Vice President J.D. Vance on Monday took to X and claimed that low-wage immigration has failed to increase gross domestic product (GDP) per capita or productivity per capita. “Western societies keep running the experiment of importing millions of low wage immigrants and expecting it to boost per capita productivity or GDP,” the vice president tweeted. “And they keep failing.” He continued, “It’s time to follow a different path.”
Alex Nowrasteh, the Cato Institute’s vice president for economic and social policy studies, pushed back on Vance’s claim. “GDP per capita has risen even as the U.S. immigrant population has increased,” Nowrasteh stated in a reply to Vance’s tweet on X.
Nowrasteh pointed to two charts to make his point. The first—from Federal Reserve Economic Data (FRED)—shows real GDP per capita, which is calculated by taking the nominal GDP, adjusting for inflation, and dividing that figure by the total U.S. population. For the most part, real GDP per capita has seen a steady increase since the Bureau of Economic Analysis first started recording the data in 1947. There have been some minor dips since then—mostly during recessionary periods—but at no point has real GDP per capita decreased over five consecutive quarters. The longest consecutive period where real GDP per capita was on the decline occurred between the second quarter of 2008 and Q2 of 2009, during the Great Recession.
The fourth quarter of 2024, the most recent quarter measured, marked the highest real GDP per capita in the nearly 80 years it’s been measured.
The second chart Nowrasteh provided came from the Migration Policy Institute (MPI), which graphed both the total U.S. immigrant population and its share of the U.S. population since 1850. Both have increased steadily since 1970. The Migration Policy Institute defined immigrants as people residing in the U.S. who were not citizens at birth, including “naturalized citizens, lawful permanent residents (LPRs), certain legal nonimmigrants (e.g., persons on student or work visas), those admitted under refugee or asylee status, and persons illegally residing in the United States.”
Drawing from U.S. Census Bureau data, the chart shows that from 1970 to 2023—the most recent year included on the chart—the number of immigrants in the U.S. has increased nearly five times over. Similarly, immigrants as a share of the total U.S. population has increased from 4.7 percent in 1970 to 14.3 percent in 2023. Meanwhile, real GDP per capita has more than doubled in that timeframe. In recent years, real GDP per capita has continued to increase on average as immigration to the U.S. has increased. Since 2000, the share of immigrants as a percentage of the total U.S. population has increased from 11.1 percent to 14.3 percent as real GDP per capita has grown 37.5 percent over the same time period.
This positive correlation between immigration and GDP is not unique to the U.S. Nowrasteh pointed to a February 2019 Science Direct study that compared immigration levels to GDP growth in 19 counties in the Organization for Economic Cooperation and Development (OECD), a group whose members consist of liberal democratic countries with developed economies, including the U.S. The study found that between 1980 and 2015, “a migration shock increases GDP per capita through a positive effect on both the ratio of working-age to total population and the employment rate.” In other words, migration was found to increase the share of working-age laborers in the country, which in turn increased production and boosted GDP per capita.
Other research studies have led to different conclusions. In an email to The Dispatch Fact Check, a spokesperson for Vance cited a June 2021 blog post from Steven Camarota, the director of research for the Center for Immigration Studies, which found a slight negative correlation between GDP per capita growth and population growth in developed economies. “If population growth drove economic growth, then countries like Canada and Australia that have among the highest rates of immigration and resulting population growth should vastly outpace a country like Japan, which has relatively little immigration and whose population actually declined over the last decade,” Camarota wrote. “And yet in the most recent decade for which we have data, (2010 to 2019), Japan’s per-capita GDP grew 10.5 percent, slightly better than both Canada’s 8.7 percent and Australia’s 9.9 percent.”
Manhattan Institute graduate fellow Daniel Di Martino expressed caution against interpreting correlations with causality, saying that direct comparison between GDP per capita and population growth alone “proves nothing.” “There’s something called reverse causality,” Di Martino told The Dispatch Fact Check. “GDP can fall, and because of that … people leave.” Or, he continued, it’s possible that people leave, which in turn causes GDP to fall. The correlation is the same in both examples, but it’s not clear what the driving factor for that correlation is, or even whether there’s a driving factor at all. Di Martino added, “The causality can come in both directions and the correlation doesn’t capture that.”
For example, Camarota cites a negative correlation between population growth and GDP per capita. However, as Di Martino explained, if one were to assume a causal relationship for that negative correlation—believing that population growth causes a decline in GDP per capita—“that implies we should reduce the population, and having kids is bad. … Would America be richer if we suddenly disappeared half the population? Actually, I think we would be less than half as rich, probably,” noting that economies of scale and labor specialization help boost economic growth but require larger populations.
Another report the Vance spokesperson shared with The Dispatch Fact Check in support of the vice president’s claim came from the U.K.-based Centre for Policy Studies (CPS). “Recent high levels of migration have not led to productivity growth and may be substituting for productivity-enhancing capital investment,” the May 2024 CPS report—authored by two Conservative Party members of Parliament, Robert Jenrick and Neil O’Brian, along with CPS research director Karl Williams—stated. “The very high levels of migration seen over recent years have coincided with a dramatic slowdown in growth in GDP per head. As the Migration Advisory Committee (MAC) [an independent public body that advises the U.K. on migration policy] has noted, migration ‘may have historically dampened incentives to adopt machinery.’” The report used the example of car washes in the U.K., where automated car wash operations have declined heavily but handwashed car sites are now more plentiful.
“Interestingly, the OBR [the U.K.’s Office of Budget Responsibility] seems to endorse this view, at least implicitly,” the CPS report added. The OBR’s March 2024 economic and fiscal outlook report estimates GDP growth under different scenarios, including a “high migration scenario” under which the report projects GDP will grow 1 percent by 2028-2029, but GDP per capita will fall 0.4 percent. However, as the CPS report notes, the OBR model assumes that “there was no change in the capital stock”—the collective value of assets used in economic production—all brought about by high migration. As the OBR report explains, the negative GDP per capita growth reflects “what would happen if the capital stock did not adjust at all in response to higher migration, making less capital available per worker and reducing overall productivity.” In other words, it assumes that production capabilities remain the same regardless of migration’s effects on the population size. Productivity is not easy to predict years into the future, which is why the OBR expressed a degree of uncertainty over its own estimates. “The outlook for productivity growth is our most important and uncertain forecast judgement,” the OBR report stated, “and there is significant uncertainty over both our migration and [labor] participation forecasts.”
The Vance spokesperson also cited a U.S. Congressional Budget Office (CBO) report published in July 2024 that stated, “The different employment composition of the surge population [into the U.S.] reduces average productivity because, on average, immigrants are less educated and have fewer years of work experience than domestic workers.”
Reduced average productivity does not necessarily imply that anyone—domestic workers or migrants—will be any worse off, according to Nowrasteh. This effect is what he called the “Danny DeVito fallacy,” named after the 4-foot-10 Hollywood actor. “If Danny DeVito walks into a room, the average height of people in the room declines but nobody is actually any shorter,” he said. Immigration might cause the statistical average to dip, but that does not prove that migrants or domestic workers are any poorer. In fact, Nowrasteh added, “GDP per capita may not increase from immigration, but everybody is actually better off because the immigrants and the natives have higher wages.”
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