Does It Matter Who You Are? How Characteristics Influence Immigrants’ State and Local Fiscal Impacts

Deborah L. Garvey, Santa Clara University

Recent research suggests that state expenditures on immigrant households modestly exceed taxes paid to state governments, while immigrants pose significant net fiscal burdens on local governments. Previous work (Garvey et al. 2002) demonstrates that differences in households' socioeconomic and demographic characteristics, not nativity status per se, account for most of immigrants' greater fiscal impacts. I use 1990 census data for New Jersey to decompose immigrant-native differences in household public service use and tax remittances into the part due to nativity differences in fiscal behavior and that due to nativity differences in observable characteristics. Two-stage least squares estimation is employed to control for the endogeneity of household location. Preliminary results suggest that the relative importance of particular household characteristics for explaining the immigrant-native fiscal gap varies dramatically across immigrant groups. The implications for point-based immigrant admission policies are clear: it is difficult to identify a priori which characteristics make immigrants relatively “costly.”