A Chequer-Board of Nights and Days

Why do economists think more favorably of immigration than the general public? I think there are three reasons: theory, empirical research, and ethics.

In terms of theory, the public focuses on the idea that "immigrants will take our jobs." But immigrants buy our products too so the primary effect of immigration is simply to increase the size of the market. Moreover, few people complain that in twenty years time our jobs will be threatened when all the babies born this year start working! Yet, population growth and immigration are very similar economic forces. Jobs can be a problem in a recession or if labor markets are not free and flexible but these problems are not caused by immigration and ought to be addressed directly.

What about wages? Economists do recognize that immigration can lower wages; but unlike the general public they also know that immigration can increase wages. Clearly, the immigration of a high-skilled worker can increase wages for Americans. Google, Yahoo and Sun Microsystems? All founded by immigrants. But the immigration of a low-skilled worker can also increase wages for Americans. More low-skilled workers mean lower prices for services such as day care or dry cleaning and this means that higher skilled Americans can spend more time doing the jobs at which they are most productive. Immigration, like trade, increases total production -- instead of moving the goods we move the workers.

The fact that immigration and trade are similar also means that even if immigration lowers wages, restricting immigration won't necessarily raise wages. With fewer low-skilled immigrants in the United States the incentive to move production overseas will increase.

Economists have extensively investigated the wage question with special attention being placed on the effect of low-skilled immigration on the wages of U.S. high school dropouts. The results from both proponents and opponents of immigration are surprisingly similar. Studies by David Card (UC Berkeley) suggest a zero effect of low-skilled immigrants on low-skilled workers. Studies by George Borjas (Harvard) suggest a wage decline of 7.4%. Borjas acknowledges that his figure is probably on the high side as it doesn't take into account increases in the capital stock brought about by immigration. Card's studies are probably on the low side because they assume that labor markets in different cities are not at all connected. Most economists are happy at some number in between.

High school dropouts have it hard already so even a small decline in wages is not something to be ignored. But is reducing immigration really the best way to help high school dropouts? How about encouraging them not to drop out instead? Why must we pit the poor against the much poorer?

Remember that we will be taking action on the immigration front that has the chance to profoundly affect our economic situation for years and perhaps decades to come. As such, it behooves us to pay attention to the ramifications. Unfortunately, at this time, the debate seems to be stuck on Justice (centering around whether it would be right to give illegal immigrants some form of amnesty) and Mercy (centering on whether it would be nice or fair to somehow demand that illegal immigrants go away). I am as offended as anyone else by the possibility that applications for immigration to the United States may find illegal immigrants potentially jumping ahead of them in the line of teeming masses yearning to breathe free. But in addition to considering Justice and Mercy, we ought to ensure that Rational Self-Interest has not fully left the realm of our thoughts as we seek to fashion an immigration policy.