The Economy Benefits When Immigrants Become Citizens

A report finds that with more naturalizations, federal, state, and city tax revenues could rise by $2 billion.

Dammy Oladapo, 3, is held by her father, Tosin Oladapo, as he makes a photo of his wife, family, and friends in front of a mural after a naturalization ceremony in Irving, Texas. (LM Otero/AP)
This article is from the archive of our partner Quartz

There are 8.8 million immigrants in the United States who are eligible to become citizens through naturalization. Fewer than 10 percent of that group go through the process each year, even though, according to a new study, naturalization economically benefits both the immigrants themselves and the cities they choose to settle in.

The research, provided to Quartz by the New York City mayor’s office as an English-language exclusive (its results were also published by Spanish-language publication El Diario), reveals that cities can reduce their spending by encouraging immigrants to apply for citizenship.

“Immigrants represent a major source of economic power for the United States, and our collective economic wellbeing depends in large part on successful integration of immigrants,” Nisha Agarwal, the commissioner of the Mayor’s Office of Immigrant Affairs, told Quartz in an email.

The study, which was commissioned by the city and published by the Urban Institute in conjunction with Citibank’s Citi Community Development program, estimates that 23 percent of the foreign population it studied in 21 big U.S. cities is eligible for naturalization. Using econometric models and simulations, the researchers established that when immigrants become citizens, their earnings increase by an average of 8.9 percent, or $3,200. After naturalization, the immigrants’ employment rate would rise 2.2 percentage points, and they would be more than 6 percentage points more likely to buy a home, which translates to 45,000 new homeowners in the cities studied. Revenue from federal, state, and city income tax, as well as from federal payroll tax, would yield an additional $2 billion.

The benefits to receiving American citizenship range from access to a broader group of employers to the right to vote, as the report outlines. But there are many reasons why legal immigrants may not apply for citizenship. A Pew Research Center survey of Hispanic immigrants from 2013 points to some of them: lack of proficiency in English, administrative barriers, and the $680 cost of the application. Some legal residents don’t want to become citizens because they maintain close ties with their home countries (this is particularly true for Mexican immigrants, the top group eligible for naturalization in the Urban Institute study). Others are not aware they can hold dual citizenship with their home country.

The Urban Institute took a closer look at New York City and San Francisco to assess the risk of increased public spending due to naturalization. Calculating changes in food-stamp, Social Security, and family-assistance benefits in the two cities, the research shows that encouraging citizenship could help city economies.

In New York, where a whopping 38 percent of the population was born abroad, tax revenues on all levels, from city to federal, would rise by $789 million if all of those eligible for naturalization got their American passports, and public benefits would fall by $34 million. In San Francisco, benefits would cost the city $4 million, but with tax revenue rising by $90 million, the net benefit is significant.

New York Mayor Bill de Blasio announced earlier this year that the city would launch a program that helps immigrants get free citizenship services at New York’s public libraries. “Mayors across America can attest: naturalization is a key mechanism for empowering immigrant families. These families make significant contributions to a city’s economy and cultural landscape, and when they succeed, we all succeed,” he said in a statement accompanying the study.

Immigration continues to be a contentious topic in the United States, with the Obama administration’s efforts to reform the system blocked by Congress and stalled in the country’s courts. Agarwal tells Quartz that while the U.S. still needs comprehensive immigration reform, in the meantime “naturalization represents a major opportunity for cities to provide real assistance to a significant proportion of their immigrant populations, as well as to encourage economic growth through new tax revenue and, in many cases, through reduced expenditures on public benefits.”

This article is from the archive of our partner Quartz.