Immigration makes little difference to the United States’ ratio of workers to retirees, but so-called positive immigration can create alpha in certain industries.
In a session debating the impact of immigration on retirement industries at Pensions & Investments’ Global Future of Retirement conference in Washington, Steven A. Camarota, director of research at the Center for Immigration Studies, said immigration “does not have that big an effect on changing the ratio of workers to retirees. That doesn’t mean it is bad — but just (that) it isn’t going to make that much difference.”
“Immigration can modestly improve the ratio of workers to retirees. But it is a temporary benefit as (immigrants) age like everyone else, and fertility tends to converge.” However, Mr. Camarota said: “Immigration makes a country like the U.S. more fertile, but not that much,” with an increase in fertility of “about 5%.”
He added that the average age of a person native to the U.S. is 36, while the average age of an immigrant is 43.
But there is also a dilemma: “If you want to use immigration to help retirement, you need selective immigration. Oddly, the more skilled immigrants you get, the lower fertility you get,” Mr. Camarota said.
Ed Farrington, executive vice president, retirement strategies-U.S. distribution, Natixis Global Asset Management, referenced a study considering patent creation, showing that 70% of patents analyzed were created by foreign-born inventors. “The positive immigration of bringing skilled, highly educated people into the system to allow them to create certainly has created alpha for certain industries,” Mr. Farrington said on the panel discussion.
The issue of immigration being used in the political arena was also addressed.
“Immigration is a peculiarly well-suited issue to an era of emotionally driven politics,” said Richard V. Reeves, senior fellow-economic studies, co-director, Center on Children and Families at The Brookings Institution. “Immigration is being used as a political weapon in ways that can potentially be quite dangerous. … Do we have fact-based political decision-making, or emotional?”