How do CBO and Brookings differ in assumptions when projecting the macroeconomic impact of reduced immigration?
Executive summary
Brookings and the Congressional Budget Office diverge chiefly on underlying population tallies, assumed outflow rates for recent arrivals, and whether (and how) to fold immigration-driven productivity gains into macro projections; Brookings’ modeling applies more conservative inflow assumptions and explicit exit rates, producing a smaller near-term GDP drag than analyses that take CBO’s higher immigration baseline at face value [1] [2]. Those methodological choices — plus different conventions about when to relax CBO’s usual “no macro effects” scoring rule — explain much of the gap in projected impacts on GDP and employment [3] [4].
1. Bigger starting populations vs. conservative midpoints: the data gap that matters
CBO’s demographic projections imply substantially faster population and labor-force growth in recent years and a much larger stock of recent arrivals than older series, and CBO uses high counts of “other foreign nationals” to feed its baselines [3] [5], whereas Brookings says its midpoint estimates of recent inflows are about 550,000 lower than CBO’s and explicitly warns that CPS-based approaches produce even larger apparent declines in the foreign‑born population used by some groups (about 2 million) [1].
2. Exit-rate plumbing: Brookings’ micro assumptions vs. CBO’s stock-based use
Brookings discloses detailed assumptions about departures: recently arrived parolees or those given notices to appear exit at 3%, unauthorized recent entrants at 4%, and recent temporary visa holders at 20% — and it mechanically reduces normal outflows when the foreign‑born stock shrinks [1]. By contrast, CBO’s public materials referenced by Brookings typically present higher gross inflow estimates (for example, 860,000 entries without inspection in 2023 used by both organizations as an anchor) but CBO’s published pieces often communicate population flows as aggregate projections rather than the same explicit per-category exit-rate plumbing Brookings applies in scenario calculations [2] [6].
3. Treatment of macro feedbacks and productivity: when the models widen the gap
CBO’s institutional approach has long been to hold macro variables fixed in standard cost estimates, but it has relaxed that convention in analyses of major legislative changes and in work that explicitly models productivity effects of skilled immigrants — for instance, CBO and JCT estimated small increases in productivity from more skilled immigration in past bills [4] [7]. Brookings’ scenario work that produced the –0.2 to –0.3 percentage‑point GDP growth impact for 2025 and –0.1 to –0.3 for 2026 explicitly notes it does not incorporate direct positive productivity effects from immigration, and it also assumes the Federal Reserve does not offset lower potential employment growth by loosening policy — an implicit macro assumption that reduces the estimated inflation channel but tends to magnify output effects [1] [2].
4. Horizon and policy framing: short‑run jobs vs. long‑run fiscal/productivity narratives
CBO’s projections are embedded in long‑range population and budget baselines — showing net immigration as the engine of population growth as births decline — and its exercises are designed for budget scoring as well as economic impact assessment [3]. Brookings frames multiple scenarios (high/low) around plausible policy shifts and emphasizes near‑term labor‑market implications (sustainable employment growth ranges, the 2025–26 GDP hit), producing more granular short‑run estimates that explicitly track recent arrivals’ labor supply and consumption effects [8] [1].
5. Where the dispute converges — and where uncertainty swamps conclusions
Both institutions agree that reduced immigration lowers labor supply and GDP relative to a counterfactual with higher inflows, but the magnitude hinges on which population counts, exit assumptions, and productivity channels are adopted; independent work (e.g., Dallas Fed or state/local analyses) finds larger GDP hits when applying CBO’s higher unauthorized‑entry baselines to structural models, underscoring that methodological choices—not ideology—drive divergent magnitudes [5] [1]. Absent a single, definitive microdata series for recent arrivals, these differing, documented assumptions explain why Brookings’ midpoint impact is meaningfully smaller than projections that accept CBO’s larger inflow numbers without Brookings’ exit‑rate adjustments [1] [2].