Some Interesting Points for Discussion on Immigration

This is also from Alex Tabarrok.

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

Some of these points are one’s I’ve raised here on this blog. For example, many complain that immigrants lower wages, but that is not so clear cut.

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.

For example, if a household is able to hire a housekeeper then the income-earners in that household can spend more time working and less time keeping house. Not only will this result in more income, but also possibly a faster rate of increase in the household income. Here is how the economist looks at this point. The opportunity cost of cleaning one’s house is the wage one earns multiplied by the amount of time it takes to clean one’s house. Suppose it takes three hours to clean the house and your wage rate is $25/hour. Now, you should be willing to pay up to $75 to have your house cleaned. This can result in either going to work for three hours to earn $75 (or more if it is over time) or enjoy three additional hours of leisure time (which is also valued at $75). If you pay your housekeeper $55 to clean your house, then the person hiring the housekeeper is strictly better off.

About the only place one can find an adverse impact on wages is among high school dropouts.

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.

But this could actually be a good thing. If the wage rate drops for high school dropouts then it makes dropping out of high school look relatively less appealing. That is drop out rates might decline if the income for dropouts is lowered. And, instead of curtailing immigration as a way to help highschool dropouts? As Alex Tabarrok suggest, why not help these people not drop out? Income is after all, positively correlated with education.

This doesn’t mean we should have wide-open borders or that the current legislation regarding immigration is good legislation. However, it is time to acknowledge that immigrants (both legal and illegal) comprise significant portion of our workforce and are important. With a 4.7% employment rate, deporting the millions of illegal immigrants already here would cause a severe problem. And considering that immigrants make up about half of the new jobs added to the economy curtailing immigration to a trickle would also cause some serious problems.

FILED UNDER: Borders and Immigration, Economics and Business, US Politics,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. TLB says:

    Detailing all the ways in which Tabarrok must be high would take too long, so here’s my response to the Open Letter.

    Some might consider it disheartening that the word “economist” apparently means “someone who only considers fiscal matters” rather than “someone who considers fiscal matters as well as all other aspects of an issue.” The “economists” who signed his letter fall into the first definition, not the second.

    Even for the first definition, they seem to have forgotten about innovation: if there were less cheap labor we would probably invent machines. That would lead to better jobs and more sales opportunities.

    And, of course, the massive immigration that Tabarrok favors would lead to foreign countries – especially Mexico but perhaps China as well – gaining a tremendous amount of political power inside our country. And, of course, with a certain critical mass of foreign citizens residing in a state (say, California), that state would be forced to do what those foreign citizens want, even if that goes against what the rest of the U.S. wants. In other words, Tabarrok’s fantasy would lead to civil war or de facto secession.

    No one who signed or supports Tabarrok’s letter really understands this issue and is able to understand the consequences of what they support.

  2. Steve Verdon says:

    TLB,

    You certainly live up to the name of your blog. You have mischaracterized the point of the OLI. Further, you seem to have bought into the hype surrounding the Reconquista and it seems obvious you have a very active and healthy conspiracy obsession.

    I’d suggest medication, but I doubt it’d help.

    (See how fun it is to cast drug related aspersions on others?)

  3. floyd says:

    you fail again to see the point, it’s the right to regulation of immigration at issue, not immigration itself. the issue again is NATIONAL SOVEREIGNTY! now, whether there is a concerted effort to drive down prevailing wages in the U.S. is a separate but related topic.

  4. Steven Plunk says:

    The Reconquista argument makes no sense. Why would they come here and then want to make it part of Mexico? Just to have it run into the ground like Mexico? To install rampant corruption? To allow drug organizations ti run the country?

    They come here to escape that and find a job. They don’t want it to be like Mexico.

    The Aztlan movement on many California colleges seems more youthful rebellion than real political movement. I wouldn’t worry about those guys, they will graduate and get jobs leaving no time for such nonsense.

  5. Zelsdorf Ragshaft III says:

    Any nation has the right to say who can and cannot become citizens of that nation. Those living outside that nation do not have the right to enter and settle, without the permission of our government. Mexico does not have the right to send its poor here to relieve that problem there. If you break into someones house it is called burglary. If you break into some other nation it cannot be called immigration, it is a civil invasion. What part of that is hard to understand?

  6. RJN says:

    TLB pretty well nails it.

    BTW: While the basis for Reconquista is totally bogus the people pushing it are not; they are dedicated leftists with no devotion to, or obligation to, the U. S.

  7. Steve Verdon says:

    Floyd,

    No, I got that right away. My point is that getting control of the borders and shutting off the flow of immigrants will likely be a Bad ThingTM.

    Zelsdorf,

    That is a completely nonsensical comment. It is nonsensical for a number of reasons.

    1. The immigrants from Mexico are usually more skilled than the average Mexican. As such they are less likely to be “poor” by Mexican standards.

    2. Nowhere have I indicated that immigrants have a right to enter the country.

    3. Nowhere did I indicate that a country does not have a right to determine who becomes a citizen.

    This pretty much nullifies your entire comment.

    RJN,

    What, are you channeling Dan Rather or something? The Reconquista: Fake, but real.

  8. RJN says:

    Steve: A falsely based argument, or movement, can be used to do real damage.

  9. TLB says:

    It would be difficult to deny that there’s a “reconquista sentiment”, especially since leading Democratic/Mexican-“American” politicians such as L.A.’s mayor, a CA senator, a U.S. congressman (Raul Grijalva), and CA’s Lt. Gov – among many others – are former members of the racial separatist group MEChA. And, since they’ve worked with Mexico, gone to Mexico, promoted the Mexican agenda, made pro-Mexican statements, and so on. In fact, Tony Villar even congratulated the president of Mexico on helping block Prop. 187. Some have gone even further, pimping U.S. social services in Mexico (Firebaugh; search at my site).

    But, just because I’ve been following this issue for years and I have hundreds of posts on the topic, don’t just take it from me! See, for instance, the comments here for lots of fun links.

    Will that sentiment change into action? Well, here’s one action. They’re able to do that without fear of repurcussion because they have a power base. And, loony libertarians and liberals and corrupt “conservatives” are helping them grow that power base.

    Once again, don’t just take it from me. Here’s a quote from Stanford historian David Kennedy: “the possibility looms that in the next generation or so we will see a kind of Chicano Quebec take shape in the American Southwest”.

    I’d suggest the reader fires up google and searches for background information. You just can’t trust anyone who’s a reconquista apologist or who tries to sell you on massive immigration without mentioning all of the costs.

  10. Steve Verdon says:

    Steve: A falsely based argument, or movement, can be used to do real damage.

    You mean like by taking it seriously and over-reacting to an unreal threat?

  11. Steve Verdon says:

    Aahhh yes, American Patrol, what a fine bunch of racists they are. Well it is good that you are going to the very source of the term Reconquista TLB.

    He also was one of the first well-known anti-immigration activists to more or less openly court white supremacists and anti-Semites. He has attended conferences of American Renaissance magazine, which specializes in racist theories about blacks and others. He interviewed the magazine’s editor, Jared Taylor, on his syndicated radio show. Another guest was California State Professor Kevin MacDonald, who is the architect of an elaborate anti-Semitic theory dressed up as evolutionary biology.