Is Immigration Good for America?

Last April, 2012 the libertarian Cato Institute held a conference on the question “Is Immigration Good for America?”. The conference sessions are available as audio or video podcasts or in the Winter Cato Journal. The conference addressed a number of key questions, including:

  • What are the arguments for immigration restriction?
  • What are the economic benefits and costs of immigration?
  • What are the economic effects of an “amnesty” for unauthorized workers in the U.S.?
  • What is the demographic impact of immigration in an era of declining birthrates?
  • How easy or difficult is it to immigrate legally to the United States?
  • What is the effect of immigration enforcement on the border and in the workplace?
  • Should we retain the doctrine of birthright citizenship as it has been interpreted in the Fourteenth Amendment to the Constitution?
  • Is immigration incompatible with a welfare state?
  • What kind of reforms of current immigration policy would be most beneficial, and can market incentives be utilized to allocate immigration visas?

Dan Griswold wrote the introduction to the Cato Journal special issue on immigration. Dan begins with a concise summary of how immigration benefits the destination country:

The Economic Case for Immigration

Undervalued in today’s discussion is the strong economic case for a more open policy toward immigration. Basic economic analysis and numerous empirical studies have confirmed that immigrants boost the productive capacity of the United States through their labor, their human capital, and their entrepreneurial spirit. Instead of competing head-to-head with American workers, immigrants typically comple- ment native-born workers by filling niches in the labor market.

Lower-skilled immigrants seek low-paying, low-status jobs that an insufficient number of Americans aspire to fill, providing more affordable goods and services to consumers while creating more rewarding employment opportunities for the native-born. Higher- skilled immigrants allow American companies to create new prod- ucts and raise productivity by stimulating innovation. Immigrant workers make capital more productive, boosting investment, output per worker, and government tax receipts.

Today’s immigration levels, while high in nominal terms, are well within the norms of American experience. A century ago, during the Great Migration, both the stock and the annual inflow of immigrants were significantly higher than today as a share of the population. Yet America assimilated those “huddled masses” of millions of immi- grants from eastern and southern Europe, who within a generation or two joined the great American middle class. Public anxiety back then over the “new races” coming to our shores bears a striking resemblance to anxieties over today’s immigrant inflows from Asia and especially Latin America.


Trillion-Dollar Bills on the Sidewalk? Yes, those trillions can be collected by global immigration reform. The indirect effects of immigration include the rarely discussed impact of Emigration: Economics and Emigration: Trillion-Dollar Bills on the Sidewalk? [ungated PDF of the AEA paper in Journal of Economic Perspectives—Volume 25, Number 3—Summer 2011.] Clemens is a Senior Fellow at the Center for Global Development – one of the few development NGO’s that we really respect. CGD gets results, not just first class junkets for overpaid staff.

End-note Moving the Jobless to the Jobs: Crucial for Economic Growth. If immigration makes everyone more prosperous, why do cities block immigration with bad housing policy? “Last one in closes the gate”.

Tyler Cowen: moral imperatives for expanding immigration

I thought this segment of prof. Cowen’s NYT op-Ed was brilliant:

(…) Michael Clemens, a senior fellow at the Center for Global Development in Washington, quantified these gains in a 2011 paper, “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?” He found that unrestricted immigration could create tens of trillions of dollars in economic value, as captured by the migrants themselves in the form of higher wages in their new countries and by those who hire the migrants or consume the products of their labor. For a profession concerned with precision, it is remarkable how infrequently we economists talk about those rather large numbers.

Truly open borders might prove unworkable, especially in countries with welfare states, and kill the goose laying the proverbial golden eggs; in this regard Mr. Clemens’s analysis may require some modification. Still, we should be obsessing over how many of those trillions can actually be realized.

IN any case, there is an overriding moral issue. Imagine that it is your professional duty to report a cost-benefit analysis of liberalizing immigration policy. You wouldn’t dream of producing a study that counted “men only” or “whites only,” at least not without specific, clearly stated reasons for dividing the data.

So why report cost-benefit results only for United States citizens or residents, as is sometimes done in analyses of both international trade and migration? The nation-state is a good practical institution, but it does not provide the final moral delineation of which people count and which do not. So commentators on trade and immigration should stress the cosmopolitan perspective, knowing that the practical imperatives of the nation-state will not be underrepresented in the ensuing debate.

U.S. ownership of Mexican property, free trade in Medicare

Tyler Cowen:

Morgan Warstler has a question:

On Mexican immigration, I’d like your thoughts on an open door policy conditioned on Mexico changing their Constitution to allow Americans to own beachfront property and companies outright.

The idea being we simply need to get Americans thinking about Mexico like a big Florida, thinking about their boomer parents buying condos and getting cheap medical care. Get entrepreneurs thinking about setting up manufacturing shops in Mexico and generally anything which makes more Americans feel annoyed by a closed border.

Why don’t free market economists that champion the import of human capital and free trade, spend more time pushing Free Market Manifest Destiny? Are we so sure Mexico wouldn’t agree to such horse trading? We push our ideas all over the globe, why not lean on Mexico where it is in our obvious strategic interest?

I believe Mexico would not agree to such horse trading, though it may happen in some lesser form, if the United States simply keeps quiet about the idea.  In particular Mexico is likely to allow greater FDI in its fossil fuels production, if only to prevent a fiscal crash from this revenue source going away.  They need expertise from U.S. companies in this area rather badly.

Beachfront property touches too closely on national pride and the efficiency gains to American ownership are in any case small.  Rent if you must, and Mexico has more wealthy people all the time to buy up that stuff.  I would favor the extension of Medicare coverage to American citizens living in Mexico, at least with some safeguards against fraud or maybe even without.  The U.S. medical establishment would not like that but I think Mexico would find it more than acceptable.

The U.S. does best in Mexico when it allows Mexicans to move the key ideas forward in the public arena.  Free trade in Medicare is the next big step we could take on our own.

Moving the Jobless to the Jobs: Crucial for Economic Growth

We know that external immigration is almost always a winner. Businessweek finds that internal immigration has similar benefits, but in the US seems to slowed almost to a stop because of high housing costs in the high growth cities. The high costs are often caused by local housing policies. But costs nationally are amplified by the home mortgage interest tax deduction. It is past time to end that subsidy.

(…) But more recent analysis by Peter Ganong and Daniel Shoag of Harvard finds that the rate of convergence across U.S. states has slowed dramatically over the past 30 years—. (…)

Ganong and Shoag note that the slowdown in migration has been particularly severe for low-income workers. They suggest that rapidly rising house prices in wealthy areas help account for that. As house prices rise, the benefits of living in productive areas erodes for low-skilled households. And the researchers note that the impact of housing regulation measured through land-use court cases is a big factor behind rising house prices. More regulation leads to higher house prices at a given income level—pricing poor people out of the housing market. Rich areas haven’t needed a passport system to keep poor people out of their communities; they’ve just regulated land use so much that there’s no cheap housing available.

Of course, that’s not necessarily easy for Washington to fix. Most of the regulations involved are made at the state and local level. But one thing Congress could do to help reduce the cost of housing and help deal with the fiscal cliff: Dump the home mortgage interest tax deduction.The $100 billion the U.S. government provides each year in home mortgage interest tax relief makes housing more expensive. Three-quarters of the tax relief on home mortgage interest goes to the top 20 percent of earners, according to the Tax Policy Center—and hardly any people at the other end of the income distribution benefit from the credit. The credit encourages richer Americans to borrow more, bid up prices, and buy bigger houses on bigger plots. All that squeezes out the affordable rental housing that poor migrants need if they are going to get to where the jobs are.

Republican and Democrats agree that we should focus on equality of opportunity. But one of the best opportunities we can give people is to move from areas of little economic potential to areas with jobs and quality education. Getting rid of the home mortgage interest tax deduction is one way both to raise revenue and to help poor people help themselves. Of course, it’s also an idea with no political traction at the moment—but we’ve seen such things change before.


Bloggers and Economists are Failing on Immigration

Really excellent, a “call to arms” by Adam Ozimek:

This is a point I hinted at in this previous post but I wanted to make more explicitly. Bloggers and economists are failing when it comes to their coverage and discussion of immigration as an economic policy lever. Despite the occasional coverage it does get, the fact that we should have more high-skilled immigration (HSI) remains an extremely under-blogged topic. Yes, there are many things that “deserve more attention”, especially many third-world tragedies. But this is domestic policy of extreme importance, and it is a solution rather than an unsolvable problem in a faraway land.


High skilled immigrants are entrepreneurs, it would help ameliorate our long-run demographic problems, etc., etc. You know the arguments.

(…) I understand the public opposition to this issue and the political gridlock, but I think it is professional malpractice that economists see trillions of dollars in pareto improvements going to waste and don’t scream about it from the rooftops daily because it’s not as fun to argue about. I don’t think the public has a good sense of the extent to which more high-skilled immigration would help us, and part of the problem is precisely that we don’t scream this from the rooftops with the regularity and fervor it deserves.


I am challenging bloggers and economists to answer these questions: are you writing and talking as much about high-skilled immigration as you should be? And if not, why aren’t you doing it more?


Immigration is Still the No Brainer Issue of the Year

An unskilled age 35 Haitian who immigrates to USA increases his/her income immediately by a factor of seven (7). That is the most efficient aid program on the planet. An average immigrant from Uganda or Vietnam does not gain quite so much. But the economics of immigration to the US are very clear empirically — more immigration enriches the whole country. So skilled immigration is truly a No Brainer. Here’s Alex Tabarrok in The Atlantic:

In The No Brainer Issue of the Year I wrote:

Behind Door #1 are people of extraordinary ability: scientists, artists, educators, business people and athletes. Behind Door #2 stand a random assortment of people. Which door should the United States open?

Once again, as the NYTimes reports, our dysfunctional political system has opted for Door #2:

A Republican bill to provide permanent resident visas for foreigners who graduate from American universities with advanced degrees in science and technology failed to pass the House on Thursday, a setback for technology companies that had strongly supported it.

…[The bill] would have eliminated an annual lottery and instead allocated 55,000 visas for legal permanent residency, known as green cards, each year to foreigners who have completed master’s and doctoral degrees from American universities in the STEM fields: science, technology, engineering and mathematics.

New Lives and Old Dreams: Immigration in America 2012 (7/24/12)

It is extremely rare to read or hear any sane, informed commentary on immigration. An exception is the recent Commonwealth Club of California panel discussion New Lives and Old Dreams: Immigration in America 2012. I can promise you some new insights in sound immigration policy. 

The panel is comprised of: 

Arturo S. Rodriguez, President, United Farm Workers
Lavinia Limón, President and CEO, U.S. Committee for Refugees and Immigrants
Dulce Matuz, President, Arizona Dream Act Coalition
Deep Nishar, Senior Vice President, Products & User Experience, LinkedIn
Raul Ramirez, Executive Director of News and Public Affairs, KQED Public Radio – Moderator

(…) In the Bay Area, the immigration conversation often centers around limited H1-B visas for techies, while most of the country broods over access to education, employment, social services and integration into the broader community. What does a ‘typical’ immigrant really look like in the U.S. in 2012? How do immigration policies actually impact the lives of documented and undocumented immigrants? Our diverse panel dives deep into the issues. Come hear the true stories shared by more than 10 million individuals.