Capital Ideas Blog

The economics of immigration reform

By Robin Mordfin
December 13, 2013

From: Blog


My grandmother disembarked at Ellis Island in 1922, just as the doors to the United States closed on Soviet immigrants. Clearly, my family is relieved that policy did not change before she got her visa, but does that mean all of her dozens of descendants support continued immigration?  Of course not: We can’t even agree on a proper brisket-making technique. As a nation, we have been discussing the benefits and disadvantages of bringing new blood into the country for centuries, and the issue has yet to be settled.

This week the IGM Economic Experts Panel showed us that even the world’s leading economists can’t agree on this issue, judging by the mixed poll results for two questions about low-skilled immigrants. The first question considered whether the average US citizen would be better off if a larger number of low-skilled foreign workers were legally allowed to enter the US each year. Slightly more than half of the experts agreed with this statement. “This would drive down the cost of a variety of services,” said Aaron Edlin of Berkeley. Still, 28 percent were uncertain.

One reason for the high number of uncertain responses seems to be semantics: “‘Average US citizen,’ what does that mean?” asked Barry Eichengreen of the University of California at Berkeley. Others simply did not have an answer, citing a lack of information. “I am sure that I am uncertain,” said Caroline Hoxby of Stanford. “A certain answer would require a knowledge of EQM effects on which we’ve only a partial grasp,” she said.

Several panelists noted that there were both pros and cons to admitting more low-skilled foreign workers. Joseph Altonji of Yale pointed out that “real income of the average American would rise, but social strains and inequality would also increase.” Oliver Hart of Harvard commented that average citizens would be better off, but welfare payments to unemployed immigrants would be a countervailing effect.

As for the second question, half of the panel agreed that low skilled American workers would be substantially worse off if a larger number of low-skilled foreign workers were legally allowed to enter the US each year. “ A higher number of workers of the same type seeking jobs would lower their average wages or employment rate,” said Darrell Duffie of Stanford. His faculty mate, Kenneth Judd, concurred. “It is hard to see how [low-skilled American workers] would benefit, and they would lose from the competition in the labor market,” said Judd.

As in the previous question, nearly a third of the respondents were uncertain, and again some of the indecision came down to semantics: several experts questioned the meaning of the word “substantial.” Others questioned the available evidence, including Robert Shimer of the University of Chicago. “Evidence that immigration pushes down low skill wages is mixed,” said Shimer.

The question of how the country should approach immigration remains one that is often discussed and never resolved. Still, it is comforting to know that even some of the best minds out there can’t agree on something the rest of us are arguing over at the dinner table. 

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