This research answers the question whether immigration contributes to metropolitan economic growth, and it also quantifies the impacts of immigration on economic growth. It examines the relationships between metropolitan Gross Domestic Product (GDP) and the measures of immigration in the United States from 2000-2010 and attempts to find evidence in three mechanisms through which immigration can contribute to the economic growth: the overall effects, the skill effects and the complementarity effects. In for each effect’ analysis, this research uses reduced- and structural-form equations and uses fixed effects and first difference models with instrumental variables.   

First, reduced-form analysis with the specification of GDP per worker as the dependent variable and share of immigrant workers in total workforce as the independent variable revealed that the overall immigration does not have a significant impact on metropolitan economic growth, and this potential impact declines with metropolitan population size and increases with its workforce’s educational level.  Structural-form analysis with the specification of GDP as the dependent variable and immigrant worker level as the independent variable found that immigration has a significant positive impact on economic growth.  Instrumental variables enhanced this finding with reduced endogeneity.  Second, either reduced- or structural- form analysis found that high-skilled immigrants contribute to the economic growth.  Interestingly, fixed effects panel regression results pointed out that low-skilled immigrants also make a substantial contribution to the economic growth.  Third, this research revealed evidence that immigration contributes to the economic growth through complementing native workers in terms of educational levels, and metropolitan areas with more complementarity between immigrants and native workers enjoy higher economic prosperity and faster growth.   

Immigration’s impact on labor market outcomes has been extensively studied.  However, previous literature seldom focuses on immigration’s effect on the aggregate economic measurement such as GDP.  By providing an in-depth analysis of immigrants’ impact on metropolitan GDP, this research seeks to fill the gap of the immigration economic impact literature. This research’s findings provide direct guidance in making and implementing metropolitan-specific immigration policy.