Thursday, August 11, 2016

Common Arguments against Immigration

By Alex Nowrasteh of Cato. Excerpts:
"1.  “Immigrants will take our jobs and lower our wages, especially hurting the poor.”

This is the most common argument and also the one with the greatest amount of evidence rebutting it.  First, the displacement effect is small if it even affects natives at all.  Immigrants are typically attracted to growing regions and they increase the supply and demand sides of the economy once they are there, expanding employment opportunities.  Second, the debate over immigrant impacts on American wages is confined to the lower single digitsimmigrants may increase the relative wages for some Americans by a tiny amount and decrease them by a larger amount for the few Americans who directly compete against them Immigrants likely compete most directly against other immigrants so the effects on less-skilled native-born Americans might be very small or even positive."

"what is not in doubt is that immigration has increased the wages and income of Americans on net.  The smallest estimates immigration surplus, as it is called, is equal to about 0.24 percent of GDP – which excludes the gains to immigrants and just focuses on those of native-born Americans.

2. “Immigrants abuse the welfare state.”

Most legal immigrants do not have access to means-tested welfare for their first five years here with few exceptions and unauthorized immigrants don’t have access at all – except for emergency Medicaid.

Immigrants are less likely to use means-tested welfare benefits that similar native-born Americans.  When they do use welfare, the dollar value of benefits consumed is smaller.  If poor native-born Americans used Medicaid at the same rate and consumed the same value of benefits as poor immigrants, the program would be 42 percent smaller.

Immigrants also make large net contributions to Medicare and Social Security, the largest portions of the welfare state, because of their ages, ineligibility, and their greater likelihood of retiring in other countries.  Far from draining the welfare state, immigrants have given the entitlement portions a few more years of operation before bankruptcy.  If you’re still worried about immigrant use of the welfare state, as I am, then it is far easier and cheaper to build a higher wall around the welfare state, instead of around the country.

 3. “Immigrants are a net fiscal cost.”

Related to the welfare argument is that immigrants consume more in government benefits than they generate in tax revenue.  The empirics on this are fairly consistent – immigrants in the United States have a net-zero impact on government budgets (the published version of that working paper is published here).

It seems odd that poor immigrants don’t create a larger deficit but there are many factors pushing explaining that.  The first is that higher immigrant fertility and the long run productivity of those people born in the United States generates a lot of tax revenue.  The second is that immigrants grow the economy considerably (this is different from the immigration surplus discussed above) and increase tax revenue.  The third is that many immigrants come when they are young but not young enough to consume public schools, thus they work and pay taxes before consuming hundreds of thousands of dollars in public schools costs and welfare benefits – meaning they give an immediate fiscal boost.  There are many other reasons as well.

Although the tax incidence from immigrants is what matters for the fiscal consequences, between 50 percent and 75 percent of illegal immigrants comply with federal tax law.  States that rely on consumption or property taxes tend to garner a surplus from taxes paid by unlawful immigrants while those that rely on income taxes do not."

"6.  “Immigrants are especially crime prone."

This myth has been around for over a century.  It wasn’t true in 1896, 1909, 1931, 1994, and more recentlyImmigrants are less likely to be incarcerated for violent and property crimes and cities with more immigrants and their descendants are more peaceful.  Some immigrants do commit violent and property crimes but, on the whole, they are less likely to do so."

"12.  “Immigrants bring with them their bad cultures, ideas, or other factors that will undermine and destroy our economic and political institutions.  The resultant weakening in economic growth means that immigrants will destroy more wealth than they will create.”
This is the most intelligent anti-immigration argument and the one most likely to be correct, although the evidence currently doesn’t support it being true.  Economics Michael Clemens lays out a wonderful model of how immigrants could theoretically weaken the growth potential of any receiving countries.  In his model, he assumes that immigrants transmit these anti-growth factors to the United States.  However, as the immigrants assimilate into American ideas and notions, these anti-growth factors weaken over time.  Congestion could counteract that assimilation process when there are too many immigrants with too many bad ideas, thus overwhelming assimilative forces.  Clemens is rightly skeptical that this is occurring but his paper lays out the theoretical point where immigration restrictions would be efficient – where they balance the benefits of economic expansion from immigration with the costs of institutional degradation.

Empirical evidence doesn’t point to this effect either.  In a recent academic paper, my coauthors and I compared economic freedom scores with immigrant populations across 100 countries over 21 years.  Some countries were majority immigrant while some had virtually none.  We found that the larger a country’s immigrant population was in 1990, the more economic freedom increased in the same country by 2011.  The immigrant’s country of origin, and whether they came from a poor nation or a rich one, didn’t affect the outcome.  These results held for the United States federal government but not for state governments.  States with greater immigrant populations in 1990 had less economic freedom in 2011 than those with fewer immigrants, but the difference was small.  The national increase in economic freedom more than outweighed the small decrease in economic freedom in states with more immigrants.  Large immigrant populations also don’t increase the size of welfare programs or other public programs across American states and there is a lot of evidence that more immigrants in European countries actually decreases support for big government.

Although this anti-immigration argument could be true, it seems unlikely to be so for several reasons.  First, it is very hard to upend established political and economic institutions through immigration.  Immigrants change to fit into the existing order rather than vice versa.  Institutions are ontologically collective – my American conceptions of private property rights wouldn’t accompany me in any meaningful way if I went to Cuba and vice versa.  It would take a rapid inundation of immigrants and replacement of natives to change institutions in most places.  
The second possibility is immigrant self-selection: Those who decide to come here mostly admire American institutions or have policy opinions that are very similar to those of native-born Americans.  As a result, adding more immigrants who already broadly share the opinions of most Americans would not affect policy.  This appears to be the case in the United States.

The third explanation is that foreigners and Americans have very similar policy opinions. This hypothesis is related to those above, but it indicates an area where Americans may be unexceptional compared to the rest of the world.  According to this theory, Americans are not more supportive of free markets than most other peoples, we’re just lucky that we inherited excellent institutions from our ancestors.

The fourth reason is that more open immigration makes native voters oppose welfare or expanded government because they believe immigrants will disproportionately consume the benefits (regardless of the fact that poor immigrants actually under—consume welfare compared to poor Americans).  In essence, voters hold back the expansion of those programs based on the belief that immigrants may take advantage of them.  As Paul Krugman aptly observed, “Absent those [immigration] restrictions, there would have been many claims, justified or not, about people flocking to America to take advantage of [New Deal] welfare programs.”

As the late labor historian (and immigration restrictionist) Vernon M. Briggs Jr. wrote, “This era [of immigration restrictions] witnessed the enactment of the most progressive worker and family legislation the nation has ever adopted.”  None of those programs would have been politically possible to create amidst mass immigration. Government grows the fastest when immigration is the most restricted, and it slows dramatically when the borders are more open.

Even Karl Marx and Friedrich Engels thought that the prospects for working class revolution in the United States were diminished due to the varied immigrant origins of the workers who were divided by a high degree of ethnic, sectarian, and racial diversity.  That immigrant-led diversity may be why the United States never had a popular workers, labor, or socialist party.

The most plausible argument against liberalizing immigration is that immigrants will worsen our economic and political institutions, thus slowing economic growth and killing the goose that lays the golden eggs.  Fortunately, the academic and policy literature does not support this argument and there is some evidence that immigration could actually improve our institutions.  Even the best argument against immigration is still unconvincing."

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