Immigration and Social Security: A Lifetime Distributional Analysis

Melissa M. Favreault, Urban Institute
Austin Nichols, Urban Institute

Immigration is transforming the U.S. labor force with important consequences for Social Security’s finances. The 2008 Trustees’ Report included a marked reduction in the system’s unfunded obligation due to adjustments to the size and composition of net immigration, and recent press accounts highlight immigration's potential to alleviate strains on the program. Using longitudinal data from the Survey of Income and Program Participation matched to rich administrative data on lifetime earnings and benefit receipt, we measure the extent to which lifetime earning patterns (including earnings mobility), payroll taxes paid, and the benefits received by immigrants differ from those for the U.S.-born population. Our findings stress heterogeneity among immigrants, and also describe how native-immigrant differences vary over time and cohorts across the 1996, 2001, 2004, and 2008 SIPP panels. Finally, we evaluate the distributive effects of various policy proposals to adjust Social Security benefits to improve benefit adequacy and equity.