Sunday Links #8: Immigration

Immigration is in the news with the new reform bill, so I thought it was worthwhile to highlight why I’ve changed my mind from “don’t care much about immigration” to “definitely in favor of making immigration easier”. It turns out that immigration (1) improves the quality of life of the immigrants themselves and (2) improves the quality of life of the immigrants’ home families and communities. These two parts alone make it worth the net cost to the host country, in my opinion.

…But wait, you say? There actually isn’t a “net cost to the host country” because immigration is a “win-win”? Yes! Turns out that all the people afraid of “Mexican immigrants stealin’ our dang jobs” were wrong, because immigration also (3) creates economic growth in the country they immigrate to. It turns out that the desire to build a large fence between US and Mexico, perhaps even with an “alligator-filled moat” and “topped with electrified barbed wire”, pretty much couldn’t be any more terrible…

Improving the Life of the Immigrants and their Families

Julia Wise highlights in Your Huddled Masses Yearning to Breathe Free that “[y]oung people move to rich countries, get jobs that pay far better than they could make back home in India or Mexico, and send some of their earnings back home to their families. That money amounts to more than twice the global aid to developing countries.”

Shaun Raviv, writing for Giving What We Can, concurs, suggesting that funding migration could even be an effective way to help the poor: “Moving a person to a country that is better organized and makes use of more advanced technology can increase their economic productivity many times over. Reflecting this, the same taxi driver in Swaziland earns multiples of her previous income if she can do the same job in Switzerland. This is a faster and larger financial impact than that offered by any other health, education, or economic empowerment program I know of.”

GiveWell spoke with Michael Clemens [PDF], an economist who studies the relationship between migration and development, who concludes that “[i]ncreased labor mobility as an excellent mechanism for increasing developing world citizens’ incomes”.

The Net Benefit to the Host Country

There is certainly some cost to immigration. A 2007 US Congressional Budget Office review of 29 reports found that while they can’t make a conclusion about the aggregate effect across all US states, generally state and local governments incur “minor” and “modest” costs from providing services to illegal immigrants that is not compensated for by increased tax revenue.

Overall, the potential for economic gain from decreasing barriers to emigration/immigration is huge – something Michael Clemens calls “trillion dollar bills on the sidewalk” [PDF]. As Clemens explains, lots of people want to emigrate and cannot because of existing political barriers. But, if they could, he estimates large gains for world GDP. As he states, “How large are the economic losses caused by barriers to emigration? Research on this question has been distinguished by its rarity and obscurity, but the few estimates we have should make economists’ jaws hit their desks.”

Indeed, instead of “take our jobs”, immigrants add more jobs through increasing demand. An Immigration Policy Center report concludes “[c]omprehensive immigration reform generates an increase in U.S. GDP of at least 0.84 percent. Summed over 10 years, this amounts to a cumulative $1.5 trillion in additional GDP. It also boosts wages for both native-born and newly legalized immigrant workers” and that “[m]ass deportation reduces U.S. GDP by 1.46 percent. This amounts to $2.6 trillion in cumulative lost GDP over 10 years, not including the actual cost of deportation.”

The Migration Policy Institute agrees: “In the long run, immigrants do not reduce native employment rates, but they do increase productivity and hence average income. This finding is consistent with the broad existing literature on the impact of immigration in the United States. […I]mmigration unambiguously improves employment, productivity, and income”.

A Harvard Business Review survey of the literature finds “immigration does not exert significant effects on native labor market outcomes” and “[ev]ven large, sudden infows of immigrants were not found to reduce native wages or employment significantly”.

TIME also review the literature in “The Economics of Immigration: Who Wins, Who Loses, and Why” and concludes that pretty much everyone wins, with the exception of low-income native workers, where the literature is split on whether they are negatively impacted or not.

Moreover, the IGM Forum Panel of Economists finds 95% of economists agree that “[t]he average US citizen would be better off if a larger number of highly educated foreign workers were legally allowed to immigrate to the US each year.”

At this point, it becomes tiring to continue to cite the tremendous amount of economic literature and experts pointing in favor of increased immigration as a benefit to the host country, so I’ll just leave a few links here: CNBC on “Immigration Reform: Good or Bad for the Economy?” (Answer: Yes), “The Economic Effects of Granting Legal Status and Citizenship to Undocumented Immigrants” [PDF] (Answer: The effects are positive for both natives and immigrants), “Rethinking the Effect of Immigration on Wages” (Answer: immigration increases wages for pretty much everyone), “Task Specialization, Immigration, and Wages” (Answer: there is little negative effect on wages from immigration as long as immigrants specialize in different tasks than natives), “Employment Effects Of Immigration To Germany: An Analysis Based On Local Labor Markets” (Answer: No negative effects on natives wages), “The Impact of Immigration on the Earnings of Natives: Evidence from Australian Micro Data” (Answer: No negative effects on natives wages), and…

…I actually have about fifty more citations, but I think you get the point.

But Why?

Why might this be the case?

Robert Wiblin says in “Immigrants Don’t Steal Your Jobs Any More Than Your Own Children Do” that :** “Reviewing the literature on the impact of immigrants on the economy, I’ve been impressed by the unanimity on the empirical question of whether immigrants increase unemployment or reduce wages in the receiving country. […] These results are interesting only because the myth that immigrants ‘take jobs’ is so widespread. It is a peculiar myth – why would new people reduce the pool of productive jobs available? All countries have doubled their populations many times over due to childbirth and they never run out of productive work to do because there is no limited pool of work to be divided up.”

Heck, even William Easterly, noted foreign aid skeptic, is excited about this: “If you are worried about having enough tax revenue to pay interest on the government debt, find more taxpayers! And look, here are some people volunteering to become new taxpayers: Haitian immigrants fleeing quakes and poverty! So let’s open the door to our Haitian fiscal rescuers, who will also lift themselves out of poverty[. …] It’s a TWOFER!”