigrants who are no longer allowed in the country,” the report adds.

Trump, Cotton and Perdue all vehemently defend the plan. They have cited the new policy being “merit-based” and how it would “increase wages and save taxpayers billions” as two benefits, but have not provided any analyses to back up their claims.

As of now, the plan is not close to being passed. Democrats are not on board, and reliance on low-skilled labor in some states has led to their Republican senators and representatives opposing the plan.

Alongside the Wharton analysis, former Twitter CEO Dick Costolo also spoke out against the plan, citing a thinned-out Silicon Valley talent pool as one of the reasons. Immigrant-founded U.S. tech companies are currently worth over $3 trillion, and the tech sector, among many others, knows the value and importance of immigrants.

Photo: Gage Skidmore



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