This is the fifth of five posts on immigration policy. For the first post and an overview, see here.
American public discourse on immigration is so hot-blooded that it often sounds as if the fate of the republic–or at least the economy–is at stake. But oddly enough, the economic issues related to U.S. immigration are in all likelihood dwarfed in size by the global gains.
While I believe that that an expansion of immigration offers gains to those already in this country, the gains seem likely to be small. For example, in the Cato Journal symposium, Raúl Hinojosa-Ojeda uses a computable general equilibrium approach to estimate that a substantial rise in immigration could increase U.S. GDP by 0.8%–and even this modest gain is well above other estimates I\’ve seen. Similarly, while I argued in the third post in this series that the effects of immigration on government budgets were probably positive, they arguments over gains and losses to different levels of government, and the gap between the two, are measure in billions or at most tens of billions of dollars–which isn\’t much in the context of an annual federal budget now approaching $4 trillion.
The main gains from immigration, perhaps not surprisingly, go to the immigrants themselves, who may easily increase their incomes by a multiple of four or five times when moving from a low-income country to a high-income country. Large increases in immigration thus offer a possibility of a massive increase in world GDP Giovanni Peri sums up some of the evidence in \”Immigration, Labor Markets, and Productivity.\”
\”[I]f one looks at several recent reports and studies on international migrations by economists and research institutions, their main emphasis is on the large size of global gains obtainable by increasing, even by a small measure, the mobility of people. A study by the World Bank (2005) estimated that an increase in international
migration equal to 3 percent of the labor force of developed countries would produce gains (to be shared globally) of $356 billion. Pritchett (2006) argues that the gains from increasing international mobility, even by a little, are much larger than those that can be obtained by fully liberalizing international trade, estimated in 2005 to be $104 billion. In the more extreme case of a full opening of more wealthy, Organization for International Cooperation and Development (OECD) countries to workers from the rest of the world, Klein and Ventura (2007) calculate a potential massive increase in the world GDP on the order of 150 percent over 50 years. For economists, in short, international migration has the formidable ability of increasing total world income and productivity, generating huge global economic opportunities. The reason is very simple. By allowing people to move to countries where they can produce four to five times more value per hour of work on average than in their country of origin, migrations allow the deployment of world human resources in a massively more efficient way …\”
My own Journal of Economic Perspectives had some articles on emigration in the Summer 2011 issue that emphasized the possibility of substantial Gains from Emigration, as I posted last August 22. (Current and back issue of my journal going back to 1994 are freely available to all, courtesy of the American Economic Association.)
In short, the strongest case for immigration is not that it conveys huge benefits to the U.S. economy–it probably doesn\’t. But it certainly conveys huge benefits to those who migrate. I believe that national boundaries matter, and I\’m an American at heart. When it comes to public policy, I place a lower value on what happens to non-Americans than I do on what happens to Americans. Thus, I do believe that any costs to Americans resulting from immigration are a legitimate policy issue. But placing a lower value on what happens to non-Americans doesn\’t mean placing no value on what happens to them. The truly enormous gains received by migrants predispose me toward policies that would allow more immigration to the U.S.–and to seek alternatives for dealing with potential costs.