The presidential campaign has made immigration a major issue. The timing of this is unusual, given that immigration to the United States slowed significantly.
In 2008, green cards, also known as permanent resident visas, were largely unchanged, but they dropped to a low of six years in 2013. Illegal immigration levels are near records lows. Southwest border migrant apprehensions are at their lowest level since the 1970s. While the number of temporary work-based permits has increased slightly over recent years, it remains below its 2007 peak. It is easy to see that relative and absolute immigration slowing down when you plot the number of visas and migrant apprehensions in the country’s working-age population.
The immigrant worker inflow has been limited by three factors: a lack or legislative action to reform immigration, a rising border and internal enforcement of immigration laws, and a slow-growing U.S. Economy. Particularly striking is Mexico’s case. Demographers have indicated that net inflows into Mexico during the five-year period since the Great Recession was over. Mexico’s economic stability has lowered the “push factor” that prompted mass emigration over four decades.
It’s not surprising that presidential politics is focusing on this issue against the backdrop of slower immigration.
Why immigration is important
The economy is powered by immigration. Immigrants increase productivity and GDP by joining the workforce. They earn more than natives, and their incomes increase. This phenomenon is known as the “immigration surplus” and although natives receive a small amount of extra GDP (typically 0.2 to 0.4%), it still amounts at $36 to $72 trillion per year.
The labor market is also awash with immigrants, who flow into areas and industries that have a relative need of workers. This allows them to boost growth in places where it might otherwise be hindered by shortages or bottlenecks.
Immigrants increase productivity and GDP by joining the workforce. Their incomes increase, but so does that of the natives. It is a phenomenon known as “immigration excess”.
It is more common for immigrants to move than natives. This increases the economy’s potential speed by eliminating bottlenecks. Slack reduction is an indicator of economic growth. This is a good thing.
There are numerous examples, both national and regional, of immigrants moving to work. In order to alleviate shortages that arose from World War II, Mexican-born immigrants were crucial. In the 1970s and 1980s, Texas saw record-breaking migration. Many immigrants arrived in the South and Mountain West, which were rapidly growing states during the 1990s.
The 2000s housing boom saw an increase in immigrants pursuing high-tech jobs and construction jobs.
Immigrants make the labor market more efficient by moving into areas that have a high demand for workers and other industries.
Furthermore, innovation is linked to the rising number of high-skilled migrants, which has been a significant trend since the 1990s. Not surprisingly, innovation is also encouraged by immigrants. Natives are less innovative than immigrants because they tend to be more focused in STEM occupations with lots of R&D.
For example, 44% of doctors are foreign-born, and 42% of computer software developers are. There are many immigrant workers in the college faculty, engineers, mathematicians as well as doctors, nurses, dentists, and professors.
Is it possible to increase the productivity and efficiency of an economy by allowing more immigration? Why does the United States restrict immigration?
On July 10, 2013, the Bush Insttitue hosted an event honoring 20 new citizens, from 12 different countries. (Grant Miller / George W. Bush Presidential Center)
There are down sides
Factor prices are affected by immigration. It lowers wages for competitors while increasing the return to capital as well as the wages for complementary workers. The immigration surplus is not distributed equally. It is principally owned by the capital owners, which can include land-owners, investors and businesses.
Complementary workers are also eligible for this benefit. These workers are in high demand as more immigrants arrive. These workers could be translators, construction supervisors or even immigration lawyers. Immigrants produce lower-priced goods and services, which is good news for consumers. But competing workers’
Löhne and salaries fall in the initial period of adjustment to new labor flows.
Research shows that the negative wage effects of immigration are worse for former immigrants than they are for natives. Current immigrants look more like past immigrants.
Research also indicates that wage effects can be more severe for low-skilled than for high-skilled employees. It could be that high-skilled U.S. workers complement native low-skilled immigrants in a greater degree than native low skilled workers, who are more educated and have fewer language skills.
We are generally referring to a plus
The United States Hispanic Chamber of Commerce (USHC) and the George W. Bush Institute collaborated to create this book that examines the link between economic growth and immigration.
America’s Advantage: The Handbook on Immigration and Economic Growth
So, immigration can be both a positive and a disruptive force. There are many examples of economic transformations that have been both positive and negative in history. The Industrial Revolution caused millions to leave the farm and created mega-cities. To these cities, we can now attribute all sorts of positive attributes including creativity and innovations and higher wages.
It is impossible to make great changes without paying a short-term price. It is the inability of market forces to direct resources efficiently that is long-term and costly. Capitalism is all about adjusting wages and prices to reflect changes in demand and supply.
Net benefits of immigration are numerous. It is important to understand that there are costs to immigration. However, this does not mean it should be stopped. It is possible to find ways to maximize the benefits of immigration while compensating for some of the workers who are affected. Trade is a similar phenomenon, and those who are negatively affected by international trade are eligible under federal programs like Trade Adjustment Assistance.
Net benefits of immigration are numerous. It is important to understand that there are costs to immigration.
The economics of international migration are not that different from domestic migration. We Texans love to celebrate Californians who have moved to Texas because they are more likely to find jobs, live in lower houses and pay less taxes. Texas is dependent on the inflows of labor from states other than Texas to grow at twice the rate that we have since 1990. As have the people who moved to Texas, the state has also benefited from this migration.
Are wages higher without inflows of labor? Perhaps temporarily. However, wage inflation and skill shortages could have stopped investment. Companies would have expanded in other places that were more affordable.
Although immigration has a net positive effect even for those who aren’t moving, it is not equally beneficial. Next, policymakers will need to plan immigration reform so that they can reap the many benefits of immigration while minimizing the costs.
Although immigration has a net positive effect even for those who aren’t moving, it is not equally beneficial. Next, policymakers will need to design immigration reform so that they can reap the many benefits of migration while also reducing the costs.
