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.