Effects of Legal and Unauthorized Immigration on the U.S. Social Security System

Published: 2011
Project ID: UM11-07


Immigration is having an increasingly important effect on the U.S. social insurance system. On the one hand, documented immigrants have the right to pension benefits, health insurance, etc. On the other hand, undocumented immigrants contribute taxes, but are not eligible for social insurance benefits unless they attain legal status. Moreover, a significant percentage of immigrants migrate back to their country of origin after a relatively short period of time. We propose a life-cycle model of legal and undocumented immigrants’ decisions regarding labor supply and program participation to analyze their role in the financial sustainability of the system. Our analysis will shed light on the effects of potential policy changes, such as giving undocumented immigrants legal status, and on the future of the social insurance system in the U.S.