Is More Immigration Always Better?

by Reihan Salam

Over at Vox, Matt Yglesias briefly summarizes the case for more immigration:

Studies done in the United States show that immigration raises average incomes of native-born Americans, including native-born Americans with low skill levels. Immigration is, of course, even better for the incomes of the immigrants themselves, which makes reduced barriers to migration one of the biggest possible game changers for overall global growth. What’s more, as the Economist’s Ryan Avent has recently shown, more immigration could be a highly effective fix to the currently hot topic of secular stagnation.

There are many assumptions packed into this paragraph, and they’re worth examining closely.  

First, Yglesias is right to observe that immigration raises the average income of native-born Americans. It’s not clear, however, that immigration raises the average incomes of native-born Americans more than a range of other policy measures, like shifting towards consumption taxation, reforming Social Security and Medicare, or drastically improving the productivity of our education system. Moreover, not all Americans are native-born (roughly 13 percent of the U.S. population is foreign-born, as is 16.3 percent of the U.S. labor force), and there is a broad consensus that, as Yglesias has pointed out, previous immigrants are “the big economic loser” from increased immigration levels. It is easy to imagine a scenario in which increased immigration raises the average incomes of native-born Americans — by, for example, lowering the cost of child care for affluent professionals, who can then work longer hours — while also lowering GDP per capita, assuming that new immigrants lower the average skill level of the U.S. workforce, as has been the case in recent decades. Would this be a desirable outcome? It really depends on what we care about most. 

Yglesias finds it odd that anyone would be concerned about the economic impact of increased immigration on previous immigrants. And he has a point, as the people who are most skeptical of increased immigration tend to be native-born Americans, not immigrants, who are generally sympathetic to the idea, not least because many of them hope to have friends and relatives join them in the U.S. Yet there is a fairly straightforward reason to be concerned: given that previous immigrants are poorer and less-educated than other Americans on average, reducing their market incomes will have negative consequences for them and for their children. Let’s stipulate that affluent professionals really do benefit enormously when they have a ready supply of less-skilled service workers to prepare their meals, mind their children, drive them to and fro, and perform various other tasks they’d prefer not to perform for themselves. 

Nevertheless, we should keep in mind the life chances of the children of the less-skilled service workers who are helping to make life less expensive for affluent professionals. Can we be confident that they will earn much higher incomes than their parents, despite the evidence that children raised in low-income households and in high-poverty neighborhoods tend to fare worse than their better-off counterparts? Do we have reason to believe that the public schools serving these children can make up for the various deficits they’re likely to experience at home? ​We can mitigate the effects of low market incomes by increasing transfers and by creating or expanding labor-intensive programs designed to improve the long-term economic prospects of their children, hence recent calls for more spending on early childhood education. But of course this is very expensive, and the U.S. already has a large number of children who are in great need of such labor-intensive services. Does it make sense to greatly increase the number of U.S. children living in low-income households to make life easier for affluent professionals? Perhaps we can tax away the higher incomes that affluent professionals earn by outsourcing household production and use this tax revenue to finance the new support services for the children of less-skilled immigrants. Will this solve the problem? To believe that you must first believe that government social programs can adequately substitute for engaged parents with strong social network. The evidence for this proposition is not exactly rock-solid. 

What of Yglesias’s claim that immigration greatly increases the incomes of immigrants who move from poor countries to rich countries? He is absolutely right. But are post-migration incomes income high enough to ensure that immigrants can expect to feed, clothe, and shelter themselves without public assistance in their new countries? The cost of living tends to be substantially higher in rich countries than in poor ones, and this cost of living increase can cut against the “place premium,” i.e., the higher income the same person with the same skills can earn in a rich country or city as opposed to a poor one. Americans frown upon allowing people, including immigrants, to live in shantytowns devoid of basic services. Americans also generally object to allowing people, and in particular children, to go hungry, regardless of their parentage. Even if my market income increases ten-fold as I go from being a less-skilled laborer in the Central African Republic to being a less-skilled laborer in California, there is no guarantee that I will be in a position to rent a home, feed my children, or insure myself against the high medical expenditures I might incur if my daughter develops leukemia. Some committed libertarians might conclude that, well, our taboo against shantytowns or against allowing poor children to go without nutritionally complete diets or medical care is foolhardy, as poor people will be poor in their native countries regardless and they’re no worse off if they at least have the opportunity to work in a much richer country. I would argue that our institutions work well in part because we protect people against extreme deprivation, and that they would work less well, and be seen as less legitimate, if we did not. I also believe that allowing the children of immigrants to live in extreme deprivation is short-sighted, as they will eventually be part of the workforce and extreme deprivation can make it very difficult to acquire skills, leaving aside the moral implications. We can’t dodge the fact that providing poor, less-skilled people who command low (or no) wages with the rudiments of a decent life is expensive.

One could argue, as proponents of increased immigration often do, that there is no meaningful moral difference between Americans and non-Americans, or between immigrants who currently reside in the U.S. and foreigners who would like to reside in the U.S. I happen not to share this view. But surely we can acknowledge that one difference between previous immigrants and new immigrants is that policymakers have more control over future immigration policy than they do over past immigration policy, barring the invention of time travel. Like it or not, we have little choice but to deal with the various economic and social challenges facing previous immigrants and their children while we can decide whether or not to take on the challenges facing future immigrants and their children.

Even if we accept that there is no moral distinction between Americans and non-Americans, and that we ought to be just as interested in the economic well-being of, say, Sri Lankan children as the Laotian-American children of an immigrant couple, is it obvious that open borders is the right way to meet our moral obligations? Labor-intensive services are far more expensive in highly-productive societies like the U.S. than they are in poor countries like Sri Lanka. If affluent Americans want to finance an ambitious human capital investment program for Sri Lankan children on the grounds that we ought to be global citizens, they ought to consider financing such a program in Sri Lanka, where the cost of labor, including skilled labor, is relatively low when compared to the cost of labor in the U.S. (Ryan Avent argues that investment in poor countries is “hard and risky,” and he implies that it is easy and safe in the U.S. But he doesn’t address the role of Baumol’s cost disease in raising the cost of human capital investment in rich countries, nor does he discuss the lackluster track record of increased education expenditures in the U.S. in recent decades. To put this differently, it’s not at all obvious that raising India’s growth rate by 0.5 percent per annum wouldn’t be a far more effective poverty mitigation tool than doubling or tripling U.S. immigration levels.)​ 

As for the economic case for open borders, it rests on the premise that free labor mobility would allow less-skilled workers to earn far higher incomes in more productive countries, and that over time migration would add trillions of dollars to global GDP. To achieve trillions of dollars in economic gains, however, billions of workers would have to migrate from the world’s poor countries to the world’s rich countries. Given that one of the chief advantages of rich countries over poor countries is the quality of their public institutions, can we really assume that there would be no deterioration in institutional quality if rich countries experienced such a surge in population? If not, we have to think more rigorously about limiting principles: billions or hundreds of millions of immigrants might be too many, but might tens of millions be the right order of magnitude? Or, for that matter, hundreds of thousands?  

There is a very simple way to address almost all of the concerns I’ve raised: instead of talking about immigration as though all immigrants were the same, let’s craft an immigration policy governed by the simple principle that immigrants ought to be capable of earning enough to provide for themselves and their families without subsidies. (For reference, under Obamacare, households are eligible for insurance subsidies on the exchanges up to 400 percent of the federal poverty level, on the grounds that households that earn less than that amount can’t be expected to meet the cost insurance. One could argue that Obamacare’s architects set this bar too high.) There are all kinds of reasons we might want to depart from this principle. Yet we should acknowledge that in doing so, we are taking on a meaningful and potentially very expensive obligation.  

 

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