    Illegal Aliens: National Net Cost Estimates Vary Widely (Letter Report,
    07/25/95, GAO/HEHS-95-133).

    Pursuant to a congressional request, GAO examined the costs of providing
    benefits and services to illegal aliens, focusing on: (1) current
    estimates of the national net costs of illegal aliens to all levels of
    government; (2) the variation in these estimates; and (3) areas in which
    the estimates could be improved.

    GAO found that: (1) illegal aliens in the United States generate more in
    costs than revenues to federal, state, and local governments combined;
    (2) estimates of the national net cost of illegal aliens vary greatly,
    ranging from $2 billion to $19 billion; (3) a great deal of uncertainty
    remains about the national fiscal impact of illegal aliens, because
    little data exists on illegal aliens' use of public services and tax
    payments; (4) displacement costs and revenue estimates account for much
    of the variation in the estimates of the national net costs of illegal
    aliens; (5) the estimates are difficult to assess because the studies do
    not always clearly explain the criteria used to determine which costs
    and revenues are appropriate to include in the estimates; and (6) the
    cost estimates could be improved by recognizing the difficulties
    inherent in collecting data on a hidden population, focusing on key
    characteristics of illegal aliens, and explaining more clearly which
    costs and revenues are appropriate to include in such estimates.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  HEHS-95-133
         TITLE:  Illegal Aliens: National Net Cost Estimates Vary Widely
          DATE:  07/25/95
       SUBJECT:  Illegal aliens
                 Cost analysis
                 Federal aid programs
                 State-administered programs
                 Statistical methods
                 Education or training costs
                 Health care costs
                 Immigration and naturalization law
                 Eligibility criteria
    IDENTIFIER:  California
                 Social Security Program
                 Supplemental Security Income Program
                 AFDC
                 Aid to Families with Dependent Children Program
                 Food Stamp Program
                 JTPA
                 Head Start Program
                 Special Supplemental Food Program for Women, Infants, and
                 Children
                 National School Lunch Program
                 Personal Responsibility Act of 1995
                 OASDI
                 Old Age Survivors and Disability Insurance Program
                 Medicaid Program
                 Job Training Partnership Act Program
                 WIC
                 New York
                 Illinois
                 Texas
                 Florida

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    Cover
    ================================================================ COVER

    Report to Congressional Requesters

    July 1995

    ILLEGAL ALIENS - NATIONAL NET COST
    ESTIMATES VARY WIDELY

    GAO/HEHS-95-133

    National Net Cost of Illegal Aliens

    Abbreviations
    =============================================================== ABBREV

      AFDC - Aid to Families With Dependent Children
      HUD - Department of Housing and Urban Development
      INS - Immigration and Naturalization Service
      IRCA - Immigration Reform and Control Act
      JTPA - Job Training Partnership Act
      WIC - Special Supplemental Food Program for Woman, Infants, and
         Children

    Letter
    =============================================================== LETTER

    B-252730

    July 25, 1995

    The Honorable Alfonse M.  D'Amato
    United States Senate

    The Honorable Lamar S.  Smith
    Chairman, Subcommittee on
     Immigration and Claims
    Committee on the Judiciary
    House of Representatives

    The Honorable Elton Gallegly
    House of Representatives

    The Honorable Bill McCollum
    House of Representatives

    The Honorable Dana Rohrabacher
    House of Representatives

    In recent years, growing public concern about illegal aliens in the
    United States has focused on their use of public benefits and their
    overall costs to society.\1 Some 3-1/2 to 4 million illegal aliens
    resided in the United States in 1994, according to government
    estimates.  States' concerns about the strain on their budgets from
    providing public benefits and services to illegal aliens have
    prompted six states to file suit against the federal government for
    reimbursement of some of these costs.\2 In one state, California,
    voters recently passed a measure that would deny state-funded public
    benefits to illegal aliens, including education, nonemergency health
    services, and other social services.\3

    Information on the effects of illegal aliens residing in the country
    can be useful to lawmakers in developing appropriate policy responses
    to address the problems created by illegal immigration.  For example,
    information on the extent, if any, to which illegal aliens impose a
    fiscal burden on U.S.  taxpayers provides one indication of the
    magnitude of the effects of illegal aliens.  The current debate about
    how to address the problems of illegal immigration has generated a
    renewed interest in the findings of studies that have attempted to
    estimate the public fiscal impact of illegal aliens.

    You asked us to examine existing estimates of the overall costs, to
    all levels of government, of providing benefits and services to
    illegal aliens.  Because illegal aliens not only receive public
    benefits but also pay taxes, we examined estimates of the public net
    costs of illegal aliens:  the government costs they generate, minus
    the revenues they contribute to government.  We previously reported
    to you on estimates of selected costs for illegal aliens incurred by
    the states in which most of this population resides.\4 This report
    (1) assesses existing estimates of the national net cost of illegal
    aliens to all levels of government, (2) examines the items that
    account for much of the variation in these estimates, and (3)
    identifies areas in which the estimates could be improved.

    In developing this information, we identified 13 studies of the net
    costs of illegal aliens issued between 1984 and 1994; only 3 of these
    studies estimated the national net cost, and we examined them in
    detail.  They are (1) Donald Huddle's\5 initial study of 1992 net
    costs, The Costs of Immigration; (2) the Urban Institute's critique
    of that study, How Much Do Immigrants Really Cost?  A Reappraisal of
    Huddle's "The Cost of Immigrants";\6 and (3) Huddle's updated study,
    The Net National Costs of Immigration in 1993.\7 In addition, we
    consulted various experts in the field of immigration about issues
    that arose in assessing estimates of the fiscal impact of illegal
    aliens (see app.  IV for a list of persons consulted).

    --------------------
    \1 An illegal alien is a person who is in the United States in
    violation of U.S.  immigration laws.  Such a person may have entered
    (1) illegally; that is without the Immigration and Naturalization
    Service (INS) inspection (undocumented), or by using fraudulent
    documentation or (2) legally, under a nonimmigrant visa or other
    temporary condition but subsequently violated the terms of the visa
    or other terms of entry.

    \2 Florida, California, Arizona, Texas, New Jersey, and New York.

    \3 California voters approved Proposition 187 on November 8, 1994.
    Many of the restrictions on eligibility for public services have not
    taken effect because lawsuits blocked implementation of the measure.

    \4 Benefits for Illegal Aliens:  Some Program Costs Increasing, But
    Total Costs Unknown (GAO/T-HRD-93-33, Sept.  29, 1993).  This
    testimony included estimates of costs for illegal aliens in
    California, New York, Texas, Florida, and Illinois.

    \5 Donald Huddle is a professor emeritus of economics at Rice
    University.

    \6 The methodology of the revenue estimates in this study is set out
    in greater detail in a study by Jeffrey Passel, Immigrants and Taxes:
    A Reappraisal of Huddle's "The Cost of Immigrants" (Washington, D.C.:
    The Urban Institute, 1994).

    \7 Huddle's updated study was issued with an accompanying paper that
    discusses some of the major areas of difference in the national net
    cost estimates.  See A Critique of the Urban Institute's Claims of
    Cost Free Immigration:  Huddle Findings Confirmed (Washington, D.C.:
    Carrying Capacity Network, 1994).

       RESULTS IN BRIEF
    ------------------------------------------------------------ Letter :1

    All three national studies concluded that illegal aliens in the
    United States generate more in costs than revenues to federal, state,
    and local governments combined.  However, their estimates of the
    national net cost varied considerably, ranging from $2 billion to $19
    billion.  Because little data are available on illegal aliens' use of
    public services and tax payments, the various indirect approaches
    used to estimate costs and revenues were often based on assumptions
    whose reasonableness is unknown.  Moreover, the studies varied
    considerably in the range of costs and revenues they included and
    their treatment of certain items, making them difficult to compare.
    As a result, a great deal of uncertainty remains about the actual
    national fiscal impact of illegal aliens.

    We did find that a relatively small number of costs and revenues
    account for much of the variation in the estimates of the national
    net cost of illegal aliens.  For example, one study included costs of
    $3.9 billion for certain benefits, such as education, provided to
    U.S.  citizen children of illegal aliens and the other two studies
    did not include these costs.  In addition, the two studies that
    included estimates of Social Security costs--$3.3 billion versus
    $0--differed in their approaches to this item and appear to have
    estimated different costs.  In these and other instances, the
    estimates were difficult to assess because the studies did not always
    clearly explain the criteria used to determine which items were
    appropriate to include.

    Better data on the illegal alien population and clearer explanations
    of which costs and revenues are appropriate to include would help
    improve the usefulness of estimates of the national net cost.
    Recognizing the difficulties inherent in collecting better data on a
    population with an incentive to keep its status hidden from
    government officials, any future studies would benefit from focusing
    on some of the key characteristics of the illegal alien population.
    These include the population's size, geographic distribution, age
    distribution, income distribution, labor force participation rate,
    tax compliance rate, and extent of school participation.  Clearer
    explanations of which costs and revenues are appropriate to include
    also would be helpful.  The appropriateness of including any
    particular item may depend on the policy questions addressed by a
    study.  If studies were more explicit about the questions they
    address, their estimates would be easier to compare and more useful
    to lawmakers.

       BACKGROUND
    ------------------------------------------------------------ Letter :2

    Illegal immigration is an important issue, especially in California,
    New York, Texas, Florida, Illinois, Arizona, and New Jersey--the
    states estimated to account for over three-fourths of the illegal
    alien population.  Illegal aliens are a concern not only because they
    are breaking immigration laws but for various other reasons.  For
    example, state and local governments are especially concerned about
    the effect on their budgets of providing benefits and services to
    illegal aliens.  In addition, there are concerns about whether the
    presence of illegal alien workers has negative effects on the
    employment of U.S.  workers.

          SIZE OF THE POPULATION
    ---------------------------------------------------------- Letter :2.1

    Public concern about the number of illegal aliens residing in the
    United States led to the passage of major immigration legislation in
    the 1980s.  In an effort to reduce the size of the nation's illegal
    alien population, estimated at 3 to 5 million in 1986, the Congress
    enacted the Immigration Reform and Control Act of 1986 (IRCA).  IRCA
    attempted to deter the inflow of illegal aliens by prohibiting
    employers from hiring anyone not authorized to work.  IRCA also
    provided that under certain circumstances, an illegal alien's status
    could be adjusted to lawful permanent resident.\8 Almost 3 million
    illegal aliens acquired lawful permanent residence as a result of
    IRCA.

    Despite a brief drop in the estimated number of illegal entries to
    the United States after IRCA was enacted, the inflow of illegal
    aliens has subsequently increased, so that the size of the illegal
    alien population is now estimated to have increased once more to
    pre-IRCA levels.  INS estimated that there were 3.4 million illegal
    aliens residing in the country in October 1992.  Updating this
    estimate would place the illegal alien population at about 4 million
    in 1994.\9 The Bureau of the Census estimated that the size of the
    illegal alien population was between 3.5 million and 4 million in
    April 1994.\10

    --------------------
    \8 Aliens who either entered the United States before January 1,
    1982, and had been living illegally in the country continuously since
    that time or who worked in agriculture were eligible to seek
    adjustment of their status.

    \9 Robert Warren, "Estimates of the Unauthorized Immigrant Population
    Residing in the United States, by Country of Origin and State of
    Residence:  October 1992," unpublished report, U.S.  Immigration and
    Naturalization Service (Washington, D.C.:  1994).  We updated the
    estimate to 1994 by using the report's estimate of a 300,000 annual
    increase in the size of the national illegal alien population.

    \10 Edward W.  Fernandez and J.  Gregory Robinson, "Illustrative
    Ranges of the Distribution of Undocumented Immigrants by State," U.S.
    Bureau of the Census, Population Division, technical working paper
    no.  8 (Washington, D.C.:  U.S.  Department of Commerce, 1994).

          ELIGIBILITY FOR FEDERAL
          BENEFITS
    ---------------------------------------------------------- Letter :2.2

    Illegal aliens are not eligible for most federal benefit programs,
    including Supplemental Security Income, Aid to Families With
    Dependent Children (AFDC), Food Stamps, unemployment compensation,
    financial assistance for higher education, and the Job Training
    Partnership Act (JTPA).\11

    However, they may participate in certain benefit programs that do not
    require legal immigration status as a condition of eligibility, such
    as Head Start, the Special Supplemental Food Program for Women,
    Infants, and Children (WIC), and the school lunch program.\12 In
    addition, they are eligible for emergency medical services, including
    childbirth services, under Medicaid if they meet the program's
    conditions of eligibility.  Illegal aliens may apply for AFDC and
    food stamps on behalf of their U.S.  citizen children.  Although it
    is the child and not the parent in such cases who qualifies for the
    programs, benefits help support the child's family.

    Illegal aliens may not work in the United States or legally obtain
    Social Security numbers for work purposes.  However, many illegal
    aliens do work and have Social Security taxes withheld from their
    wages based on falsely obtained numbers.\13 Illegal aliens are not
    explicitly barred from receiving Social Security benefits;
    nonetheless, some illegal aliens may not be able to collect benefits
    because an individual generally must have obtained a valid Social
    Security number to receive credit for work performed.

    --------------------
    \11 While illegal aliens are ineligible by law for housing
    assistance, the Department of Housing and Urban Development (HUD)
    allowed them to receive assistance until final regulations
    implementing eligibility restrictions were issued.  HUD issued that
    final rule on eligibility of aliens for housing assistance on March
    20, 1995 (60 Fed.  Reg.  14816, 1995); the rule became effective June
    19, 1995.

    \12 Certain welfare reform proposals being considered by the Congress
    would further restrict the eligibility of illegal aliens for federal
    benefits.  For example, the Personal Responsibility Act of 1995 (H.R.
    4) would make illegal aliens ineligible for federal means-tested
    public benefit programs, except for certain emergency assistance.

    \13 This can occur in various ways.  For example, an illegal alien
    might provide an employer with (1) a Social Security number that had
    been assigned to another person, (2) a counterfeit Social Security
    card, or (3) a genuine Social Security card that was obtained by
    furnishing fraudulent documents to the Social Security
    Administration.

          TYPES OF REVENUES GENERATED
    ---------------------------------------------------------- Letter :2.3

    Illegal aliens generate revenues as well as costs; these revenues
    offset some of the costs that governments incur.  Research studies
    indicate that many illegal aliens pay taxes, including federal and
    state income taxes; Social Security tax; and sales, gasoline, and
    property taxes.  However, researchers disagree on the amount of
    revenues illegal aliens generate and the extent to which these
    revenues offset government costs for benefits and services.

          STATE EFFORTS TO ESTIMATE
          FISCAL IMPACT OF ILLEGAL
          ALIENS
    ---------------------------------------------------------- Letter :2.4

    Over the past few years, the states with the largest illegal alien
    populations have developed estimates of the costs they incur in
    providing benefits and services to illegal aliens.  These estimates
    vary considerably in the range of costs included and methodologies
    used.  Two states, California and Texas, also have estimated the
    public revenues that illegal aliens generate.

    In a recent report, we reviewed California's estimates of three costs
    for illegal aliens--elementary and secondary education, Medicaid, and
    adult incarceration--and various revenues from this population.\14
    Although we adjusted the cost estimates based on our assessment of
    the state's assumptions, we cited several data limitations that
    prevented us from developing precise estimates.  The even more
    extensive data limitations on the revenue side precluded us from
    making any assessment of the revenue estimates.

    --------------------
    \14 Illegal Aliens:  Assessing Estimates of Financial Burden on
    California (GAO/HEHS-95-22, Nov.  28, 1994).

          MOST STUDIES CONCLUDE
          ILLEGAL ALIENS GENERATE MORE
          IN COSTS THAN IN REVENUES
    ---------------------------------------------------------- Letter :2.5

    The literature on the public fiscal impact of illegal aliens reflects
    considerable agreement among researchers that illegal aliens are a
    net cost, though the magnitude of the cost is a subject of continued
    debate.  We identified 13 studies issued between 1984 and 1994 that
    developed estimates of the net costs of illegal aliens.  Many of the
    studies focused on the illegal alien population in specific states,
    such as California or Texas, or specific areas, such as San Diego
    County or Los Angeles County.  In addition, the range of costs and
    revenues included in the studies varied depending on the level of
    government examined:  local, state, federal, or some combination of
    these.  All but one study concluded that illegal aliens generated
    more in public costs than they contributed in revenues to government.
    (See app.  I for a list of the studies.) Only 3 of the 13 studies
    estimated the fiscal impact of all illegal aliens in the United
    States on all levels of government.

       NATIONAL NET COST OF ILLEGAL
       ALIENS UNCERTAIN
    ------------------------------------------------------------ Letter :3

    The three studies that have estimated the national net cost of
    illegal aliens have generated considerable media attention and public
    discussion.  Each concluded that illegal aliens generate more in
    costs than revenues at the national level, but their estimates of the
    magnitude of the net cost varied considerably.  The studies faced the
    difficult task of developing estimates of the public fiscal impact of
    a population on which little data are available.  They generally
    relied on indirect approaches; as a result, the reasonableness of
    many of their assumptions are unknown.  In addition, the studies
    differed considerably in the range of costs and revenues they
    included and their treatment of certain items, which makes them
    difficult to compare.  For these reasons, a great deal of uncertainty
    remains about the actual national net cost of illegal aliens.

          STUDIES' ESTIMATES OF NET
          COSTS VARY CONSIDERABLY
    ---------------------------------------------------------- Letter :3.1

    Donald Huddle estimated that the national net cost of illegal aliens
    to federal, state, and local governments was $11.9 billion in
    1992.\15 This estimate was followed by an Urban Institute review of
    Huddle's work, which adjusted some of Huddle's cost and revenue
    estimates and estimated a much lower net cost for 1992--$1.9
    billion.\16 Responding to the Urban Institute's criticisms, Huddle
    subsequently produced an updated estimate for 1993 that was higher
    than his initial estimate--$19.3 billion.\17 (See app.  II for a list
    of the costs and revenues included in each of the estimates.)

    The net cost estimates in each of the national studies are derived
    from three major components:  (1) the direct costs of providing
    public benefits and services to illegal aliens, (2) displacement
    costs--the costs of providing various types of public assistance to
    U.S.  citizens displaced from their jobs by illegal aliens, and (3)
    public revenues attributable to illegal aliens.  A comparison of
    Huddle's initial study with the Urban Institute's study indicates
    that the major differences were in their estimates of displacement
    costs and revenues.  Their estimates of direct program costs were
    relatively similar, as shown in figure 1.

       Figure 1:  Estimated Net Costs
       to Federal, State, and Local
       Governments for Illegal Aliens
       in the United States

       (See figure in printed
       edition.)

    \a Donald Huddle, The Costs of Immigration (Washington, D.C.:  1993),
    exhibits 5, 6, and 12.

    \b Jeffrey S.  Passel and Rebecca L.  Clark, How Much Do Immigrants
    Really Cost?  A Reappraisal of Huddle's "The Cost of Immigrants"
    (Washington, D.C.:  1994), pp.  1-8, supplemented by data from
    Jeffrey Passel providing a breakdown of the cost estimates for
    individual items; and Jeffrey S.  Passel, Immigrants and Taxes:  A
    Reappraisal of Huddle's "The Cost of Immigrants" (Washington, D.C.:
    1994), table 7c.

    \c Donald Huddle, The Net National Costs of Immigration in 1993
    (Washington, D.C.:  1994), exhibits 5, 6, and 12.

    In their study, the Urban Institute researchers did not develop a
    completely independent estimate but instead adjusted some of the cost
    and revenue estimates in Huddle's initial study to obtain what they
    believed to be a more reasonable estimate.  The Urban Institute study
    also added certain revenues that were not included in Huddle's
    initial study, such as payroll taxes (Social Security and
    unemployment compensation) and federal gasoline tax.  In developing
    their own estimate, Urban Institute researchers used some of Huddle's
    assumptions.  In particular, the Urban Institute study used Huddle's
    estimate of the size of the illegal alien population--4.8 million
    illegal aliens--for purposes of comparability, though the study
    maintained that this estimate was too high.\18

    Huddle's update of his earlier study differs substantially from the
    Urban Institute study in all three components of the net cost
    estimates, with the largest difference occurring between the
    estimates of direct program costs (see fig.  1).  The reason for this
    difference is primarily because Huddle's updated study includes over
    $10 billion for direct cost items that were not included in either
    his initial study or the Urban Institute study.

    --------------------
    \15 This study and Huddle's updated study were commissioned by the
    Carrying Capacity Network, a nonpartisan, nonprofit, national
    organization whose stated mission is to increase understanding of the
    interrelated nature of population growth, environmental degradation,
    resource conservation, and quality-of-life issues in the United
    States.

    \16 The Urban Institute is a nonprofit, nonpartisan, policy research
    organization.  The two lead analysts in this research were Jeffrey S.
    Passel and Rebecca L.  Clark, director and senior research associate,
    respectively, in the Institute's Program for Research on Immigration
    Policy.

    \17 Huddle recently updated his national net cost estimate to 1994.
    The updated estimate relies on the same methodologies as the estimate
    for 1993.  However, the 1994 estimate uses higher per capita costs
    for various public assistance programs, a higher estimate of the
    income of illegal aliens, and an updated estimate of the size of the
    illegal alien population.  Huddle concluded that the national net
    cost of illegal aliens in 1994 was between $16 billion and $21.6
    billion.  The lower figure is based on an estimated illegal alien
    population of 4 million; the higher figure on a population of 5.4
    million.  See Donald L.  Huddle, The Net National Costs of
    Immigration into the United States:  Illegal Immigration Assessed
    (Washington, D.C.:  Carrying Capacity Network, 1995).

    \18 In other studies, the Urban Institute researchers have used
    significantly lower estimates of the size of the illegal alien
    population.  For example, in Rebecca L.  Clark and others, Fiscal
    Impacts of Undocumented Aliens:  Selected Estimates for Seven States,
    the researchers used INS' national population estimate of 3.4 million
    illegal aliens as of 1992.

          STUDIES' ESTIMATES BASED ON
          LIMITED DATA ON ILLEGAL
          ALIEN POPULATION
    ---------------------------------------------------------- Letter :3.2

    National data on illegal aliens' use of public services and level of
    tax payments generally are not available.  Various national databases
    that contain extensive data on the resident population's use of
    public services and household characteristics, for example, do not
    have data on the immigration status of respondents who are not U.S.
    citizens.\19 Questions about immigration status are not included on
    Census surveys because they might provoke untruthful responses and
    thereby affect the quality of the survey data, according to a Census
    official.

    Because of such data limitations, the national studies relied on
    indirect approaches to estimate the costs and revenues attributable
    to illegal aliens.  In using these approaches, the studies made
    assumptions whose reasonableness is often unknown.  To estimate
    direct program costs, for example, the studies multiplied their
    estimates of the average number of illegal aliens who received a
    benefit or service times the average annual program cost per illegal
    alien.  However, data generally are not available to assess whether
    the assumptions used in estimating illegal aliens' recipiency
    rates\20 and average costs were reasonable.

    For example, for some programs, one or more of the studies assumed
    that illegal aliens had the same recipiency rate and average cost as
    the overall population served by the program.  Huddle's updated study
    made this assumption in estimating costs for Head Start and adult
    education.  For other programs, the studies adjusted the national
    recipiency rate or average cost upward or downward to reflect a
    presumed difference in the use of the program by illegal aliens.  For
    example, in estimating the cost of housing assistance, Huddle's
    initial and updated studies assumed that the recipiency rate and
    average cost were higher for illegal aliens than for the overall
    population served by this program.  The Urban Institute's study
    assumed that the recipiency rate was higher but that the average cost
    was the same.

    For still other programs, the studies estimated the public service
    use of illegal aliens by using data on populations that included
    groups in addition to illegal aliens.  For example, in their
    estimates of the cost of primary and secondary education, the studies
    used data on the school enrollment rates of populations that included
    foreign-born children who were legal residents.  The studies'
    estimates of the enrollment rate of school-age illegal aliens ranged
    from 70 to 86 percent.\21

    To estimate revenues attributable to illegal aliens, Huddle's initial
    study and the Urban Institute's study started with a preexisting
    estimate of revenues collected from illegal aliens in Los Angeles
    County for various federal, state, and local taxes.\22 The studies
    calculated the per capita payments by illegal aliens in Los Angeles
    County for each of these taxes.  The studies then used different
    methodologies to adjust these per capita tax estimates to apply them
    to the national illegal alien population.\23

    In contrast, Huddle's updated study used a different approach to
    estimate revenues.  The study developed an estimate of the income
    distribution of the national illegal alien population from data on
    the foreign-born population and on illegal aliens who were legalized
    under IRCA.  Based on this income distribution, the study used data
    on the tax payments or tax rates associated with different levels of
    income for the general population to estimate revenues from illegal
    aliens.

    --------------------
    \19 These include Census Bureau databases such as the decennial
    census, the Current Population Survey, and the Survey of Income and
    Program Participation.

    \20 Recipiency rate refers to the percentage of a population that
    receives benefits from a particular program.

    \21 Subsequent to its national net cost study, the Urban Institute
    developed more detailed estimates of the costs of providing certain
    education and public welfare benefits to illegal aliens.  The Urban
    Institute also expanded its critical analysis of the estimates for
    these benefits in Huddle's initial study.  See Rebecca L.  Clark, The
    Costs of Providing Public Assistance and Education to Immigrants
    (Washington, D.C.:  The Urban Institute, 1994).

    \22 The estimates of tax payments by illegal aliens were developed in
    a study by the Los Angeles County Internal Services Department titled
    Impact of Undocumented Persons and Other Immigrants on Costs,
    Revenues and Services in Los Angeles County, prepared for the Los
    Angeles County Board of Supervisors (Los Angeles:  1992).

    \23 For example, the Urban Institute study maintained that Huddle's
    initial study inappropriately used data on geographic differences in
    tax payments as a proxy for differences in tax rates.

          STUDIES DIFFICULT TO COMPARE
    ---------------------------------------------------------- Letter :3.3

    The national net cost studies vary considerably in the range of costs
    and revenues they included and their treatment of certain items,
    making the studies difficult to compare.  The variation in the
    studies reflects an absence of clear standards for determining the
    items that are appropriate to include in such estimates.  A consensus
    on standards has not yet emerged because the three national studies
    represent the initial efforts of researchers to develop estimates of
    the total public fiscal impact of the illegal alien population.

    Because the studies attempted to develop comprehensive estimates of
    the fiscal impact of a population, it is important to determine
    whether the items they included are appropriate.  However, this is
    difficult to determine because the studies did not always clearly
    explain the rationale for including items that were excluded by other
    studies or treating items differently from the way they were treated
    by other studies.  As a result, it is difficult to ascertain whether
    the large variations in the studies' estimates for such items stem
    from their addressing different policy questions or from differing
    views about how to respond to the same question.

       WHY NATIONAL ESTIMATES VARY
    ------------------------------------------------------------ Letter :4

    A relatively small number of costs and revenues account for much of
    the variation in the estimates of the national net cost of illegal
    aliens.  Some of these cost and revenue items were included in one
    study but not the others.  In the case of other items, the studies
    differed considerably in the approaches or assumptions they used to
    develop their estimates.

    Our review focuses on differences between the Urban Institute's study
    and Huddle's updated study.  Four areas account for about 88 percent
    of the difference between the studies' estimates of total costs:  (1)
    costs for citizen children of illegal aliens, (2) costs for the
    portion of some services provided to the general public that are used
    by illegal aliens, (3) Social Security costs, and (4) costs for
    workers displaced from jobs by illegal aliens.  On the revenue side,
    about 95 percent of the difference in the studies' estimates is
    attributable to differences in their estimates of local revenues (see
    table 1).\24

                               Table 1

               Major Areas of Difference Between Urban
                  Institute's Estimate and Huddle's
                Updated Estimate of National Net Costs

                        (Dollars in billions)

                                            Amount of difference
                                               (Huddle's updated
                                          estimate\a minus Urban
    Areas of difference                  Institute's estimate\b)
    ----------------------------------  ------------------------
    Costs
    ------------------------------------------------------------
    Citizen children                                       $4.58
    General public services\c                               5.77
    Social Security                                         3.27
    Displacement                                            4.29
    Other\d                                                 2.53
    ============================================================
    Total difference in costs                              20.44

    Revenues
    ------------------------------------------------------------
    Local                                                   2.85
    Federal and state                                       0.14
    ============================================================
    Total difference in revenues                            2.99
    ============================================================
    Total difference in net costs                          17.45
    ------------------------------------------------------------
    \a Donald Huddle, The Net National Costs of Immigration in 1993,
    (Washington, D.C.:  1994), exhibits 5, 6, and 12.

    \b Jeffrey S.  Passel and Rebecca L.  Clark, How Much Do Immigrants
    Really Cost?  A Reappraisal of Huddle's "The Cost of Immigrants"
    (Washington, D.C.:  1994), pp.  1-8, supplemented by data from
    Jeffrey Passel providing a breakdown of the cost estimates for
    individual items; and Jeffrey S.  Passel, Immigrants and Taxes:  A
    Reappraisal of Huddle's "The Cost of Immigrants" (Washington, D.C.:
    1994), table 7c.

    \c These consist of county and city costs and state and federal
    highway costs.

    \d These include items that are in Huddle's updated estimate but not
    in the Urban Institute's estimate.  For example, Huddle's updated
    estimate includes three federal programs for which illegal aliens are
    ineligible:  unemployment compensation, federal student aid, and job
    training under JTPA.  If illegal aliens receive these benefits, they
    likely do so through fraudulent means.  However, data generally are
    not available to quantify the extent of fraud by illegal aliens in
    these programs.

    --------------------
    \24 Huddle's updated study used a slightly higher estimate of the
    size of the illegal alien population than his initial study and the
    Urban Institute's study--5.1 million versus 4.8 million.  This
    factor, in addition to price inflation from 1992 (the year of the
    Urban Institute's estimate) to 1993 (the year of Huddle's updated
    estimate), accounts for about $1.0 billion of the $17.5 billion
    difference between the net cost estimates, based on our calculations.

          COSTS FOR CITIZEN CHILDREN
          OF ILLEGAL ALIENS
    ---------------------------------------------------------- Letter :4.1

    Huddle's initial study and the Urban Institute's study included
    estimates of costs for U.S.  citizen children of illegal aliens for
    only one program--AFDC.\25 These costs represent cash payments
    received by illegal aliens on behalf of their citizen children.
    However, Huddle's updated study includes estimates of citizen
    children costs for additional programs:  primary and secondary
    education; school lunch; Food Stamps; and English as a Second
    Language, English for Speakers of Other Languages, and bilingual
    education.  Huddle's estimate of these additional items totals $3.9
    billion.\26 In all these programs except Food Stamps, the benefits or
    services are provided directly to citizen children.

    The appropriateness of including these additional citizen children
    costs depends on the policy question under consideration.  For
    example, if the question concerns the overall public fiscal impact
    associated with illegal immigration, then including these costs would
    be appropriate because they are a consequence of the failure to
    prevent aliens from illegally entering and residing in the United
    States.  In addition, it would also be appropriate to include costs
    and revenues attributable to adult citizen children of illegal aliens
    (children 18 years old and older).\27 Alternatively, if the question
    concerns the cost of benefits or services provided only to persons
    residing unlawfully in the country, then it would not be appropriate
    to include these costs.  None of the three national studies, however,
    clearly specifies the question it addressed.

    --------------------
    \25 Huddle's initial study estimated $820 million in AFDC costs; the
    Urban Institute's study estimated $202 million.  In our 1993
    testimony, we estimated that AFDC costs for fiscal year 1992 were
    $479 million, based on administrative data from the Department of
    Health and Human Services.

    \26 This cost estimate is difficult to assess because Huddle's
    updated study does not explain the methodology used to estimate the
    number of citizen children of illegal aliens.

    \27 Huddle's updated study does not include such costs or revenues.

          COSTS FOR GENERAL PUBLIC
          SERVICES
    ---------------------------------------------------------- Letter :4.2

    Huddle's initial study and the Urban Institute's study included
    estimates of costs for the portion of some county government services
    provided to the general public that are used by illegal aliens, such
    as public safety, fire protection, recreation, roads, and flood
    control.  Huddle's updated study includes over $5.3 billion in
    additional costs for miscellaneous public services not included in
    his initial study or the Urban Institute's study, including federal
    and state highway costs and costs for a range of city services, such
    as police, fire, sewerage, libraries, parks and recreation, financial
    administration, and interest on debt.\28

    The studies' inclusion of costs for services to the general public
    raises two issues:  the specific services that should be included and
    the appropriate methodology for estimating the costs of the services
    attributable to illegal aliens.  With regard to the first issue, the
    national studies focused on local services provided to the general
    public; the only such state or federal service that any of them
    included was highway services.  However, because there are other
    state and federal services provided to the general public that
    illegal aliens may use or benefit from, it is not clear that the
    studies' estimates included all the appropriate items.\29 None of the
    studies clearly addressed this issue.

    A second issue involves the methodology used to estimate the costs of
    services provided to the general public.  Huddle's updated study
    calculates the costs of the additional miscellaneous public services
    on an average cost basis.  However, this may yield questionable
    estimates because the additional cost that governments incur for
    these services due to the presence of each illegal alien could be
    substantially lower or higher than the average cost per person of
    providing the services.  Using marginal cost--the cost of providing a
    service to one additional user--would better reflect the additional
    costs due to the presence of illegal aliens.  For example, in areas
    where illegal aliens constitute a small percentage of the population,
    the marginal cost of providing them fire protection could be lower
    than the average cost.  On the other hand, if the number of illegal
    aliens in an area necessitates the construction of new fire stations,
    the marginal cost of fire protection for them could be higher than
    the average cost.  While using marginal costs would yield better
    estimates, the data needed to estimate these costs are difficult to
    obtain.

    --------------------
    \28 Huddle's updated study double-counts certain local costs, such as
    those for education and public welfare.  The study includes these
    costs both in the estimates of miscellaneous county and city costs,
    and in the estimates for specific program items, such as elementary
    and secondary education, and AFDC.

    \29 For example, state governments provide various environmental,
    public safety, health, and judicial services; they also pay interest
    on debt incurred to finance the broad range of services they provide.

          SOCIAL SECURITY COSTS
    ---------------------------------------------------------- Letter :4.3

    Social Security (the Old Age, Survivors, and Disability Insurance
    program) has both a revenue side--payroll contributions from workers
    and employers--and a cost side--benefits paid out.  Huddle's initial
    study did not include either Social Security revenues or costs.
    Huddle's updated study, in response to the Urban Institute's study,
    included both.  On the revenue side, the researchers' estimates are
    fairly close:  Huddle estimates $2.4 billion in Social Security
    revenues, compared with the Urban Institute's estimate of $2.7
    billion.\30 However, on the cost side, the researchers draw sharply
    different conclusions:  Huddle estimates that illegal aliens
    generated $3.3 billion in Social Security costs; the Urban Institute
    estimates that no Social Security costs were generated by illegal
    aliens.

    This difference reflects a disagreement about the conceptual approach
    to measuring Social Security costs.  The Urban Institute study views
    the Social Security costs for illegal aliens in a given year as the
    amount of benefits paid to this population in that year.  The
    rationale for this view is that the federal government treats Social
    Security costs and revenues on a current accounts basis:  in
    calculating the annual federal budget deficit (or surplus), Social
    Security taxes are treated as revenues and Social Security benefits
    as expenses.  However, the Social Security Administration does not
    have data on the amount of Social Security benefits paid to illegal
    aliens; as a result, it is unclear whether the Urban Institute's
    assumption that this amount was zero is reasonable.

    In contrast, Huddle's updated study views Social Security costs in
    terms of the "present value of future benefits" that illegal aliens
    will collect.  The study's cost estimate for 1993 represents the
    present value of the portion of future Social Security benefits that
    illegal aliens will receive that is attributable to their earnings in
    1993.\31 Huddle's rationale for using this approach to Social
    Security costs is the belief that the federal government is incurring
    a substantial obligation for future benefits to illegal aliens.
    However, the data needed to develop a reasonable estimate of the
    amount of Social Security benefits that illegal aliens will collect
    in the future are not available.\32

    These different conceptual approaches to measuring Social Security
    costs appear to address different questions.  The current accounts
    approach is relevant to the question of the current-year cost of
    benefits provided to illegal aliens who generally have reached
    retirement age.  In contrast, the present value approach is more
    appropriate for answering the question of the long-term costs that
    will result from the presence of illegal aliens currently in the
    labor force.  The explanation of the Social Security cost estimate in
    Huddle's updated study makes it difficult to discern whether he
    explicitly sought to address a different question than the one
    addressed by the Urban Institute's study.

    --------------------
    \30 The estimate in Huddle's updated study contains an arithmetical
    error in the calculation of Social Security revenue from the highest
    income group.  Correcting this error would raise the estimate of
    Social Security revenues to $2.7 billion, the same as the Urban
    Institute's estimate.

    \31 The present value of a future benefit is the amount that would be
    sufficient, if invested at a given interest rate, to fund the
    expected future stream of payments.

    \32 For example, Huddle's estimate assumes that 75 percent of illegal
    aliens in the work force eventually will collect Social Security
    benefits, but data are not available to determine whether this is a
    reasonable assumption.

          DISPLACEMENT COSTS
    ---------------------------------------------------------- Letter :4.4

    Although illegal aliens by law are not entitled to work in this
    country, they often find employment.  This raises questions about the
    extent to which illegal aliens take jobs away from legal
    residents--U.S.  citizens and aliens residing legally in the country.
    Job displacement can generate costs to all levels of government for
    various forms of public assistance provided to legal residents who
    lose their jobs.  Huddle's initial and updated studies include $4.3
    billion in costs for public assistance--Medicaid, AFDC, Food Stamps,
    unemployment compensation, and general assistance--provided to
    displaced U.S.  citizen workers.  In contrast, the Urban Institute's
    study concludes that any job displacement costs are offset by the
    positive economic effects of illegal aliens.  These positive economic
    effects include the new jobs and additional spending (the multiplier
    effect) generated by illegal aliens' spending on goods and services.
    Huddle's subsequent response to the Urban Institute's position is
    that the social and economic costs associated with each of the
    claimed economic benefits would have to be assessed.\33

    It is very difficult to quantify the positive and negative effects of
    illegal aliens on the economy.  With regard to job displacement, our
    analysis indicates that Huddle's $4.3 billion estimate is based on a
    job displacement rate that is inconsistent with research findings on
    this topic.  While some studies have shown that job displacement may
    occur, recent studies using national data generally have concluded
    that displacement is either small in magnitude or nonexistent.
    Huddle's estimate assumes a displacement rate of 25 percent; that is,
    for every 100 low-skilled illegal alien workers, 25 U.S.  citizens
    were displaced from their jobs in 1993.  The estimate cites Huddle's
    own studies on job displacement to support the 25-percent rate.
    However, these studies assume a correlation between the employment of
    illegal aliens and the unemployment of native workers that is not
    supported by any evidence.  (See app.  III for a more complete
    discussion of Huddle's displacement cost estimate.)

    With regard to positive economic effects, economic models have been
    developed to estimate multiplier effects; however, the models have
    not been used to measure the effects of subpopulations such as
    illegal aliens.  As a result, the extent to which the positive
    economic effects of illegal aliens offset the costs they generate is
    unclear.

    --------------------
    \33 For example, he maintains that researchers must ask "what is the
    net enhancement of consumer spending if one consumer population
    displaces another, or if added consumption must be financed by higher
    public sector outlays." See A Critique of the Urban Institute's
    Claims of Cost Free Immigration:  Huddle Findings Confirmed, Carrying
    Capacity Network (Washington, D.C.:  1994).

          LOCAL REVENUES
    ---------------------------------------------------------- Letter :4.5

    The national net cost studies estimated the amounts of various
    revenues from illegal aliens collected by federal, state, and local
    governments.  These include income, sales, property, Social Security,
    and gasoline taxes.  (See app.  II for a list of the revenues
    included in the studies.) Developing reasonable estimates of these
    revenues requires information about various characteristics of the
    illegal alien population, such as its size, age distribution, income
    distribution, labor force participation rate, consumption patterns,
    and tax compliance rate.  However, limited data are available on
    these characteristics.  Furthermore, the studies differ in some of
    the revenues they include.

    Huddle's initial estimate of the total revenues from illegal aliens
    was $2.5 billion.  The Urban Institute's study criticized Huddle's
    estimate for omitting several revenues--the largest being Social
    Security tax--and estimated $7 billion in total revenues.  Huddle's
    updated study, which estimated total revenues at $10 billion, added
    several revenues that were not included in his initial study, such as
    Social Security tax, federal and state gasoline taxes, and city
    taxes.  As shown in table 2, the major area of difference between the
    revenue estimates in the Urban Institute's study and Huddle's updated
    study was in their estimates of local revenues.

                               Table 2

                Revenue Estimates in Urban Institute's
                   Study and Huddle's Updated Study

                        (Dollars in billions)

                           Urban Institute's    Huddle's updated
    Revenues               estimate (1992)\a   estimate (1993)\b
    -------------------  -------------------  ------------------
    Federal                            3.740               3.691
    State                              2.146               2.337
    Local                              1.087               3.933
    ============================================================
    Total                              6.973               9.961
    ------------------------------------------------------------
    \a Jeffrey S.  Passel and Rebecca L.  Clark, How Much Do Immigrants
    Really Cost?  A Reappraisal of Huddle's "The Cost of Immigrants"
    (Washington, D.C.:  1994), pp.  1-8, supplemented by data from
    Jeffrey Passel providing a breakdown of cost estimates for individual
    items; and Jeffrey S.  Passel, Immigrants and Taxes:  A Reappraisal
    of Huddle's "The Cost of Immigrants" (Washington, D.C.:  1994), table
    7c.

    \b Donald Huddle, The Net National Costs of Immigration in 1993
    (Washington, D.C.:  1994), exhibit 6.

    Two factors help explain the difference in their estimates of local
    revenues.  First, Huddle's updated study includes some local revenues
    not included in the Urban Institute's study, such as property taxes
    paid by businesses.\34 Second, the researchers' estimates of the per
    capita income of illegal aliens differ.  The researchers use income
    as a factor in estimating the different revenues because the amount
    of revenues from illegal aliens is a function of their income levels.
    The per capita income figure in Huddle's updated study ($7,013) is 36
    percent higher than that in the Urban Institute's study ($5,155).
    However, more recent work by the Urban Institute for the same general
    time period can be used to obtain an income figure closer to
    Huddle's--about $7,739.\35 If this higher figure was substituted in
    the Urban Institute's study, the estimate of total revenues from
    illegal aliens would increase to $10.5 billion, placing it closer to
    the $10 billion figure in Huddle's updated study.

    The reasonableness of the revenue estimates would remain unclear even
    if the gap between the estimates was narrowed, due to the limited
    data available on the characteristics of the illegal alien
    population.  For example, the estimates of illegal aliens' incomes
    cited above are derived from two main sources:  survey data on former
    illegal aliens who were legalized under IRCA and 1990 Census data on
    the foreign-born population (which does not distinguish illegal from
    legal aliens).  By using these sources to develop estimates, the
    researchers assumed that the average income of illegal aliens was
    similar to that of aliens legalized under IRCA or to the foreign-born
    population (either to the population overall or subpopulations from
    specific countries).  However, the reasonableness of these
    assumptions is unknown.\36

    --------------------
    \34 The source used by Huddle's updated study to estimate county
    revenues does not break out the amounts of property taxes collected
    from individuals versus businesses.  The Urban Institute's study
    included only the portion of county property taxes paid by
    individuals.

    \35 In Rebecca L.  Clark and others, Fiscal Impacts of Undocumented
    Aliens:  Selected Estimates for Seven States, Urban Institute
    researchers developed estimates of the per capita income of illegal
    aliens in the seven states estimated to account for about 86 percent
    of the illegal alien population.  To obtain the $7,739 figure, we
    assumed that the per capita income of illegal aliens in all other
    states was the average of the seven states.  We then weighted these
    income estimates based on the INS estimate of the geographic
    distribution of illegal aliens cited in the report.

    \36 For instance, the average income of illegal aliens who were
    legalized under IRCA may have been lower than that of illegal aliens
    who were not legalized because the former group included a much
    higher percentage of persons born in Mexico than the latter, and
    Mexican-born residents have among the lowest incomes of the
    foreign-born population.  See Rebecca L.  Clark and others, Fiscal
    Impacts of Undocumented Aliens:  Selected Estimates for Seven States,
    chapters 2 and 6.  Similarly, foreign-born residents who reside
    legally in the United States may have higher or lower incomes than
    illegal aliens who immigrated from the same countries and in the same
    time period.

       ESTIMATES OF NATIONAL NET COSTS
       COULD BE IMPROVED
    ------------------------------------------------------------ Letter :5

    Our review of the national net cost studies highlighted two key
    issues:  the limited data on the illegal alien population and the
    considerable variation in both the items that the studies included
    and their treatment of some of the same items.  These issues led us
    to conclude that considerable uncertainty remains about the national
    fiscal impact of illegal aliens.  Obtaining better data on the
    illegal alien population and providing clearer explanations of which
    costs and revenues are appropriate to include would help improve the
    usefulness of the national estimates.

          BETTER DATA ON ILLEGAL ALIEN
          POPULATION NEEDED
    ---------------------------------------------------------- Letter :5.1

    The limited availability of data on illegal aliens is likely to
    remain a persistent problem because persons residing in the country
    illegally have an incentive to keep their status hidden from
    government officials.  Yet as researchers explore new possibilities
    for overcoming some of the obstacles to collecting data on this
    population, some progress may be achieved.\37

    Given the data gaps in so many areas, any effort to collect better
    data should focus on those data that would have the greatest impact
    in improving the estimates of net costs.  Thus, emphasis could be
    placed on obtaining data on illegal aliens' use of those public
    benefits associated with the largest cost items or their payment of
    those taxes associated with the largest revenue items.  For example,
    elementary and secondary education is estimated to be the single
    largest program cost; thus, researchers could focus on obtaining data
    on the number of illegal alien schoolchildren.  However, researchers
    may confront legal barriers in attempting to collect these data.\38

    Another approach, which could be used in conjunction with the first,
    would be to obtain data on characteristics of the illegal alien
    population that would have broad usefulness by permitting researchers
    to estimate several cost or revenue items.  For example, data on the
    illegal alien population's size, geographic distribution, age
    distribution, income distribution, labor force participation rate,
    and tax compliance rate would be useful in estimating many types of
    revenues.  Better data on the size of the population also would be
    useful in estimating most of the public costs of illegal aliens.

    --------------------
    \37 We are in the initial process of developing an estimation
    methodology that may prove useful in obtaining better data on the
    illegal alien population.  The methodology involves surveying
    foreign-born residents about their immigration status in a way that
    does not cause any respondent to identify himself or herself as an
    illegal alien, yet would permit the development of reliable estimates
    regarding the size and characteristics of the illegal alien
    population.

    \38 As we noted in our California report, many school districts in
    California believe that the U.S.  Supreme Court decision, Plyler v.
    Doe, prohibits them from asking about the immigration status of
    students.  See Illegal Aliens:  Assessing Estimates of Financial
    Burden on California (GAO/HEHS-95-22, Nov.  28, 1994).

          CLEARER EXPLANATION NEEDED
          OF ITEMS THAT SHOULD BE
          INCLUDED IN NET COST STUDIES
    ---------------------------------------------------------- Letter :5.2

    Obtaining better data on the illegal alien population will not
    resolve all the problems associated with estimating the net costs of
    illegal aliens.  Researchers will still face issues about which items
    are appropriate to include in the estimates and how the items should
    be treated.  As we have seen, different decisions on these issues can
    generate considerable variation in estimates of net costs.
    Researchers need to clearly explain how they handled such issues in
    order to facilitate comparisons of their estimates.  For example,
    when the decision about whether an item should be included or how it
    should be treated depends on the policy question being asked, a study
    should clearly acknowledge the question it addresses.  The variations
    in the national studies' treatment of costs for citizen children of
    illegal aliens and Social Security costs were difficult to assess
    because the studies did not make clear which questions they were
    addressing.

          FEDERAL EFFORT TO IMPROVE
          ESTIMATES OF ALIENS' FISCAL
          IMPACT
    ---------------------------------------------------------- Letter :5.3

    Recognizing the need for better information on the effects of
    immigration, a federal effort is under way to improve estimates of
    the fiscal impact of legal and illegal aliens.  The U.S.  Commission
    on Immigration Reform, a bipartisan congressional commission created
    by the Immigration Act of 1990, is working on a final report to the
    Congress, due in 1997, on a wide range of immigration issues.  The
    Commission provided an interim report to the Congress in September
    1994.\39 The Commission has convened a panel of independent experts
    organized by the National Academy of Sciences to review the
    methodologies and assumptions of studies of the costs and benefits of
    immigration.  The panel will develop recommendations on the data
    sources and methodologies that hold the greatest promise for more
    precise measurement of the economic and social impacts of legal and
    illegal immigration.

    --------------------
    \39 U.S.  Immigration Policy:  Restoring Credibility, U.S.
    Commission on Immigration Reform (Washington, D.C.:  U.S.  Government
    Printing Office, 1994).

       CONCLUSIONS
    ------------------------------------------------------------ Letter :6

    The three national studies that we reviewed represent the initial
    efforts of researchers to develop estimates of the total public
    fiscal impact of the illegal alien population.  The little data
    available on this population make it difficult to develop reasonable
    estimates on a subject so broad in scope.  Moreover, the national
    studies varied considerably in the range of items they included and
    their treatment of certain items, making their estimates difficult to
    compare.  As a result, a great deal of uncertainty remains about the
    national fiscal impact of illegal aliens.

    Obtaining better data on the illegal alien population would help
    improve the national net cost estimates.  Recognizing the
    difficulties inherent in collecting better data on a population with
    an incentive to keep its status hidden from government officials, any
    effort to collect better data should focus on those characteristics
    of the illegal alien population that are useful in estimating the
    largest net cost items, or many of them.  These characteristics
    include the population's size, geographic distribution, age
    distribution, income distribution, labor force participation rate,
    tax compliance rate, and extent of school participation.

    Clearer explanations of which costs and revenues are appropriate to
    include would also help improve the usefulness of the estimates.  The
    appropriateness of including any particular item may depend on the
    policy questions addressed by a study.  If studies were more explicit
    about the questions they address, their estimates of net costs would
    be easier to compare.

    The expert panel convened by the U.S.  Commission on Immigration
    Reform could serve as a forum for discussing some of these data and
    conceptual issues.  By exploring ways to provide lawmakers with
    better information on the public fiscal impact of illegal aliens,
    researchers could help provide a basis for the development of
    appropriate policy responses to address the problems of illegal
    immigration.

       COMMENTS AND OUR EVALUATION
    ------------------------------------------------------------ Letter :7

    We obtained comments on a draft of this report from the Urban
    Institute and Donald Huddle (see apps.  V and VI).  In their
    comments, the researchers restated their disagreements with each
    other on a number of topics, including the size of the illegal alien
    population, the appropriate treatment of costs for citizen children
    of illegal aliens and Social Security costs, and the magnitude of
    indirect costs such as those attributable to job displacement.  The
    researchers also cited areas in which they maintained that our report
    did not sufficiently identify the problems with each other's
    estimates.  In addition, they provided technical comments that we
    incorporated where appropriate to better characterize the
    methodologies they used in their net cost estimates.

    The Urban Institute researchers agreed with much of the report's
    analysis and its conclusions about the need for better data on the
    illegal alien population and sharper definitions of the accounting
    framework used.  However, they took exception with two points in our
    report.  They maintained that it is possible to test the
    reasonableness of the underlying assumptions used in the net cost
    estimates by developing estimates for reference groups\40 and that
    their estimate of Social Security costs attributable to illegal
    aliens was reasonable.  Huddle disagreed with several of the report's
    findings.  He maintained that the report was too negative in claiming
    that the reasonableness of many of the assumptions in the net cost
    estimates is unknown.  In elaborating this point, Huddle argued that
    the results of various surveys of illegal aliens' use of public
    benefits are consistent with the utilization rates in his cost
    estimates.  Huddle also asserted that our report's criticism of his
    Social Security and displacement cost estimates were unjustified.

    We believe that our report accurately describes the problems
    researchers face in developing estimates of the national fiscal
    impact of the illegal alien population.  With regard to the
    reasonableness of the assumptions in the net cost estimates, we agree
    with Urban Institute researchers that developing cost and revenue
    estimates for reference groups can provide a "reality check" on
    estimates for illegal aliens, as well as a useful context for
    assessing the net cost estimates.  However, the use of reference
    groups provides only a limited test and does not ensure that the
    estimates for a particular immigrant group are reasonable.  We find
    Huddle's claim that the assumptions in his estimates are consistent
    with the results of survey studies problematic for several reasons.
    The utilization rates reported by these studies vary considerably,
    the reliability of some of the studies has been questioned, and the
    extent to which the findings of these studies can be generalized to
    the illegal alien population nationwide is unclear.

    On the issue of Social Security costs for illegal aliens, we continue
    to believe that data limitations preclude the development of a
    reasonable estimate.  To support their estimate that these costs are
    zero, the Urban Institute researchers cited some reasons why illegal
    aliens are not likely to be receiving Social Security benefits.
    Huddle, on the other hand, criticized the Urban Institute's estimate
    by citing several reasons for believing that illegal aliens are
    receiving benefits.  Given the researchers' disagreement and the lack
    of national data on the number of illegal aliens receiving benefits,
    we have no basis for supporting either of these positions.  Data
    limitations also lead us to question Huddle's estimate of Social
    Security costs.  For example, Huddle claimed that at least 75 percent
    of illegal aliens in the work force have valid Social Security
    numbers, but he did not provide sufficient evidence to support this
    claim.  Moreover, data are not available to assess his claim.

    Finally, with regard to the magnitude of displacement costs, we
    continue to believe that Huddle's estimate overstates these costs
    because it is based on a displacement rate that is inconsistent with
    research findings on job displacement.  (See pp.  32-33 for a more
    detailed discussion of Huddle's comments and our responses on this
    issue).

    The comments from the Urban Institute and Huddle reinforce our
    assessment of how difficult it is to develop estimates of the
    national fiscal impact of illegal aliens, given the limited data
    available.  As noted in this report, obtaining better data on some of
    the key characteristics of the illegal alien population could help
    narrow the gap between the researchers' widely varying estimates of
    the national net cost.  Moreover, clearer explanations of the
    approaches used would make the net cost estimates more useful.

    --------------------
    \40 The reference groups are citizens and groups of immigrants other
    than illegal aliens.  Urban Institute researchers noted that
    estimates of total costs for a program (or total tax payments)
    attributable to illegal aliens and reference groups can be tested by
    comparing them with actual government program expenditures (or
    revenues collected).

    ---------------------------------------------------------- Letter :7.1

    Our work was conducted in accordance with generally accepted
    government auditing standards.  If you or your staff have any
    questions concerning this report, please call me on (202) 512-7215.
    Other GAO contacts and staff acknowledgments are listed in appendix
    VII.

    Jane L.  Ross
    Director, Income Security Issues

    STUDIES OF THE NET FISCAL IMPACT
    OF ILLEGAL ALIENS
    =========================================================== Appendix I

                   Geographic
                   area and time  Level of
    Author(s) and  period         government     Estimated net
    date of study  studied        studied        fiscal impact
    -------------  -------------  -------------  ---------------
    Huddle (1994)  United         Federal,       ($19 billion)
                   States, 1993   state, and
                                  local

    Passel and     United         Federal,       ($2 billion)
    Clark (Urban   States, 1992   state, and
    Institute)                    local
    (1994)

    Huddle (1993)  United         Federal,       ($12 billion)
                   States, 1992   state, and
                                  local

    Huddle (1994)  Florida, 1992  Federal,       ($913 million)
                                  state, and
                                  local

    Huddle (1994)  Texas, 1992    Federal,       ($1 billion)
                                  state, and
                                  local

    Huddle (1993)  California,    Federal,       ($5 billion)
                   1992           state, and
                                  local

    Parker and     San Diego      State and      ($244 million)
    Rea (1993)     County,        local
                   fiscal year
                   1992-93

    Parker and     San Diego      State and      ($146 million)
    Rea (1992)     County,        local
                   fiscal year
                   1991-92

    Texas          Texas, 1993    State and      ($130-$166
    Governor's                    local          million)
    Office of
    Immigration
    and Refugee
    Affairs
    (1993)

    Romero and     California,    State          ($2.7 billion)
    others (1994)  fiscal year
                   1994-95

    Los Angeles    Los Angeles    Local          ($272 million)
    County Board   County,
    of             fiscal year
    Supervisors    1991-92
    (1992)

    Los Angeles    Los Angeles    Local          ($276 million)
    County Chief   County,
    Administrativ  fiscal year
    e Office       1990-91
    (1991)

    Lyndon B.      Texas, fiscal  State          $60-$227
    Johnson        year 1982                     million
    School of
    Public         Six Texas      Local
    Affairs        cities,                       ($4-$30
    (1984)         fiscal year                   million)
                   1982
    ------------------------------------------------------------
    Source:  GAO analysis of studies.

    COST AND REVENUE ITEMS INCLUDED IN
    ESTIMATES OF THE NATIONAL NET
    COSTS OF ILLEGAL ALIENS
    ========================================================== Appendix II

                        (Dollars in millions)

                                                          Huddle
                                                              's
                                                          update
                                                               d
                          Huddle's                        estima
                           initial                            te
                          estimate   Urban Institute's    (1993)
    Items                 (1992)\a   estimate (1992)\b        \c
    -------------------  ---------  --------------------  ------
    Direct program costs
    ------------------------------------------------------------
    Primary and             $3,909         $3,679         $4,369
     secondary
     education
    Primary and                 \d           \d            2,828
     secondary
     education (citizen
     children)
    Federal student aid         \d           \d               72
    Public higher              342          257              485
     education
    School lunch               109          107              121
    School lunch                \d           \d               63
     (citizen children)
    Adult education             \d           \d               28
    Head Start                  17           9                12
    English as a Second        858          771            1,074
     Language, English
     for Speakers of
     Other Languages,
     and bilingual
     education
    English as a Second         \d           \d              556
     Language, English
     for Speakers of
     Other Languages,
     and bilingual
     education (citizen
     children)
    Compensatory               101         101\e             122
     education
    AFDC                       820          202              919
    Food Stamps\f               \d           4               414
    WIC                         81           46               93
    Elderly nutrition            1           1                 1
    Housing assistance         295          153              326
    Low-income home             32           16               27
     energy assistance
    Criminal justice         1,031        1,031\e            541
     (corrections)
    Unemployment                \d           \d              856
     compensation
    JTPA                        \d           \d               72
    General assistance          \d           \d               92
    Medicaid                   479          463              509
    Earned Income Tax           \d           \d              278
     Credit and health
     care tax credit
    State and federal           \d           \d              435
     highway costs
    Community block             \d           \d               90
     grants
    County costs             2,021        2,021\e          2,472
    City costs                  \d           \d            4,887
    Social Security             \d           0             3,266
    ============================================================
    Total direct           $10,096         $8,861         $25,00
     program costs                                             8
    Displacement costs       4,291           0             4,290
    ============================================================
    Total costs            $14,387         $8,861         $29,29
                                                               8

    Revenues
    ------------------------------------------------------------
    Federal income tax        $368          $515            $890
    Federal excise tax         499          181              250
    Federal gas tax             \d          155              166
    Social Security tax         \d         2,721           2,385
    Unemployment                \d          168               \d
     insurance tax
    State revenues           1,335         2,146           2,337
    Local revenues             284         1,087           3,933
    ============================================================
    Total revenues          $2,486         $6,973         $9,961
    ============================================================
    Net costs (costs       $11,901         $1,888         $19,33
     less revenues)                                            7
    ------------------------------------------------------------
    \a Donald Huddle, The Costs of Immigration (Washington, D.C.:  1993),
    exhibits 5, 6, and 12.

    \b Jeffrey S.  Passel and Rebecca L.  Clark, How Much Do Immigrants
    Really Cost?  A Reappraisal of Huddle's "The Cost of Immigrants"
    (Washington, D.C.:  1994), pp.  1-8, supplemented by data from
    Jeffrey Passel providing a breakdown of the cost estimates for
    individual items; and Jeffrey S.  Passel, Immigrants and Taxes:  A
    Reappraisal of Huddle's "The Cost of Immigrants" (Washington, D.C.:
    1994), table 7c.

    \c Donald Huddle, The Net National Costs of Immigration in 1993
    (Washington, D.C.:  1994), exhibits 5, 6, and 12.

    \d The estimate does not include this item.

    \e The Urban Institute's estimate uses Huddle's initial estimate for
    this item.

    \f The Urban Institute's estimate is for the costs of benefits
    received fraudulently by illegal aliens; Huddle's updated estimate is
    for the cost of benefits to U.S.  citizen children of illegal aliens.

    REVIEW OF HUDDLE'S DISPLACEMENT
    COST ESTIMATE
    ========================================================= Appendix III

    In our view, Huddle's estimate of $4.3 billion in displacement costs
    is based on a displacement rate that is too high.  The estimate
    assumes that for every 100 low-skilled illegal alien workers, 25 U.S.
    citizens were displaced from their jobs in 1993.  This assumption of
    a 25-percent displacement rate is inconsistent with research findings
    on job displacement.

    HUDDLE'S RESEARCH ON DISPLACEMENT

    Huddle's study cites his own work on job displacement to support the
    claim that the level of displacement is at least 25 percent.  In
    several field surveys that focused on the labor market in the Houston
    metropolitan area, Huddle claimed to have found displacement rates
    that ranged from 23 to 53 percent in the 1980s.\1 The figures that
    Huddle cited in his 1982-83, 1985, and 1989-90 "microstudies of job
    displacement" are based on the percentages of unemployed native
    workers he surveyed who were still unemployed after some period of
    time.  However, these figures cannot be construed as measures of
    displacement by illegal aliens because the studies did not show that
    the unemployed natives lost their jobs to illegal aliens or were
    unable to find work because of the presence of illegal aliens in the
    Houston labor market.

    In effect, Huddle's microstudies of job displacement assumed a
    correlation between the employment of illegal aliens and the
    unemployment of native workers that was unsupported by any evidence.
    In addition, even if the studies had accurately measured the level of
    job displacement in Houston in the 1980s, the phenomenon of job
    displacement is so sensitive to the locality where it is measured
    that the studies' results for Texas cannot be generalized to the
    nation.

    OTHER RESEARCH ON DISPLACEMENT

    In his national net cost study, Huddle maintains that the 25-percent
    displacement rate is a conservative figure because an even higher
    displacement rate can be derived from a study by Altonji and Card.\2
    However, this contradicts the conclusion that the authors draw from
    their own research.  Altonji and Card summarize the results of their
    study as indicating that immigrants have a small and potentially zero
    effect on the employment rates of natives.  Furthermore, Huddle's
    interpretation of Altonji and Card's econometric results is based on
    an incorrect use of statistics.  Huddle sums the coefficients from
    three separate regression equations, each with a different dependent
    variable.\3

    The work of other researchers does not support the claim of a
    25-percent displacement rate.  Our 1986 review of the literature on
    job displacement concluded that illegal aliens may displace native
    workers.  However, it found that the available research was
    inconclusive because it was limited and suffered from important
    methodological weaknesses.\4 In addition, the experts that we
    consulted during our review agreed that while there is no consensus
    on what the average displacement rate might be, the literature on
    displacement does not support the claim of a rate as high as 25
    percent.  Recent studies using nationwide data have concluded that
    job displacement by aliens is either small in magnitude or
    nonexistent.\5 The literature on job displacement that focuses
    specifically on illegal aliens has reached the same conclusion.\6

    HUDDLE'S COMMENTS AND OUR
    EVALUATION

    In his comments on a draft of our report, Huddle maintained that our
    criticism of his displacement cost estimate was unjustified (see app.
    VI).  Huddle made four main points about our discussion of
    displacement.  First, he contended that we had misunderstood his
    definition of displacement and were not including other types of
    displaced workers, such as teenagers who could not find first-time
    jobs and workers who had to physically move in order to look for
    work.  Second, Huddle maintained that the coefficients from the four
    different equations in the Altonji and Card study are additive.
    Third, Huddle claimed that we did not consider the effect of illegal
    immigrants on wage depression as well as job displacement.  Finally,
    Huddle maintained that his interpretation of the literature on job
    displacement was valid and that other experts would agree with him.

    With respect to Huddle's definition of displacement, we do not agree
    that it is valid to apply this broader definition in calculating the
    costs of the array of social service benefits he cites.  Workers who
    have never entered the labor force cannot collect unemployment
    benefits, for example, and teenagers in particular are not likely to
    be individually eligible for the full range of welfare benefits.
    Workers who migrate elsewhere, that is, those who are physically
    displaced due to the presence of illegal aliens in the work force,
    may not necessarily be jobless or earning such a low wage in their
    new place of residence that they would be eligible for welfare
    benefits.  Most importantly, there is no evidence of how many
    displaced workers remain permanently unemployed and, therefore,
    continue to collect welfare over a long period of time.  In our view,
    ascribing full costs to this broader set of workers overstates the
    true cost of displacement.

    With respect to Huddle's claim that the coefficients in table 7.7 of
    the Altonji and Card study are additive, we disagree.  Adding the
    coefficients on the first equation, which measures the ratio of
    people in the labor force to the population as a whole, and the
    second equation, which measures the ratio of employed persons to the
    population as a whole, effectively double-counts all employed
    persons, because the second ratio is a subset of the first.  In
    addition, no other researcher we consulted, including one of the
    authors, interpreted the Altonji and Card study in the way that
    Huddle did, nor did they agree with Huddle's methodology of adding
    coefficients from separate regression equations to get a measure of
    total labor displacement.

    With respect to Huddle's claim that we overlooked the phenomenon of
    wage depression, we did not make an evaluation of the impact of
    illegal aliens on wage depression because that was outside the scope
    of the net cost studies we reviewed.  These studies specified job
    displacement only, and it is our judgment that the evidence on job
    displacement is much weaker than the evidence on wage depression.
    Huddle's claim that job displacement and wage depression are close
    substitutes in terms of their impact on the low-skill native work
    force and on the net cost of public services is not supported by any
    empirical evidence or reference to any relevant literature.

    Finally, with respect to our overall conclusion and our
    interpretation of the literature, we thoroughly reviewed the
    literature and consulted with recognized experts on immigration (see
    app.  IV for a list of these persons).  None of the experts we
    consulted believes that a displacement rate as high as 25 percent is
    supported by the research literature.

    --------------------
    \1 Donald L.  Huddle, "Immigration and Jobs:  The Process of
    Displacement," The NPG Forum (May 1992), pp.  1-5.

    \2 Joseph G.  Altonji and David Card, "The Effects of Immigration on
    the Labor Market Outcomes of Less-skilled Natives," Immigration,
    Trade and the Labor Market, eds.  John M.  Abowd and Richard B.
    Freeman (Chicago:  University of Chicago Press, 1991).

    \3 This is an inappropriate use of the results of multivariate
    regression analysis and has no statistical meaning.

    \4 Examples of methodological weaknesses included the use of
    unreliable methods, such as hearsay, to identify illegal alien
    workers and inappropriate statistical procedures to support
    inferences (for example, cross-sectional or single-period data used
    to support cause-and-effect inferences that implied a temporal
    sequence).  See Illegal Aliens:  Limited Research Suggests Illegal
    Aliens May Displace Native Workers (GAO/PEMD-86-9BR, Apr.  1986).

    \5 See the studies by Altonji and Card, Enchautegui, Greenwood and
    Hunt, and Greenwood and McDowell.

    \6 See the studies by Winegarden and Khor, and Taylor and others.

    EXPERTS CONSULTED BY GAO
    ========================================================== Appendix IV

    George J.  Borjas, Professor of Economics, University of California,
    San Diego.

    David Card, Professor of Economics, Princeton University.

    Richard Fry, Division of Immigration Policy and Research, Bureau of
    International Labor Affairs, U.S.  Department of Labor, Washington,
    D.C.

    Briant Lindsay Lowell, Division of Immigration Policy and Research,
    Bureau of International Labor Affairs, U.S.  Department of Labor,
    Washington, D.C.

    Demetrios Papademetriou, Carnegie Endowment for International Peace,
    Washington, D.C.

    Stephen J.  Trejo, Associate Professor of Economics, University of
    California, Santa Barbara.

    Sidney Weintraub, Center for Strategic and International Studies,
    Washington, D.C.; Dean Rusk Chair in International Affairs, Lyndon B.
    Johnson School of Public Affairs, University of Texas, Austin.

    (See figure in printed edition.)Appendix V
    COMMENTS FROM THE URBAN INSTITUTE
    ========================================================== Appendix IV

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)Appendix VI
    COMMENTS FROM DONALD HUDDLE
    ========================================================== Appendix IV

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    (See figure in printed edition.)

    GAO CONTACTS AND STAFF
    ACKNOWLEDGMENTS
    ========================================================= Appendix VII

    GAO CONTACTS

    Cynthia M.  Fagnoni, Assistant Director, (202) 512-7202
    Andrew Sherrill, Evaluator-in-Charge, (202) 512-7252

    ACKNOWLEDGMENTS

    In addition to those named above, the following persons also made
    important contributions to this report:  Deborah A.  Moberly,
    Evaluator; Alicia Puente Cackley, Senior Economist; Steven R.
    Machlin, Senior Social Science Analyst; and William McNaught,
    Assistant Director, Office of the Chief Economist.

    BIBLIOGRAPHY
    =========================================================== Appendix 0

    Altonji, Joseph G., and David Card.  "The Effects of Immigration on
    the Labor Market Outcomes of Less-skilled Natives." Immigration,
    Trade and the Labor Market, John Abowd and Richard B.  Freeman, eds.
    Chicago:  University of Chicago Press, 1991.

    Bean, Frank D., and others.  "Undocumented Migration to the United
    States:  Perceptions and Evidence." Population and Development
    Review, Vol.  13, No.  4 (1987), pp.  671-90.

    Carrying Capacity Network.  A Critique of the Urban Institute's
    Claims of Cost Free Immigration:  Huddle Findings Confirmed.
    Washington, D.C.:  1994.

    Clark, Rebecca L.  The Costs of Providing Public Assistance and
    Education to Immigrants, PRIP-UI-34.  Washington, D.C.:  The Urban
    Institute, 1994.

    Clark, Rebecca L., and others.  Fiscal Impacts of Undocumented
    Aliens:  Selected Estimates for Seven States.  Washington, D.C.:  The
    Urban Institute, 1994.

    Enchautegui, Maria E.  "Effects of Immigration on Wages and
    Joblessness:  Evidence from Thirty Demographic Groups." Washington,
    D.C.:  The Urban Institute, 1994.

    Fernandez, Edward W., and J.  Gregory Robinson.  "Illustrative Ranges
    of the Distribution of Undocumented Immigrants by State," technical
    working paper no.  8.  Washington, D.C.:  U.S.  Bureau of the Census,
    Population Division, 1994.

    Fix, Michael, and Jeffrey S.  Passel.  Immigration and Immigrants:
    Setting the Record Straight.  Washington, D.C.:  The Urban Institute,
    1994.

    Greenwood, Michael J., and Gary L.  Hunt.  "Economic Effects of
    Immigrants on Native and Foreign-Born Workers:  Complementarity,
    Substitutability, and Other Channels of Influence." Washington D.C.:
    U.S.  Department of Labor, Bureau of International Labor Affairs,
    Division of Immigration Policy and Research, 1991.

    Greenwood, Michael J., and John McDowell.  "The Labor Market
    Consequences of U.S.  Immigration:  A Survey," Working Paper 1, 1990.
    Washington, D.C.:  U.S.  Department of Labor, Bureau of International
    Labor Affairs, Division of Immigration Policy and Research.

    Huddle, Donald.  The Net National Costs of Immigration Into the
    United States:  Illegal Immigration Assessed.  Washington, D.C.:
    Carrying Capacity Network, 1995.

    _____.  The Net Costs of Immigration to Florida.  Washington, D.C.:
    Carrying Capacity Network, 1994.

    _____.  The Net National Costs of Immigration in 1993.  Washington,
    D.C.:  Carrying Capacity Network, 1994.

    _____.  The Net Costs of Immigration to Texas.  Washington, D.C.:
    Carrying Capacity Network, 1994.

    _____.  The Costs of Immigration.  Washington, D.C.:  Carrying
    Capacity Network, 1993.

    _____.  The Net Costs of Immigration to California.  Washington,
    D.C.:  Carrying Capacity Network, 1993.

    _____.  "Immigration and Jobs:  The Process of Displacement." The NPG
    Forum (May 1992), pp.  1-5.

    Los Angeles County Chief Administrative Office.  Updated Revenues and
    Costs Attributable to Undocumented Aliens.  Los Angeles:  1991.

    Los Angeles County Internal Services Department.  Impact of
    Undocumented Persons and Other Immigrants on Costs, Revenues and
    Services in Los Angeles County.  Report prepared for Los Angeles
    County Board of Supervisors, Nov.  6, 1992.

    Lyndon B.  Johnson School of Public Affairs.  The Use of Public
    Services by Undocumented Aliens in Texas:  A Study of State Costs and
    Revenues, Policy Research Report, No.  60.  Austin, Texas:  Lyndon B.
    Johnson School of Public Affairs, University of Texas, 1984.

    Parker, Richard A., and Louis M.  Rea.  Illegal Immigration in San
    Diego County:  An Analysis of Costs and Revenues, report to the
    California State Senate Special Committee on Border Issues.  San
    Diego:  1993.

    Passel, Jeffrey S.  Immigrants and Taxes:  A Reappraisal of Huddle's
    "The Cost of Immigrants." Washington, D.C.:  The Urban Institute,
    1994.

    Passel, Jeffrey S., and Rebecca L.  Clark.  How Much Do Immigrants
    Really Cost?  A Reappraisal of Huddle's "The Cost of Immigrants."
    Washington, D.C.:  The Urban Institute, 1994.

    Rea, Louis M., and Richard A.  Parker.  A Fiscal Impact Analysis of
    Undocumented Immigrants Residing in San Diego County, report by the
    Auditor General of California, C-126.  Sacramento, California:  1992.

    Romero, Phillip J., and others.  Shifting the Costs of a Failed
    Federal Policy:  The Net Fiscal Impact of Illegal Immigrants in
    California.  Sacramento, Calif.:  California Governor's Office of
    Planning and Research, and California Department of Finance, 1994.

    Taylor, Lowell J., and others.  "Mexican Immigrants and the Wages and
    Unemployment Experience of Native Workers," Policy Discussion Paper
    PRIP-UI-1, Program for Research on Immigration Policy.  Washington,
    D.C.:  The Urban Institute, 1988.

    Texas Governor's Office of Immigration and Refugee Affairs.
    Estimated Costs for the Undocumented Population.  Austin, Texas:
    1993.

    U.S.  Commission on Immigration Reform.  U.S.  Immigration Policy:
    Restoring Credibility.  Washington, D.C.:  U.S.  Government Printing
    Office, 1994.

    U.S.  General Accounting Office.  Illegal Aliens:  Assessing
    Estimates of Financial Burden on California (GAO/HEHS-95-22).
    Washington, D.C.:  1994.

    U.S.  General Accounting Office.  Benefits for Illegal Aliens:  Some
    Program Costs Increasing, But Total Costs Unknown (GAO/T-HRD-93-33).
    Washington, D.C.:  1993.

    U.S.  General Accounting Office.  Illegal Aliens:  Limited Research
    Suggests Illegal Aliens May Displace Native Workers
    (GAO/PEMD-86-9BR).  Washington, D.C.:  1986.

    Vernez, Georges, and Kevin McCarthy.  The Fiscal Costs of
    Immigration:  Analytical and Policy Issues, DRU-958-1-IF, background
    paper presented at "The Public Costs of Immigration:  Why Does It
    Matter?" Rand, Center for Research on Immigration Policy, Santa
    Monica, California, 1995.

    Warren, Robert.  "Estimates of the Unauthorized Immigrant Population
    Residing in the United States, by Country of Origin and State of
    Residence:  October 1992." Unpublished report, U.S.  Immigration and
    Naturalization Service.  Washington, D.C.:  1994.

    Winegarden, C.R., and Lay Boon Khor.  "Undocumented Immigration and
    Unemployment of U.S.  Youth and Minority Workers:  Econometric
    Evidence." The Review of Economics and Statistics, Vol.  73, No.  1
    (1991), pp.  105-112.

    RELATED GAO PRODUCTS

    Illegal Aliens:  Assessing Estimates of Financial Burden on
    California (GAO/HEHS-95-22, Nov.  28, 1994).

    Benefits for Illegal Aliens:  Some Program Costs Increasing, But
    Total Costs Unknown (GAO/T-HRD-93-33, Sept.  29, 1993).

    Illegal Aliens:  Despite Data Limitations, Current Methods Provide
    Better Population Estimates (GAO/PEMD-93-25, Aug.  5, 1993).

    Trauma Care Reimbursement:  Poor Understanding of Losses and Coverage
    for Undocumented Aliens (GAO/PEMD-93-1, Oct.  15, 1992).

    Undocumented Aliens:  Estimating the Cost of Their Uncompensated
    Hospital Care (GAO/PEMD-87-24BR, Sept.  16, 1987).

    Illegal Aliens:  Limited Research Suggests Illegal Aliens May
    Displace Native Workers (GAO/PEMD-86-98BR, Apr.  21, 1986).