Lessons from Immigration Economics.

AuthorBorjas, George J.
PositionEssay

The "economistic" perspective has greatly influenced how many observers think about the benefits and costs of immigration. In this perspective, immigration is like international trade. After all, both involve flows across national boundaries. In the case of trade, manufactured widgets are transported from one country to another. In the case of immigration, human beings transport themselves across those boundaries.

Think of what it means to import that proverbial widget. It did not create itself out of thin air; it was manufactured by combining physical resources with some labor inputs. For example, making a single widget in China may require two high-skill workers to spend a month doing the design work and ten low-skill workers to spend a year actually producing the piece. Importing a Chinese-made widget then resembles the immigration of two high-skill Chinese workers for a month and the immigration of ten low-skill Chinese workers for a year. Immigration is indeed like trade, except that instead of importing the finished widget, we are importing the raw labor that can manufacture that widget domestically.

The accumulated knowledge from decades of research implies that international trade, on net, can have very beneficial economic impacts, creating an instinctive bias toward viewing this type of "worker migration" favorably. We already know that international trade increases the size of the economic pie. Therefore, the argument goes, immigration must also be beneficial. After all, importing workers seems equivalent to importing widgets.

In the 1950s and 1960s, West Germany and other European countries, heavily influenced by the economistic perspective, recruited and imported hundreds of thousands of guest workers, including many from Turkey. Those workers were viewed as the robotic labor inputs that underlie the argument that immigration, like trade, generates a net economic benefit for the receiving country.

However, the presumed economic gains that result from looking at the world using the myopic lens through which immigrants are seen as a collection of robotic labor inputs can clash with reality when we view immigration from a much broader and longer-run perspective. Over time, the impact of the "temporary" workers who come in for a month or a year to produce those widgets domestically is not simply the sum of their contribution to widget production. By 2011, Turkish immigrants and their children composed almost 4 percent of the German population, and the question of how this ethnic group fit into German society had become a central policy concern there. Reflecting on the European experience with millions of guest workers, the Swiss writer Max Frisch made what I think is the single most insightful observation ever made about immigration when he quipped: "We wanted workers, but we got people instead."

In short, viewing immigrants as purely a collection of labor inputs can lead to a very misleading appraisal of what immigration is about and gives an incomplete picture of the economic impact of immigration. Because immigrants are not just workers but people as well, calculating the impact of immigration requires that we take into account that immigrants act in particular ways and that some actions are more beneficial than others.

Those choices, in turn, have repercussions and unintended consequences that can magnify or shrink the beneficial impact of immigration given by the value of their contribution to widget production. Much of my evolution in how I think about immigration has resulted from attempts to incoiporate Max Frisch's insight into my academic work.

But a second factor has also influenced my thinking and in particular affected how I "read" and interpret the voluminous literature on the economic impact of immigration. Paul Collier, a renowned British public intellectual and a professor at Oxford University, published a book in 2013 entitled Exodus: How Migration Is Changing Our World. Collier, whose work mainly addresses questions in development economics, never directly worked on immigration issues in his academic work. In Exodus, he argues that the presumed large benefits that immigration may impart on receiving countries can be greatly reduced as the number of immigrants increases substantially and the migration flow continues indefinitely.

Regardless of how one feels about this particular conclusion, I found it particularly insightful to read Collier's overall perception of the social science literature that he reviewed as he wrote Exodus: "A rabid collection of xenophobes and racists who are hostile to immigrants lose no opportunity to argue that migration is bad for indigenous populations. Understandably, this has triggered a reaction: desperate not to give succor to these groups, social scientists have strained every muscle to show that migration is good for everyone" (2013, 25-26, emphasis added).

This is as damning a statement about die value of social science research on immigration--and probably about the value of social science research on practically any politicized and contentious policy issue--as one can find. As far as I know, Collier is the first distinguished academic to acknowledge publicly that social scientists have constructed an intricate narrative where the measured impact of immigration must be shown to be "good for everyone." By now, I would imagine, the affected muscles of those so- called scientists have strained so hard that they have achieved Schwarzeneggerian proportions.

I never made such an assertion in public. But as those who have heard me discuss related issues in private over the years well know, I have had a gnawing and growing suspicion that a great deal of the social science research--particularly outside economics but certainly not exclusively so--was ideologically motivated. Much of the academic research, I have long thought, was being censored or filtered to present the evidence in a way that would exaggerate the benefits from immigration and minimize the costs. The spin was often very subtle, but it could be detected, as Collier did, if one bothered to look.

By emphasizing the economistic perspective, for example, much of the existing research ignores the implications of the many decisions potential immigrants must make, including whether to migrate or not, whether to assimilate or not, and so on. And many of those decisions might easily shift the emphasis away from the notion that immigration is "good for everyone." Similarly, much of what we think we know about the economic impact of immigration is driven by assumptions that are made to simplify the conceptual model or the empirical analysis. Needless to say, assumptions are not randomly born, and they matter. Finally, the typical study of the economic impact of immigration that uses an underlying economic model to frame the question often produces many insights. Some of those insights, however, detract from the narrative that Collier detected and are often hidden away in the attic of inconvenient truths.

This essay, paying close attention...

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