Economists want more immigration, why don’t you?

A perennial assertion of open borders skeptics is that they are the voice of reason and empirics in the immigration debate, while open borders advocates are soft-headed people thinking with their hearts instead of their brains. So this humble blogger spent a Friday lunch hour in Washington, D.C. attending a Cato Institute panel titled What Economists Think About Immigration. Incidentally, the panel was broadcast on C-SPAN, and thanks to them, you can also view the full panel online.

Of the four people on stage, only one was a new face to me:

  1. Alex Nowrasteh (moderator of the panel, Cato Institute researcher, and an Open Borders blogger)
  2. Madeline Zavodny (panelist, chair of the Agnes Scott College economics department)
  3. Ethan Lewis (panelist, associate professor of economics at Dartmouth, and my former econometrics professor)
  4. Michael Clemens (panelist, Center for Global Development researcher, and the man who single-handedly changed the way I think about immigration)

Zavogny presented first, talking about high-skilled immigrants to the US and how they contribute economically to the US. I think even open borders skeptics tend to favour high-skilled immigration. Those who don’t are either unmoored from reality, or openly admit that they don’t have a hard empirical reason for their belief that high-skilled immigrants should be banned from taking good jobs. So I won’t cover Zavogny’s presentation in depth.

Clemens presented third, but similar to Zavogny, I don’t think he covered much terribly new ground in the debate (at least, that would be new to someone already familiar with the academic debate on immigration’s empirical impacts). Clemens presented a version of his double world GDP lecture, covering the usual ground: immense gains to migrants, doubling world GDP, banning “brain drain” dehumanises immigrants and doesn’t help anyone, and ending restrictions on freedom of movement may seem crazy, but crazier things have happened (see: the abolition of slavery).

Lewis, on the other hand, presented some really compelling and new material. To me, one of the new things was how strongly he feels about immigration! I suppose econometrics does not lend itself to very passionate lectures, but although I knew he studied immigration while I was a student of his, I had no inkling of the depth of his support for reducing immigration restrictions.  (Full disclosure: I was also a student of his wife, Elizabeth Cascio, who supervised my senior seminar and final economics paper.) Even more new and exciting to me: Lewis presented some of his latest work, which finds that immigration has boosted the income of Americans across the board — even low-income Americans.

Perhaps the most commonly-cited harm of immigration is its impact on the wages and employment of natives. Immigration supposedly reduces wages across the board. This is a complete myth, which no economist would sign on to (at least, none that I’ve read, including prominent skeptics). There is concern among a few economists that immigration harms income and employment for low-earning natives. However, few find this result, and most that do have been subject to various criticisms: the impact they find is extremely small (the most popular estimate here would suggest that 20 years of immigration to the US resulted in a cumulative 3% decline in low-earning natives’ wages); it’s sensitive to the removal of a few data points; it doesn’t account for how capital investments  react to the influx of labour; it relies on data from a period when other things driving reduction in wages, such as the decline of trade unions, could be confounding the results.

Lewis presents a slide (at roughly the 25:30 mark in the C-SPAN recording) suggesting that not only has immigration increased the wages of high-skilled natives, as you would expect — it has also increased the wages of low-skilled natives. Why does the wage data suggest this? What plausible mechanisms are there? Lewis suggests two major things:

  1. Changes in the use of capital — firms respond to an influx of immigrants by investing less in capital than they had planned, creating jobs for low-skilled natives as well as immigrants and ameliorating the potential negative wage impacts for low-skilled natives
  2. Immigrants compete in a different labour market than natives — immigrants whose English fluency is limited or non-existent will compete among one another for jobs, and natives emerge unscathed thanks to their English skills

Lewis presents the arguments for these mechanisms quite well, so I’d urge you to watch his talk yourself. In particular, he has a number of interesting charts backing all these points up. My understanding is he has a forthcoming paper that will fully flesh out the ideas in his presentation. My take is this is just one data point, but if you’re analytically evaluating the likely outcomes of more immigration, seeing this ought to make you revise upward your assessment of the probability that immigration helps or doesn’t harm natives. And given the existing literature, that assessment should already have been assigned a fairly high probability in the first place — certainly not the 0% chance that so often seems to be assumed in immigration debates.

Lewis wraps up his talk by urging the audience to think beyond the current policy debate in Washington, which focuses today primarily on whether to regularise the 11 million unauthorised immigrants currently living in the US. He points out that it makes absolutely no sense to ban people from migrating in the first place, and given the immense gains to the migrants, even if you don’t believe his estimates, you should be happy to enforce a tax or fee on them that captures some of those gains, to ensure all natives benefit from immigration.

Economists overwhelmingly reject popular myths that immigrants are economic harms. Yet these myths refuse to die. We no longer believe that Jews drink the blood of babies, that Chinese eat rats, or that Irish are just drunk beggars. Why do we believe that people born on the other side of an invisible line called the national border are an incredible harm to us, while people born on the other side of an invisible line demarcating a county or province are perfectly guiltless? Both types of people are as likely to “steal” our jobs and drive down our wages. But one person we call a criminal for crossing that invisible line; the other, we call a good citizen.

I can’t echo my former professor’s words enough. We need to think beyond today’s debates about immigration. The fact is, today’s debates rely on ignorant assumptions about immigration. They assume immigrants are “job thieves”. Having a debate on these terms is like arguing whether we should let more Jews in or hold back lest they start drinking our children’s blood or poisoning our wells. We’re starting from premises so utterly wrong that there’s no point having the debate.

Of course the US should have a process for legalising people who’ve lived in the US for a long period of time. If they ever did any harm by crossing an invisible line 10 or 15 or 20 years ago, as long as they aren’t committing any crimes and harming anyone today, we should live and let live. This is so basic that as Lewis says, we need to think bigger. We need to reject the myths of the past, and adopt a reality-based immigration policy — one that embraces all human beings as people with dreams and goals and potential and contributions that will enrich us all and build our communities.

John Lee is an administrator of the Open Borders website. Liberal immigration laws are a personal passion for him. See all blog posts by John.


12 thoughts on “Economists want more immigration, why don’t you?”

  1. John Lee once again shows his myopic and totally off base non-reasons for open borders. Truth: flooding the USA with endless immigration undermines, undercuts and displaces America’s minorities and poor whites. It displaces blacks, Latinos and uneducated whites. That’s a fact born of 47 million Americans subsisting on food stamps. It’s a fact that eight million illegal alien migrants work full time jobs as they displace 8 million American workers. Immigration throws working Americans into welfare lines and soup kitchens. It breeds discontent shown by the violence of unemployed “Black Flash Mobs” terrorizing our cities. It shows in 1 of 4 African American men cannot secure a job because of the 100,000 legal immigrants imported into the USA every 30 days.

    Additionally, Lee lacks any understanding of the damage to other countries that send their best and brightest to our country, which in turn, deprives those countries of brains, leadership and an educated future.

    I don’t know where Lee obtains his thought processes, but he’s out to lunch, 51 cards short of a full deck and he lacks any comprehension of numbers, environment and quality of life. Trying to reason with him equals reasoning with a 1st grader. Frosty Wooldridge, 6 continent world bicycle traveler, overpopulation grows as the gravest threat to humanity in the 21st century.

  2. OK, most economists think the past and present immigrants have been a net positive, economically. Has there been a broad survey of many economists, to get their opinions about the economic consequences of the future migrants that would migrate in response to open borders? Is there widespread acceptance about the approximate doubling of world GDP?

    I looked at but I could not tell whether many other economists have evaluated the studies cited on that web page.

    It would also be interesting to know their thoughts about long-term economic consequences (if any) of modifying the demographics of the receiving nations. I’m assuming that is not part of the analyses done so far, but I could be wrong.

    I’m not an economist, so I’m not qualified to evaluate studies. All I can do is wonder what all the experts think.

    I have an unrelated observation, in response to this:
    ‘Why do we believe that people born on the other side of an invisible line called the national border are an incredible harm to us, while people born on the other side of an invisible line demarcating a county or province are perfectly guiltless? Both types of people are as likely to “steal” our jobs and drive down our wages. But one person we call a criminal for crossing that invisible line; the other, we call a good citizen.’
    This kind of exaggerated rhetoric doesn’t help, because it misrepresents what people believe. Plenty of people inside any border are not “perfectly guiltless” nor “good citizens”, and almost everyone knows it. There’s no way to get rid of those undesirable people, so they are not a topic for discussion. But that fact alone does not imply that we must be similarly resigned to accepting undesirable people outside our border.

  3. While I’m not with Frosty Wooldridge, and overpopulation is certainly not the greatest threat for the 21st century– for one thing, more people means more specialization and trade and more ideas, i.e., it’s mostly good; for another, birthrates are falling everywhere… indeed, I’m almost go to the other extreme and said that falling birthrates are the greatest threat for the 21st century– I do tend to be a little bit less optimistic than John about the effects of immigration on the wages of relatively unskilled native-born Americans. It’s quite possible (though on balance I doubt it) that immigrants haven’t lowered the wages of native-born Americans in the US. Yes, they might be competing in different labor markets. Maybe there are jobs where you don’t need native English or cultural skills, but you do need a cheap hard worker, and those jobs go to immigrants, while other jobs need native English and the ability to put Americans at ease, and those go to US high school graduates. It’s an empirical question, but a very difficult one to investigate, and even good research tends to be useful and interesting but rather inconclusive.

    And of course, there’s a BIG difference between saying that current levels of immigration don’t lower wages and saying that open borders wouldn’t. For one thing, immigration under open borders would be far greater than immigration today. For another, the current immigration regime discriminates in favor of people with more skills, which makes immigrants less competitive with low-skilled natives. Under open borders, low-skilled natives would face a lot more competition than they do. Against this, immigrants tend to be disproportionately entrepreneurial, and networks of specialization and trade could become richer, but all in all, I think open borders would lead to a fairly steep fall in the wages of a lot of less-skilled Americans, and maybe to a good deal of unemployment if minimum wages didn’t fall. (Which, by the way, might be a topic for another post: open borders, minimum wages, and labor market participation.) Finally, in response to this…

    “Immigration supposedly reduces wages across the board. This is a complete myth, which no economist would sign on to (at least, none that I’ve read, including prominent skeptics).”

    … while I think it’s true that no economist would be likely to commit him- or herself to the view that immigration would lower native wages across the board, it is interesting to note that John Kennan’s paper *Open Borders* lays out a model in which, in fact, all wages do fall, except those of immigrants themselves, because immigration makes workers more productive and increases the effective global labor supply. More supply means a lower price. Kennan is still very optimistic about open borders, which he sees as producing a huge increase in GDP, but the gains go to immigrants and to *capitalists,* which see their returns rise sharply because of the increase in labor. Kennan would doubtless agree that he’s ignoring human capital differentiation and that some native workers, very likely most skilled workers, would see their wages rise, but it’s interesting that at least one theoretical model would have immigration reducing natives’ wages across the board.

    1. Nathan Smith, once again, you illustrate complete lack of any grasp of human overpopulation. Contrary to your idea that we lack enough humans on the planet, the human race adds 1 billion every 12 years on it’s way to 10 or 11 billion from its current 7.1 billion–by 2050– a scant 37 years from now. As it is, 10 million children and 8 million adults starve to death annually in 2013. Seven US states suffer water shortages. You people on this website need a realty check. By adding more immigrants, the USA compounds the carbon footprint, water footprint, ecological footprint, species extinction rates, polluted atmosphere, acidified oceans accelerated–to mention a few of the problems with endless immigration. Add in lowered quality of life and standard of living as our cities become congested nightmares. You folks need to stop your idealist balderdash and get down to the reality of human overpopulation in the USA and worldwide. Because, Peak Oil is coming and once it hits, we will not have gas to fill tractors to cultivate food. I can’t get any simpler for you people. Endless population growth cannot be sustained on a finite planet. Get a grip people! Frosty Wooldridge, a “Galileo” of the 21st century on human overpopulation and my work will prove self-evident before mid century. Your advocacy for endless immigration and population growth will prove vacant minded.

  4. In response to John Lee’s question why don’t you want more immigrants: the late economist Kennth Boulding put it quite brilliantly: “Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.”

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