immigration economics and immigration policy...jan 17, 2007 · george j. borjas* the...
TRANSCRIPT
Immigration Economics and Immigration Policy
George J. Borjas Harvard University
April 2018
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ImmigrationEconomicsandImmigrationPolicy
GeorgeJ.Borjas*
The“economistic”perspectivehasgreatlyinfluencedhowmanyobserversthink
aboutthebenefitsandcostsofimmigration.Inthisperspective,immigrationislike
internationaltrade.Afterall,bothinvolveflowsacrossnationalboundaries.Inthecaseof
trade,manufacturedwidgetsaretransportedfromonecountrytoanother.Inthecaseof
immigration,humanbeingstransportthemselvesacrossthoseboundaries.
Thinkofwhatitmeanstoimportthatproverbialwidget.Itdidnotcreateitselfout
ofthinair;itwasmanufacturedbycombiningphysicalresourceswithsomelaborinputs.
Forexample,makingasinglewidgetinChinamayrequiretwohigh-skillworkerstospend
amonthdoingthedesignwork,andtenlow-skillworkerstospendayearactually
producingthepiece.ImportingaChinese-madewidgetthenresemblestheimmigrationof
twohigh-skillChineseworkerforamonth,andtheimmigrationoftenlow-skillChinese
workersforayear.Immigrationisindeedliketrade,exceptthatinsteadofimportingthe
finishedwidget,weareimportingtherawlaborthatcanmanufacturethatwidget
domestically.
Theaccumulatedknowledgefromdecadesofresearchimpliesthatinternational
trade,onnet,canhaveverybeneficialeconomicimpacts,creatinganinstinctivebias
towardsviewingthistypeof“workermigration”favorably.Wealreadyknowthat
internationaltradeincreasesthesizeoftheeconomicpie.Therefore,theargumentgoes,
immigrationmustalsobebeneficial.Afterall,importingworkersseemsequivalentto
importingwidgets.
Inthe1950sand1960s,WestGermanyandotherEuropeancountries,heavily
influencedbytheeconomisticperspective,recruitedandimportedhundredsofthousands
ofguestworkers,includingmanyfromTurkey.Thoseworkerswereviewedastherobotic
laborinputsthatunderlietheargumentthatimmigration,liketrade,generatesanet
economicbenefitforthereceivingcountry.
*RobertW.ScrivnerProfessorofEconomicsandSocialPolicy,HarvardKennedySchool.Thisessayis
drawsfromthemoredetaileddiscussioninWeWantedWorkers:UnravelingtheImmigrationNarrative(NewYork:Norton,2016).
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However,thepresumedeconomicgainsthatresultfromlookingattheworldusing
themyopiclensofimmigrantsasacollectionofroboticlaborinputscanclashwithreality
whenweviewimmigrationfromamuchbroaderandlongerrunperspective.Overtime,
theimpactofthe“temporary”workerswhowouldcomeinforamonthorayearto
producethosewidgetsdomesticallywasnotsimplythesumoftheircontributiontowidget
production.By2011,Turkishimmigrantsandtheirchildrencomprisedalmost4percentof
theGermanpopulation,andthequestionofhowthisethnicgroupfitintoGermansociety
hadbecomeacentralpolicyconcernthere.ReflectingontheEuropeanexperiencewiththe
millionsofguestworkers,theSwisswriterMaxFrischmadewhatIthinkisthesinglemost
insightfulobservationevermadeaboutimmigrationwhenhequipped:“Wewanted
workers,butwegotpeopleinstead.”
Oneimportantlessonfromimmigrationeconomicsisthatviewingimmigrantsas
purelyacollectionofroboticlaborinputsleadstoaverymisleadingappraisalofwhat
immigrationisabout,andgivesanincompletepictureoftheimpactofimmigration.
Becauseimmigrantsarenotjustworkers,butpeopleaswell,calculatingtheactualimpact
ofimmigrationrequiresthatwetakeintoaccountthatimmigrantsactinparticularways
becausesomeactionsaremorebeneficialthanothers.Thosechoices,inturn,have
repercussionsandunintendedconsequencesthatcanamplifyorweakenthebeneficial
impactofimmigrationgivenbythevalueoftheircontributiontowidgetproduction.
Forinstance,itisself-evidentthatnoteverypersoninasendingcountrywantstobe
animmigrant.Infact,mostpeopleoftenchoosetostayintheirbirthplace,despitethe
sizableeconomicgainstobehadbymovingfromoneplacetoanother.Themoversalmost
certainlydifferinsignificantwaysfromthestayers;theyhavedifferentmotivations,
differentskills,andsoon.Tocalculatetheimpactofimmigrationcorrectly,itisnotjusta
matterofcountingthenumberofbodiesthatfilledtheslotsintheproverbialwidget
factory.Wealsoneedtoworryaboutwhichtypesofpersonsthereceivingcountryended
upattracting.
Oncetheimmigrantsreachtheirdestination,theyhavemanymorechoicestomake.
Acrucialchoicethatallimmigrantsmustmakeiswhethertoassimilatetotheirnew
surroundings.AsEuropehaslearnedinthepastfewdecades,assimilationdoesnothappen
automatically.Therearemanybenefitsfromassimilation—forexample,animmigrantmay
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findbetter-payingjobs.Buttherearealsomanycosts—forexample,animmigranthasto
devotetimetolearningthenewlanguage,ormayhavetogiveuplong-heldculturaltraits
andbeliefs.Immigrantswillprobablychoosetoassimilateonlywhenitisintheirinterest
todoso.
Immigrantswillalsohaveeconomicconsequencesthroughtheircontributionstoor
useofthewelfaresystemsintheindustrializedcountries.Themyopicimmigrant-as-
workerperspectiveignoresthefactthatimmigrantshavelivesoutsidethefactorygate.But
immigrantsgetsick,haveaccidents,losehomes,winlotteries,andaresubjectedtothe
samerandomtwistsoffatethatweallface.And,justlikeus,manywillneedhelpand
assistancewhenbadthingshappen.
ThewelfarestateintheUnitedStatesisdesignedtoprovideassistancenotonlyto
thosewhoaremostneedy,butalsototheworkingpoor.Anditisobviousthatabroader
perspectiveofimmigration—onethatviewsimmigrantsassomethingmorethanrobotic
workers—impliesthattheimpactofimmigrationonwelfareexpenditureswilldependon
whotheimmigrantsare.Ifthepeoplewhochoosetomigratearehigh-skill,immigration
willbenefitthefiscalbottomline;theimmigrantswilladdlittletothecostofmaintaining
thewelfarestateandwillsharetheburdenoffundingit,includinghelpingpayforthe
substantialcostsresultingfromanagingnativepopulation.Butiftheimmigrantsarelow-
skill,immigrationcouldincreasethefiscalburdenfornatives.
Inshort,therearecrucialdifferencesbetweenanevaluationofimmigrationthat
reliesontheimmigrants-as-workersmetaphorandonethattakesthebroaderperspective
thatimmigrantsarepeople.Butthereareimportantsimilaritiesaswell.Ineithercase,
immigrantsincreasethesizeoftheworkforce,andthis“laborsupplyshock”changes
conditionsinthelabormarket.Mostobviously,anincreaseinthenumberofpeoplewho
candoaparticulartypeofworkwilllikelyreducethewagethatemployersneedtoofferto
peoplelookingforthatwork.Atthesametime,however,otherpeoplewillgain—afterall,
lowerwagesfortheworkerstypicallymeanhigherprofitsfortheemployers.Intheend,
immigrationwillalmostcertainlyimprovetheeconomicwellbeingofsomeAmericans,but
otherAmericanswillbeworseoff.
MuchofmyevolutioninhowIthinkaboutimmigrationhasresultedfromattempts
toincorporateMaxFrisch’sinsightintomyacademicwork.Butthereisalsoasecondfactor
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thatinfluencedmythinking,andparticularlyaffectedhowIreadandinterpretthe
voluminousliteratureontheeconomicimpactofimmigration.PaulCollier,arenowned
BritishpublicintellectualandaprofessoratOxfordUniversity,publishedabookin2013
entitledExodus:HowMigrationisChangingOurWorld.Collier,whoseworkmainly
addressesquestionsindevelopmenteconomics,hadneverhimselfdirectlyworkedon
immigrationissuesinhisacademicwork.InExodus,Collierarguedthatthepresumedlarge
benefitsthatimmigrationmayimpartonreceivingcountriescanbegreatlyreducedasthe
numberofimmigrantsincreasessubstantiallyandthemigrationflowcontinues
indefinitely.
Regardlessofhowonefeelsaboutthisparticularconclusion,Ifounditparticularly
insightfultoreadCollier’soverallperceptionofthesocialscienceliteraturethathe
reviewedashewroteExodus:1
Arabidcollectionofxenophobesandracistswhoarehostiletoimmigrants
losenoopportunitytoarguethatmigrationisbadforindigenouspopulations.
Understandably,thishastriggeredareaction:desperatenottogivesuccorto
thesegroups,socialscientistshavestrainedeverymuscletoshowthat
migrationisgoodforeveryone.”
Thisisasdamningastatementaboutthevalueofsocialscienceresearchon
immigration—andprobablyaboutthevalueofsocialscienceresearchonanypoliticized
andcontentiouspolicyissue—asonecanfind.AsfarasIknow,Collieristhefirst
distinguishedacademictoacknowledgepubliclythatsocialscientistshaveconstructedan
intricatenarrativewherethemeasuredimpactofimmigrationmustbeshowntobe“good
foreveryone.”
Ihavelonghadagnawingsuspicionthatalotofthesocialscienceresearch—
particularlyoutsideeconomics,butcertainlynotexclusivelyso—wasideologically
motivated.Muchoftheacademicresearchwasbeingcensoredorfilteredtopresentthe
1PaulCollier,Exodus:HowMigrationisChangingOurWorld.NewYork:OxfordUniversityPress,
2013,pp.25-26.Emphasisadded.
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evidenceinawaythatwouldexaggeratethebenefitsfromimmigrationandminimizethe
costs.Thespinwasoftenverysubtle,butitcouldbedetected,asCollierdid,ifonebothered
tolook.
Byemphasizingtheeconomisticperspective,forexample,muchoftheexisting
researchignorestheimplicationsofthemanydecisionspotentialimmigrantsmustmake,
includingwhetherornottomigrate,whetherornottoassimilate,andsoon.Andmanyof
thosedecisionscouldeasilyshifttheemphasisawayfromthenotionthatimmigrationis
“goodforeveryone.”Similarly,muchofwhatwethinkweknowabouttheeconomicimpact
ofimmigrationisdrivenbyassumptionsthataremadetosimplifytheconceptualmodelor
theempiricalanalysis.Needlesstosay,assumptionsdonotcomeoutofthinairandthey
matter.Finally,thetypicalstudyoftheeconomicimpactofimmigrationthatusesan
underlyingeconomicmodeltoframethequestionoftenproducesmanyinsights.Someof
thoseinsights,however,detractfromthenarrativethatCollierdetected,andthoseare
oftenhiddenawayintheatticofinconvenienttruths.
Thisessayreviewssomeofthelessonslearnedbytheavailableevidenceonthe
economicimpactofimmigration.Insteadofleadingtotheclaimthatimmigrationis“good
foreveryone,”thebroaderandmorerealisticapproachteachesusthatalthough
immigrationmaybegoodforsome,itisnotnecessarilygoodforall.Liketrade,
immigrationproduceswinnersandlosers.Unliketrade,becauseimmigrationinvolvesthe
movementofhumanbeings,theimplicationsofMaxFrisch’sinsightmayeasilyreduce,,and
perhapsevenreverse,theneteconomicgainsthatsuchflowscangenerateforareceiving
country.Infact,itmaywellbethatimmigrationleadstolittleincreaseintheeconomicpie,
buttoasubstantialchangeinhowthepieissplit.Asaresult,itmaybemoreusefultothink
ofimmigrationnotintermsofeconomicefficiency,butassimplyaredistributivesocial
policy.
1.Economicassimilation
Mostdiscussionsofeconomicassimilationpresumethatitisadesirableoutcome—
atleastfromthepointofviewoftheUnitedStates.Itmightseemsillytoevenponder
whetherweshouldthinkofassimilationasapositivedevelopment,butthequestionisnot
asfar-fetchedasitseems.Forinstance,oneoften-heardargumentinfavorofimmigration
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isthat“immigrantsdojobsthatnativesdon'twanttodo.”Ifthegainsfromimmigration
accruefromthisdivisionoflabor,itisfarfromclearthatassimilationbenefitsnatives.
Afterall,ifimmigrantseventuallybecomejustlike“us,”whowilldothejobsthat“we”do
notwanttodo?
Theproblemwiththisapproachisthatitviewsassimilationfromtheeconomistic
perspectiveofcostsandbenefits.Theconceptofeconomicassimilationisobviouslyfar
narrowerthantheculturalandsocialintegrationthatreallyliesatthecoreofthedebate.
TheimmigrationdebateinEurope,forexample,revolvesaroundtheperceivedpresenceof
largeunassimilatedgroupsintheirsociety.Assimilationisnotsimply,andperhapseven
mainly,aneconomicphenomenon.However,economicassimilationistiedtogether—and
probablygoestogether—withotherformsofintegration.
Themainlessonfromtheexistingevidenceoneconomicassimilationisobvious:
Immigrants,likeeveryoneelse,respondtoincentives.Iftheimmigrantsfinditprofitableto
assimilate,theywilltakeactionsthatleadtoassimilation.Iftheimmigrantsfindit
worthwhiletoremainagroupapart,thattoomighthappen.Asaresult,itshouldnotbe
surprisingthatassimilationfluctuatesovertimeaseconomic,cultural,andpolitical
conditionschange.
Figure1showsthewagegrowthexperiencedbyaspecificimmigrantwaveover
time—relativetothegrowthofcomparablyagednatives.Ineffect,itillustrateshowfast
Figure'1.'Trends'in'economic'assimilation'
!Source:!Adapted!from!George!J.!Borjas,!Immigration!Economics!(Cambridge,!MA:!Harvard!University!Press,!2014),!p.!46.!
!
!5#
0#
5#
10#
15#
20#
0# 5# 10# 15# 20# 25# 30#
Percen
t'rate'of'wage'catch.up
'
Years'since'migra5on'
1965-69 arrivals
1985-89 arrivals
1995-99 arrivals
1955-59 arrivals
1975-79 arrivals
1935-39 arrivals
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theearningsofimmigrantsarecatchinguptotheearningsofnatives.Itiscertainlythecase
thattheeconomicperformanceoftheimmigrantswhoarrivedbefore1980improved
dramatically.Theirearningsgrewbyaround10percentagepointsinthefirstdecade,and
by15to20percentagepointsafter30years.
Buttheassimilationoutlookisfarlessoptimisticformorerecentwaves.The
earningsoftheimmigrantswhoarrivedinthelate1980sgrewbyonly5percentagepoints
inthefirst10years,anddidnotimproveafterthat.Mostdisturbing,theearningsofthe
immigrantswhoarrivedinthelate1990sdidnotgrowatallintheirfirstdecade.Inshort,
thereseemstohavebeenadramaticslowdownineconomicassimilation.
PartoftheslowdownisrelatedtotheriseoflargeethnicenclavesintheUnited
States.Thelogicisobvious.ImmigrantswhoarriveintheUnitedStatesandfindfew
compatriotswithwhomtheycaninteracthaveastrongerincentivetoacquiretheskills
necessaryforabroaderrangeofsocialandeconomicexchanges,suchasbecomingEnglish
proficient.Incontrast,immigrantswhoenterthecountryandfindalargeandwelcoming
ethnicenclavehavelessincentivetoengageinthosetypesofcostlyinvestmentsbecause
theyalreadyhavealargeaudiencethatvaluestheirpre-existingskills.Theavailabledata,
infact,showthatassimilationratesaresmallerforimmigrantgroupsthathavealarge
ethniccommunityawaitingtheirarrival.
Itmaybetemptingtodismissthemodernevidenceontheassimilationslowdown
bygoingbacktothehistoricalrecordandassertingthattheimmigrantswhoenteredthe
countryattheturnofthe20thcenturyexperiencedremarkableassimilation,andwhy
shouldthepresentbeanydifferent.Althoughitiswidelybelievedthattheeconomic
performanceofthoseimmigrantsimproveddramaticallyduringtheirlifetime,arecent
reexaminationshowsthatthewidespreadconsensusiswrong.Thepublicreleaseofthe
actualcensusmanuscriptscompiledatthetimeallowsmodernhistorianstotrackspecific
personsfromcensustocensus.Thisperson-leveltrackingletsusinspectthecareerpathof
eachimmigrantandcompareittothenativepath.
Thetrackingexerciseturnsthewidespreadperceptionofrapidimprovementonits
head.AseconomichistoriansRanAbramitzky,LeahPlattBoustan,andKatharineEriksson
conclude:“ThenotionthatEuropeanimmigrantsconvergedwithnativesafterspending10
to15yearsintheUSis…exaggerated,aswefindthatinitialimmigrant-nativeoccupational
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gapspersistedovertime.”2Inshort,thehistoricalexperienceprovidessurprisinglylittle
evidenceofanyeconomicimprovementfortheEllisIslandimmigrantsduringtheirlifetime.
Theavailableevidence,therefore,suggestsanintriguingmessage.Itseemsthatonly
theimmigrantswhoenteredtheUnitedStatesinbetweenthetwomassmigrationsthat
serveasbookendstothe20thcenturyexperiencedsubstantialimprovementduringtheir
lifetime.Notably,theintervalbetweenthosetwomigrationshappenstobetheperiod
whenrestrictiveimmigrationpolicies,combinedwiththeeconomicdebacleoftheGreat
DepressionandthepoliticalupheavalofWorldWarII,greatlylimitedthenumberof
immigrants.Afascinatingquestionremainsopenforfuturedebate:Coulditbethatthe
limitedimmigrationduringthathiatuswaspartlyresponsiblefortheeconomicflourishing
experiencedbytheimmigrantswhocameinthoseyears?
2.TheLaborMarketImpact
Immigrantsdojobsthatnativesdonotwanttodo,andhavelittleimpactonnative
jobopportunitiesasaresult.Anyonewhofollowstheimmigrationdebatesurelynoticed
thisrefraingettinglouderinthepastdecade,asthepoliticalclassconsideredvarious
proposalsthatwouldgrantamnestytoundocumentedworkersandsubstantiallyincrease
thenumberofvisasinmanycategories.
Althougheveryoneknowsthatthepriceofgasgoesdownwhenthesupplyofoil
goesup,manyseemtobelievethatthelawsofsupplyanddemanddonotapplyinthe
immigrationcontext.Buttherearesomeinconvenientfactsthattendtobeoverlookedin
therushtotheconsensusthatimmigrationisgoodforeveryone.
AspartofanenforcementinitiativebytheBushadministrationinSeptember2006,
immigrationagentsraidedachicken-processingplantintheruralcommunityofStillmore,
Georgia.TheWallStreetJournalsentateamofreporterstoinvestigate.3Theteamgathered
evidencethatclearlyillustrateshowlabormarketsrespondtolaborsupplyshocks:
2RanAbramitzky,LeahPlattBoustan,andKatherineEriksson,“ANationofImmigrants:Assimilation
andEconomicOutcomesintheAgeofMassMigration,”JournalofPoliticalEconomy122(June2014),pp.469-470.
3EvanPérezandCoreyDade,“ReversalofFortune:AnImmigrationRaidAidsBlacks—ForaTime.”WallStreetJournal,January17,2007.
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AfterawaveofraidsbyfederalimmigrationagentsonLaborDayweekend,a
localchicken-processingcompanycalledCriderInc.lost75%ofitsmostly
Hispanic900-memberworkforce.Thecrackdownthreatenedtocripplethe
economicanchorofthisfadingruraltown.ButforlocalAfrican-Americans,
thedramaticappearanceoffederalagentspresentedanunexpected
opportunity.Cridersuddenlyraisedpayattheplant.Anadvertisementinthe
weeklyForest-Bladenewspaperblared“IncreasedWages”atCrider,starting
at$7to$9anhour—morethanadollarabovewhatthecompanyhadpaid
manyimmigrantworkers.
Crider’sreactiontothe75percentcutinitslaborsupplydemonstratethecommon
senseunderlyingthelawsofsupplyanddemandfarbetterthanthemathematicalmodels
ofeconomistsevercould.Facedwiththepossibilityofbeingunabletooperatetheplant
andsufferingsubstantiallosses,Criderdidwhatanyprofit-maximizingfirmwoulddo:
Attractworkersbyofferingahigherwage.
Indoingso,Criderlearnedtheobviouslessonimpliedbyeconomictheory.Itisnotthat
“immigrantsdojobsthatnativesdon'twanttodo.”Itisinsteadthat“immigrantsdojobs
thatnativesdon’twanttodoatthegoingwage.”
Figure'1.'A'firm’s'response'to'a'cut'in'labor'supply'!
!!!!!!!!!!!!!!!Source:!Evan!Pérez!and!Corey!Dade,!“Reversal!of!Fortune:!An!Immigration!Raid!Aids!Blacks—For!a!Time,”!Wall$Street$Journal,!January!17,!2007.!
!
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Hundredsofpublishedstudiesattempttomeasurethelabormarketimpactof
immigration,withsomeclaimingthatimmigrationhaslittleimpactonnativewages,while
othersclaimingthattheeffectissizable.Itiseasytodemonstratehowonecangenerate
bothsetsofresultsfromthesameunderlyingdatainthecontextoftheMarielsupplyshock.
OnApril20,1980,FidelCastrodeclaredthatCubanswishingtomovetotheUnitedStates
couldleavefromtheportofMariel.ThefirstMarielitosarrivedonApril23.ByJune3,over
100,000Cubanshadmigrated,andMiami’sworkforcehadgrownbyaround8percent.We
candeterminetheimpactofthissupplyshockbylookingatlabormarketconditionsin
Miamijustbeforeandaftertheevent.DavidCard’s(1990)originalstudyconcludedthat
suchacomparisonimpliedthattheMarielitoshadnoimpactontheaveragewageof
workersinMiami.4
Almosttwo-thirdsoftherefugeeswerehighschooldropouts,sothatthenumberof
highschooldropoutsintheMiamiareaincreasedbyanastounding20percentinamatter
ofweeks.Thisobviouslysuggeststhatagoodplacetostartwouldbetolookattheearnings
ofhighschooldropouts.Remarkably,thattrivialcomparisonwasnotreportedinDavid
Card’soriginalstudyoftheMarielsupplyshock.
4DavidCard,“TheImpactoftheMarielBoatliftontheMiamiLaborMarket,”IndustrialandLabor
RelationsReview43(January1990):245-257.
Figure2.DidMarielaffecttheearningsofhighschooldropouts?
A.Non-Hispanicmenaged25-59 B.Allnon-Cubanworkersaged16-61
4.8
5
5.2
5.4
5.6
5.8
1972 1976 1980 1984 1988 1992 1996 2000 2004
Logweeklywage
Year
Outside Miami
Miami
4.7
4.9
5.1
5.3
5.5
1972 1976 1980 1984 1988 1992 1996 2000 2004
Logweeklywage
Year
Outside Miami
Miami
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Whileworkingonmylatestbook,WeWantedWorkers,Ibecameinterestedinthe
Marielcontext,decidedtolookatthedatamyself,andspecificallyfocusonthelow-skill
workersmostlikelytobeaffected.PanelAofFigure2showswhathappenedtothe
earningsofprime-agenon-Hispanicmenbeforeandafter1980(withtheshadedarea
givingthemarginoferror).Itisobviousthattheearningsoflow-skillworkersinMiami
tookadramaticnosediveafter1980,andittookadecadefortheirearningstofullyrecover.
AsIsuggestedearlier,thereisagreatdealofanalytical“creativity”inimmigration
research,andmydiscoveryofthetrendinPanelAquicklyledtore-examinationsthatspun
thedatainadifferentway.TheMarielcontext,infact,presentsanidealopportunityto
showhowitiscrucialtoexaminethe“nutsandbolts”ofwhatresearchersactuallydo
beforereachingaconclusionaboutaquestionoffundamentalimportanceintheeconomics
ofimmigration.
PanelBofFigure2usesthesameunderlyingdatafromtheCurrentPopulation
Surveys(CPS)torecalculatethewagetrends,butlooksatwhathappenedtoadifferent
groupofworkers.ThisparticulardatamanipulationindicatesthatMarieldidnothaveany
impactontheearningsoflow-skillworkers.Manyparticipantsintheimmigrationdebate
willpreferwhatPanelBsays.Butbeforejumpingtoconclusionsbasedonwhatagraph
lookslike,itiscrucialtostopandthinkaboutwhatisgoingon.
OnedistinctionbetweenthetwopanelsofFigure2isthattheright-hand-sidepanel
looksatthetrendintheaveragewageofmenandwomen,whichseemsfineexceptforthe
factthatmanywomenenteredthelabormarketinthe1980s.Asaresult,thesample
compositionischanginginwaysthatneedtobeaccountedfor,particularlybecausetherise
infemalelaborforceparticipationinMiamiwasfarslowerthantheriseoutsideMiami.
Similarly,PanelBincludesnon-CubanHispanicsinthecalculationofwagetrends.
ThisalsoseemsfineuntilonerealizesthatabigchunkofthoseadditionalHispanicswere
immigrantswhoenteredthecountryafter1980.Unfortunately,theCPSdidnotprovide
anyinformationoncountryofbirthatthetime,sotheresearcherneedstoapproximatethe
populationof“natives.”Itturnsoutthat52percentofthenon-CubanHispanicsaddedin
PanelBareimmigrantswhoarrivedafter1980.Addingthesepost-Marielimmigrantsto
thecalculationagainchangesthesamplecomposition,andcontaminatespost-1980wage
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trends.Justimagine,forexample,howthewagetrendina“placebo”citysuchasLos
AngeleswouldlookcomparedtoMiamiifoneincludedtheverylargenumberofMexican
immigrantswhosettledinSouthernCaliforniaduringthe1980s.
Finally,PanelBincludesworkersoutsidetheir“primeage,”particularlythosewho
are16to18yearsold.Thisinclusionisalsoproblematic.Almostalloftheseteenage
workersarehighschoolstudents,employedinpart-timejobs,andclassifiedas“highschool
dropouts”becausetheydonotyethaveahighschooldiploma.Therearemillionsofsuch
students(ourteenagesonsanddaughtersamongthem),andtheirpresenceinthe
calculationofthewagetrendsmakesthecalculationalmostmeaningless.Intheend,it
seemsthatwhatoneconcludesaboutthewageimpactofMarieldependsentirelyonwhere
onelooks.
Inmyview,thereislittledoubtthatimmigrantsaffectthelabormarket
opportunitiesofnatives.A10percentincreaseinthesupplyoflaborinaparticularskill
groupprobablylowersthewageofthatgroupbyatleast3percentintheshortrun.The
temptationtoplaywithassumptionsandmanipulatethedata,however,isparticularly
strongwhenexaminingthisverycontentiousissue,sothatthereportedeffectsoften
dependontheassumptionsmadeandthestatisticalmanipulationsused.Theconflicting
evidence,however,suggestsonemoralthatcanbehelpfulwheninterpretingcompeting
claims:Themorethatoneaggregatesgroupsintheworkforce,themorethatone“hides
away”thespecificgroupofworkershurtbyimmigration,andthelesslikelyoneistofind
thatimmigrantshaveanadverseeffectonnatives.
3.Theimmigrationsurplus
Receivingcountriestypicallywelcomeimmigrantsforasimplereason:they
perceivethatimmigrationgeneratesanoverallbenefitfornatives.Ifthisperceptionwere
different,ifitwerebelievedthatimmigrantsmadenativesworseoff,Isuspectthatthe
opendoorswouldquicklyclose.
Toaccuratelymeasuretheeconomicgainsfromimmigration,oneneedstolistall
thepossiblechannelsthroughwhichimmigrationtransformstheeconomy:how
immigrationchangeswages,prices,andprofits;howimmigrationchangesthenumberof
jobsineachsector;hownativeworkersandnative-ownedfirmsrespond;andonandon.
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Thisexhaustivecalculationhasneverbeendone.Instead,thetypicalestimateofthe
gainsreliesonamodelofahypotheticaleconomythathelpsvisualizewhathappenswhen
thelabormarketisfloodedbymillionsofnewworkers,lettingusrecordtherippleeffects
ofimmigrationonallsectors.Putbluntly,allestimatesoftheeconomicbenefitsfrom
immigrationcomefromaneconomistwritingdownafewequationsthatpurportedly
describehowtheeconomyworksandthenplugginginsomenumbers.
Oneimportantlessonfromthistheory-basedexerciseisthatthetextbookmodelof
thelabormarket—themodelthatdescribesthecommon-senselawsofsupplyand
demand—indeedpredictsthatimmigrantparticipationintheproductivelifeofourcountry
increasestheaggregatewealthofthenativepopulation.Thisincreaseintheeconomicpie
accruingtonativesisknownasthe“immigrationsurplus.”Inshort,thereareeconomic
incentivesforkeepingthedooropen.
However,asTable1shows,thatmodelalsopredictsthatthenetgainsfornatives
aremodest—notinthetrillionsofdollars,noteveninthehundredsofbillions,butonly
around$50billionannually.Andthetheory-basedexerciserevealsthatifoneiswillingto
paradethismodestgaininpolicydiscussions,thenonemustalsobewillingtoparadeother,
lesswelcome,implicationsofthesamecalculation:Immigrationisresponsibleforahuge
Table 1. The short-run immigration surplus, 2015
Billions of dollars
Immigration surplus 50.2
Loss to native workers 515.7
Gain to native firms 565.9
Total increase in GDP 2,104.0
Payments to immigrants 2,053.8
Source: George J. Borjas, We Wanted Workers: Unraveling the
Immigration Narrative, New York: Norton, 2016, p. 158.
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redistributionofwealth,totalingaroundhalf-a-trilliondollars,fromnativeworkerswho
competewithimmigrantstothosenativeswhouseoremployimmigrantlabor.Itistelling
thatmanydiscussionsoftheimmigrationsurplusoftenchoosetooverlookthesubstantial
distributionalcostassociatedwithgeneratingevena$50billionsurplus.
Notethattheimmigrationsurplus,whichmeasurestheaggregategainsaccruingto
natives,isconceptuallydifferentfromthetotalincreaseinGDPobservedinthereceiving
country.AsTable1shows,immigrationhasincreasedGDPintheUnitedStatesbyover$2
trillion.Almostallofthisincrease,however,goestotheimmigrantsthemselves—
immigrants,likeus,donotworkforfree.Almostbydefinition,itislikelythatimmigrants
havegainedsubstantiallyfromimmigration(otherwisetheywouldreturntothesource
countries).
Iwouldaddahugecaveattothe$50billionestimateoftheimmigrationsurplus.
Thecalculationignoresalltheexternalitiesthatimmigrantscreatealongtheway.The
externalitiesarebothgood--theentryofextremelyhigh-skillimmigrantssurelyaccelerates
innovation,makesusmoreproductive,andhasabeneficialimpactoneconomicgrowth.
Andbad--theentryofsomehigh-skillimmigrants,suchasthosewhoenrolledinflight
schoolsandlearnedtoflyplanesandthenflewthemonSeptember11,2001,canmakeus
allmuchworseoff.Theredoesnotexistasinglecrediblestudythatevenattemptsto
quantifythevalueofthemanypositiveandnegativeexternalities.So,intheend,allwe
reallyhavetogoonisanestimatedsurplusof$50billionintheshortrun.
4.Thefiscalimpact
Butbeforeconcludingthatimmigration,liketrade,isanetplustothereceiving
country’seconomicpie,weneedtocontrastthe$50billionsurpluswithanumberthat
measuresthefiscalimpactofimmigration.Afterall,immigrantsarenotwidgets.Theywill
contributetothefundingofthewelfarestatethroughthetaxestheypay,andtheyincrease
thecostofthewelfarestatebecausetheywillreceivesomeservices.Thefiscalimpact
woulddeterminewhetherthetaxesthatimmigrantspayaresufficientlylargetocoverthe
expenditurestheytrigger.
Thequestionofwhetherimmigrantsusewelfaremoreorlessoftenthannatives
populationis,needlesstosay,controversial.Andtherearemanyconflictinganswerstothis
16
question.Giventhisdisparity,itisenlighteningtoillustrate—inaverysimpleway—how
onecanusethesamepubliclyavailabledatatoreachverydifferentconclusions.The
CurrentPopulationSurvey(CPS)isthepremiermonthlysurveyoftheAmerican
populationandiscollectedbytheCensusBureau.Itisthesurveyusedtocalculatethe
officialunemploymentratethatmakesnewsuponitsreleaseeveryfirstFridayofthe
month.
Tokeepthingssimple,being“onwelfare”willmeanreceivingbenefitsfromanyone
ofthreeprograms:Medicaid,foodstamps,orcashbenefits.Thereareobviouslymanyother
programsthatcouldbethoughtofasbeingsometypeofwelfare,rangingfrompublic
housingtofreeschoollunches.Thefractionofbothnativesandimmigrants“onwelfare”
wouldobviouslybehigherifoneweretoincludetheseadditionalprograms,butitiseasy
toillustratethemainpointbyconcentratingonthethreemainprogramsthatmakeupthe
safetynet.Weareinterestedinfindingoutifthefractionofimmigrantsonwelfareis
higher,lower,orthesameasthefractionofnativesonwelfare.
Thetwo“curtains”ofFigure1showthe20-yeartrendsinwelfareusecalculated
fromtheCPS,butIwilltemporarilyplayatrickonthereaderbynotrevealingthe
differencebetweenthetwocurtains.LetmeemphasizethatIamusingthesameCPSdata
tocalculatethetrendsinbothcurtains.Nevertheless,itisobviousthatifonelooksat
Figure1.Trendsinwelfareuse,1994-2015
Source:Author’scalculationsfromtheCurrentPopulationSurveys,1994-2015,
0
5
10
15
20
25
30
35
40
1990 1995 2000 2005 2010 2015
Percen
treceivingassistance
Year
Curtain #1
Natives
Immigrants
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015
Percen
treceivingassistance
Year
Curtain #2
Natives
Immigrants
17
Curtain#1,immigrantsareonwelfarefarmoreoftenthannatives,andincreasinglyso.But
ifonelooksatCurtain#2,thewelfareuseofthetwogroupsisessentiallythesame.
Letmereemphasize:Bothcurtainsuseexactlythesamedata.Sowhatisthe
differencebetweenthetwocurtains?Italldependsonthefineprint.InCurtain#1,Iam
reportingwelfareusebyhouseholds—whichisthewayinwhichwelfareuseismostoften
analyzed.Mostwelfareprograms,afterall,areallocatedatthehouseholdlevel.For
example,itisthepresenceofminorchildrenthatmightentitleasinglemothertoreceive
anincomegrantforthefamily.InCurtain#1,theCPSdataaremanipulatedtodetermineif
anyoneinthehouseholdreceivesMedicaid,foodstamps,orcash.
Animmigranthouseholdisonewheretheheadofthehouseholdisforeign-born,
andanativehouseholdisonewheretheheadisnative-born.Itisevidentthathouseholds
headedbyanimmigranthaveparticularlyhighratesofwelfareuse,andthatthegap
betweenimmigrantandnativehouseholdsincreasedovertime.By2015,37percentof
immigranthouseholdswereonwelfareascomparedto24percentofnativehouseholds.
ButthetrendsinCurtain#2seemtocontradictthisfact.Inthisalternativescenario,
Imanipulatedthedatasothattheframeofreferenceisasingleperson,ratherthana
household.Inotherwords,therelevantquestionbecomes:Didaparticularindividual
receivewelfare?Ifoneweretocalculatethefractionofpeoplewhoreceiveassistance,
thereislittledifferencebetweenimmigrantsandnatives.About25percentofbothgroups
receivedwelfarein2015.
Sowhatexactlyisgoingon?Iintroducedasubtle“trick”increatingCurtain#2.
Supposeayoung,singleimmigrantwomanarrivesintheUnitedStates.Afterafewyearsin
thecountry,shebecomesasinglemotherandhastwochildren.InCurtain#1,thisthree-
persongroupingwouldbeclassifiedasanimmigranthousehold.Ifthemother’sincome
weresufficientlylow,thechildren(andperhapseventhemotherherself)wouldqualifyfor
sometypeofassistance.Thehouseholdwouldenterthetallyonce,asanimmigrant
householdonwelfare.
InCurtain#2,thisthree-personhouseholdnowentersthetallythreedifferenttimes.
IfthishouseholdwereonMedicaid,thetallywouldrecordoneimmigrantpersonon
welfareandtwonativepersonsonwelfare.Andthereinliesthetrick:Becausethechildren
werebornintheUnitedStates,theyenterthecost-benefitcalculationonthenativesideof
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theledger.Asthetwocurtainsillustrate,thistrickmakesahugedifferenceinwhat
conclusionwedrawfromthesamedata.Toemphasizeyetagain,thefineprintmatters!
InSeptember2016,theNationalAcademyofSciencespublisheda500-pagereport
thatprovidesmanyalternativeestimatesofthefiscalimpactofimmigration,bothinthe
shortrunandinthelongrun.5Theshortrunimpactiscalculatedbycomparingthecostof
providingpublicservicestoimmigrantswiththetaxesthatthoseimmigrantspayina
particularyear.Thereportunambiguouslyconcludedthat,onayear-to-yearbasis,
immigrantsandtheirdependentchildrencreateafiscalburden.(NotethattheNational
Academyimplicitlyadoptedtheimmigrant-household-as-a-unitmethod).
Infact,theNationalAcademyusedninealternativescenariostocalculatetheshort-
runfiscalburden(seeTables8-2and9-6inthereport).Thesescenariosreportaburden
rangingfrom$43billionto$299billionannually.Inshort,thesocialexpenditurestriggered
byimmigrantsexceedthetaxestheypaybyatleast$43billionayearandperhapsbyas
muchas$299billion.Thedataaresounambiguousthatitiseasytosummarizewhatthe
NationalAcademycalculationsteachus.Onayear-to-yearbasis,thereisnodoubtthatthe
taxesthatimmigrantpaydonotcoverthepublicexpenditurestheytrigger.Andthe
shortfallseemstoexceed$50billionannually.
TheNationalAcademyalsocalculatedthelong-runfiscalimpact,takingintoaccount
thetaxesandexpendituresofimmigrantsandtheirdescendantsovera75-yearperiod.
Thislong-runcalculationallowsforthepossibilitythatimmigrantsmighthelpfiscally,as
thenativepopulationisagingandthereisnotenoughmoneytofundtheliabilitiesinSocial
SecurityandMedicareunlesswedrasticallyraisetaxesorcutbenefits.Immigrationbrings
innewtaxpayerswhocanhelpfundsomeofthoseliabilitiesinthefuture.
AstheNationalAcademyreportnotes,however,thebottomlineofthelong-run
calculationdependsentirelyontheassumptionsmade.Itiseasytogenerateeitheravery
positivelong-runfiscalimpactoraverynegativeonebymakingdifferentassumptions.
Therearetwodistinctassumptionsthatdrivetheconclusion.Thefirstishowtoallocate
expendituresonpublicgoodsbetweenimmigrantsandnatives.Althoughitmakessenseto
5FrancineD.BlauandChristopherMackie,eds.TheEconomicandFiscalConsequencesofImmigration,
Washington,DC:NationalAcademyPress,2016.
19
assumethatthecostofpublicgoods,suchaspoliceprotectionornationaldefense,is
unchangedifweadmitonemoreimmigrant,itmakesfarlesssensetoassumethatthecost
ofpublicgoodsisunchangedifweadmitover40millionimmigrants.Similarly,anylong-
runscenariomustmakeassumptionsaboutthefuturepathoftaxesandgovernment
expenditures,andtheavailablemenuofassumptionsaboutthefutureistemptingto
anyonewishingtoreachaspecificconclusionaboutthelong-runfiscalimpact.
AstheNationalAcademyshowed,thelong-runfiscalimpactoftheaverage
immigrantispositiveonlyifimmigrantsdonotaffectthecostofpublicgoodsand
weassumethatfuturetaxratesandbenefitpaymentswillfollowtheprojectionsmadeby
theobviouslyinfallibleCongressionalBudgetOffice(seeTable8-12inthereport).Ifone
getsridofeitherofthoseassumptions,thepositivelong-termimpactofanimmigrant(and
descendants)contributinganetof+$58,000overthenext75yearsbecomesalossaslarge
as-$119,000.
Assumptionsmatter,anddifferentassumptionsleadtowildlydifferentanswers.It
iseasytogenerateaverylargefiscalburdenbychargingimmigrantsforthecostofthe
publicgoodstheyreceive.Anditisequallyeasytogeneratealargefiscalgainbyplaying
aroundwiththeassumptionsaboutfuturetaxesandexpenditures.
5.ImplicationsforPolicy
20
Socialscientistsingeneral,andeconomistsinparticular,havedoneaverygoodjob
ofconvincingmanypeoplethatthemathematicalmodelswebuildandtheempirical
findingswegeneratecanbethefoundationfora“scientific”determinationofsocialpolicy.
Putdifferently,ifalltheexpertmodelingandstatisticalanalysissaysthattheworldlooks
likex,thenitmustbethecasethatpolicyyistherightthingtodo.
Ihappentobelievethattheclaimthatmathematicalmodelinganddataanalysiscan
somehowleadtoascientificdeterminationofsocialpolicyissheernonsense.Socialpolicy
wouldnotbescientificallydeterminedeveniftherewereuniversalagreementonthe
underlyingfacts.Ideologyandvaluesmatteraswell.Andthedebateoverpolitically
contentiousissues,suchasimmigration,wouldbefarmorehonestandproductiveifwe
openlyacknowledgedthatobviousrealityratherthanpeddleparticularpolicygoalsasif
theywereimpliedbysomescientificstudy.
Theargumentthatmodelsanddatacansomehowleadtoapurelytechnocratic
determinationofpublicpolicyignoresasimplefactoflife.Governmentsoftenpursuea
particularpolicygoalbecausethey—andthepeoplewhoelectedthem—believethatwhat
theyaredoingistherightthingtodo.
Weallhavedifferentvaluesandperceptionsaboutwhatisright,muchofitcoming
fromourpersonalhistoryandfromtheideologicalcompassthatweusetonavigate
throughlife.Someofusfeelthatweshouldhavemoreimmigrationbecauseofthediversity
thatimmigrantsintroduceintoourculture;andsomepeoplewillgomuchfurtherand
arguethatitisimmoraltodenyanypersontherighttocrossanationalboundaryinsearch
ofabetterlife.Ontheotherside,somewillwanttochangethetypesofimmigrantswe
admit,arguingthatthistypeisbetterinsomesensethanthatothertype;andstillothers
believethatweneedtohaveasubstantialcutinimmigrationbecausetheywantto
preserveparticularthingsaboutthecountryasitisnow.
Let’ssuppose,forexample,thatademocraticallyelectedgovernmentranona
platformthatpromisedtoprotectnativetaxpayersfromtheperceivedfiscalburden
createdbylow-skillimmigration.Thisgovernmentnowcontrolsallthepolicylevers
(includingthecourts)neededtofulfillthepromisetheymade.
21
Thegovernmentconsultstheexperts,andalltheexpertsagreeaboutthefiscal
impact.Inparticular,let’sassumethatitistruethatlow-skillimmigrationisafiscalburden,
andthathigh-skillimmigrationeasesthatburden.
Theelectedgovernmentlooksatthesettledscienceandthepolicypathbecomes
obvious:Itisfiscallyirresponsible,andwouldgreatlyannoythegovernment’ssupporters,
toadmitmillionsoflow-skillimmigrantswhowillbecomeafiscalburden,butitmaybe
worthwhiletoadmithigh-skillimmigrantswhohavehighearningsandpayalotoftaxes.
Thegovernmentmightthenproposea“comprehensiveimmigrationreform”thatridsthe
UnitedStatesofthefamilypreferencesystem,andreplacesitwithaskillfilterthat
preventsalllow-skillimmigrantsfromenteringthecountry.
Let’snowsupposeinsteadthatthepoliticianswhogotelectedhadadifferent
mandate.Theyranonaplatformthatpromisedtoalleviateworldpovertybyincreasing
foreignaidandbyallowingmanyoftheworld’spoortomovetotheUnitedStatesto
partakeinthemanyopportunitiesthatourcountryoffers.
Theexpertsstillreportthesameuniversallyagreed-uponfacts:low-skill
immigrantsareafiscalburdenandhigh-skillimmigrantshelpfundthewelfarestate.But
thegovernmentgotelectedonaplatformthatpromisedtoaddresstheissueofworld
poverty—andtospendalotofmoneytodoso.Itiseasytoseethatanimmigrationpolicy
thatwouldadmitmillionsoftheworld’s“poorandhuddledmasses”wouldbeaverylarge
anti-povertyprogramindeed,perfectlyalignedwiththeideologicalbeliefsofthis
governmentanditssupporters.
Doesknowingthefactthatthepoorandhuddledmassescreateafiscalburdenfor
thenativepopulationdeterthedemocraticallyelectedgovernmentfromcarryingoutits
mandate?Theanswerwouldlikelydependonthe“burdenthreshold”thatthegovernment
andthepeoplewerewillingtoaccept.Ifthefiscalburdenpernativehouseholdisonlya
fewhundreddollarsperyear,thepoliticallysensiblepolicymightstillbetheadmissionof
millionsoflow-skillworkersdespitethefactthattheywillbecomeafiscalburden.The
government—anditssupporters—mighthavesecondthoughtsifthefiscalburdenwasin
thetensofthousandsofdollars.Butitisobviousthatideologywilltrumpthefactsforsome
rangeofthefiscalburden.Thisburdenisthepricethatthepeoplewhoareideologically
committedtothereductioninworldpovertyarewillingtopayfor“doinggood.”
22
SowhatwouldIdo?MyanswerobviouslydependsonwhatIbelievetheobjectiveof
immigrationpolicytobe.IhappentothinkthatitisagoodthingfortheU.S.topursuea
policythatgenerateseconomicgainsbyadmittingsomehigh-skillimmigrantsandalso
“doesgood”byadmittingsomeofthehuddledmasses.Withinthatframework,thereare
somepolicyshiftsthatwouldleadtopreferableoutcomes.
Letmestartwiththeobvious.Itmakesnosensetotalkaboutchangesinpolicy
unlessourbordersaresecure.Theveryporousbordersthathaveallowedover11million
undocumentedpersonstoentertheUnitedStatesmakelegalimmigrationpolicy,inWoody
Allen’swords,“atravestyofamockeryofasham.”Whatisthepointofcomingupwith
waystoimproveimmigrationpolicyifanyonecanbecomeanimmigrantbycrossingthe
southernborderorbybreakingthetermsofatouristvisa?Anecessaryfirststepissimply
toregaincontrolofthebordersothatchangesinimmigrationpolicymeansomethingonce
again.
Asecureborderwillobviouslyrequirethatwedevotemoreresourcestosecuring
theborder,andwealreadyspendalotofmoneydoingthatwithless-than-stellarresults.
Theundocumentedflowwouldprobablyslowdowndramaticallyifwetookadifferent
tack:let’sseriouslypenalizelaw-breakingemployers.Thiswouldinvolverequiring
employerstouseanalreadyavailableelectronicsystemwheretheycouldeasilycheckthe
visastatusofjobapplicants(aswithE-Verify).Fortunately,wearenotthetypeofcountry
thatwilltrampleonthecivilrightsofundocumentedimmigrantswhentheyaredetected
andapprehended.Butwearecertainlythetypeofcountrythatheavilyfinesandpenalizes
thosefirmsthatbreakthelaw.Sizablefinesandcriminalpenaltieswouldgoalongway
towardsmakingundocumentedimmigrationamoremanageableproblem,andwouldfree
ustodiscussimmigrationpolicyinamoresensibleandrationalway.
Wealsoneedtoviewimmigrationpolicyfromabroaderperspective—notonly
worryingabouthowmanyimmigrantstoacceptandtheformulausedtoselectthelucky
few,butalsoabouthowtoalleviatetheadverseimpactofimmigrationonmanyAmericans.
Thebestpolicyresponsetothelowerwagescausedbyimmigrationisnotnecessarilyto
cutimmigrationaltogether.Aswehaveseen,thereareeconomicgainstobehad.However,
theanswertolowerwagesshouldnotbetojustignorethemortomaintainthecharade
thatimmigrationis“goodforeveryone.”TheTradeAdjustmentAssistanceProgram
23
enactedin1974providedaidtoAmericanworkersaffectedbyimports.Perhapsitistime
tosetupacomparableprogramtoassisttheworkersemployedinthoseindustriesand
localitiestargetedbyimmigrants.
Manyagriculturalandservicecompanieshavebenefittedhandsomelyfromthe
employmentoflow-skillimmigrants,anditisabouttimethatthoseexcessprofitsbeused
tocompensatelow-skillAmericansfortheirlossesandtohelpthemtransittonewjobsand
occupations.IfMicrosoftreallycreatesfournewjobsforeveryH-1Bvisagranted,asBill
Gatesclaims,thenMicrosoftisprofitingsubstantiallyfromthatprogramandshouldbe
willingtopaymanythousandsofdollarsforeachofthosecovetedpermits.Thosefunds
couldbeusedtocompensateandretraintheaffectedpersonsinthehigh-techindustry.We
mightbepleasantlysurprisedbyhowmuchmoneyfirmsarewillingtoponyuptoimport
guestworkers.InSingapore,forexample,firmsthatbringinlow-skillserviceworkerspay
amonthlylevyof20to30percentoftheworker’ssalaryforthetemporaryvisa.Putsimply,
immigrationpolicyshouldbegintoincorporatespecifictaxesandsubsidiestoensurethat
thegainsfromimmigrationaremoreevenlydistributed.Buttoevenpartiallycompensate
thelosersfromcurrentpolicy,massiveimmigrationwillrequiremassivenewgovernment
programstosuperviseamassivewealthredistributiontotalinginthetensofbillionsof
dollars.Thereiszerochancethatthefirmsthatprofitfromthewaythingsarewouldgo
alongwiththesetransferswithoutanepicpoliticalstruggle.
Andthosearethe“easy”fixes.Thelinkbetweenimmigrationandthewelfarestate
introducesparticularlythornyissues.Itisworrisomethat,despitealltherestrictionson
immigrantwelfareuse,manyimmigrant-headedhouseholdsreceivesometypeofaid.The
easiestfixistodowhatAustraliaandCanadado—changetheadmissionrulestoselectonly
high-skillapplicants.Anothermightbetofurthertightenthewelfareeligibilityrulesfor
immigrants.Butthistighteningcreatesadditionalproblemsbecauseimmigranthouseholds
oftenqualifyforassistanceduetothepresenceofU.S.-bornchildren,andeffective
eligibilityrequirementsmaywellrequirethatwetreatminorAmericancitizens
differentiallydependingonwheretheirparentswereborn.
Anequallydifficultproblemconcernsthelong-termassimilationprospectsof
immigrantfamilies.Historically,immigrantsmadethedecisiontoassimilatewithoutmuch
governmentencouragement.Thishands-offapproachworkedwellinthepast,whenthe
24
assimilationdecisionwasmadeinaculturalandsocialenvironmentwherethephrase
“meltingpot”wasnotconsideredtobeamicro-aggression.Thecurrentideological
revulsioninmanyquarterstowardstheverynotionofassimilation,andthecontinued
reinforcementofdistinctethnicidentitiesbymanygovernmentprograms,makesthe
hands-offapproachproblematic.
Thinkingaboutimmigrationpolicyintroducesdifficultandinescapabletradeoffs,
andchoosingamongthosetradeoffscannotbedonesolelyonthebasisofthemathematical
modelingandstatisticalanalysisprovidedbyeconomists.Intheend,thepolicychoice
mostlydependsonourvalues,onwhatwebelievetheUnitedStatesisallabout,andon
whatkindofcountrywewantourchildrentolivein.
Intheend,thereisaverysimple(andobvious)wayofsummarizinghowoneshould
thinkabouttheframingofimmigrationpolicy:Whoareyourootingfor?