The Corner

The Economic Impact of the President’s Immigration Action: Exaggerated?

AEI’s Stan Veuger:

The economic impact of the president’s executive actions, while probably positive overall, is unlikely to change these attitudes. It will be small and unevenly distributed, but the administration is portraying it differently, running the risk of creating expectations that will not be met. Its projections may not be as disingenuous as the president’s “[i]f you like your plan, you can keep your plan” lies, but they are skewed in a way that reminds one of the administration’s claims that raising the federal minimum wage will destroy not a single job and lead to a massive consumer spending boom. The Council of Economic Advisers estimates that the president’s executive order will increase gross domestic product by 0.4 percent after 10 years, will not affect the likelihood of employment for native workers while raising their wages and will cut deficits by $25 billion in 2024. Much like the council’s minimum wage increase forecasts, these numbers appear to be based on fairly extreme assumptions, even though it refers to them as “lower-bound” estimates.

For example, about three quarters of the Council of Economic Advisers’ estimate of increased GDP is driven by administrative actions that encourage high-skilled immigration. These actions have not received nearly as much attention as the administrative actions helping undocumented, generally low-skilled immigrants, probably because they affect fewer people and the people affected never broke immigration law. To gauge the impact of this increase in high-skilled immigration, the council relies on parameters from a paper by two economists from the University of California, Davis and one from Colgate University who believe that foreign science, technology, engineering and mathematics workers are responsible for as much as half of the productivity growth in the U.S. over the past couple of decades. That is certainly not an uncontroversial view: For example, in an arguably better identified study, economists at the University of Notre Dame, the Treasury Department and the University of California at Berkeley have found that many of these workers merely replace native workers, and produce no patents that would not have otherwise been produced. Note that this is not a partisan issue: The Berkeley economist who co-authored the second paper, for example, served as a political appointee in the Obama administration.

There’s more. Read the whole column here.

— Michael R. Strain is deputy director of economic policy studies and resident scholar at the American Enterprise Institute. You can follow him on Twitter at twitter.com/MichaelRStrain.

Michael R. Strain — Michael R. Strain is the director of economic-policy studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute.  

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