Could Illegal Immigrants Be to Blame for the Productivity Slowdown?

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By Steve Goldstein | 6:04 am, March 10, 2017

All sorts of reasons have been trotted out to explain why U.S. productivity growth has slowed so markedly, from mis-measurement to stalling innovation to weak capital investment.

Oxford Economics has a new research note adding another theory: unauthorized workers.

They say that up to 15% of the 2 percentage point slowdown in productivity growth can be attributed to illegal immigration.

By their numbers, which rely on data from the Labor Department and a survey from Pew Research, there are just over 11 million illegal immigrants in the U.S., of which 8 million are in the workforce, or 5% of the total U.S. workforce.

They then adjusted the productivity growth numbers for a larger workforce.

The research note does point out that they’re assuming illegal immigrants aren’t captured in official employment statistics. That’s not necessarily the case — the Bureau of Labor Statistics acknowledges the household survey does include some illegal immigrants, so the question is the degree to which it does.

Furthermore, the Pew data suggest the number of illegal immigrants in the labor force has stabilized in recent years. And yet, the productivity slowdown has been more notable recently. Which means that even if Oxford Economics is right, there have to be other factors in play for why productivity growth has slowed.

This article was originally published in Marketwatch.