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Gary Becker Explains the Benefits of Setting a Price for Immigration

The United States should apply price theory to immigration and charge immigrants a fee to gain citizenship, said Gary Becker, University Professor of Economics and of Sociology. “When I mention this to people, they sometimes go hysterical,” Becker told a packed house during the inaugural Becker Brown Bag Series lunch discussion hosted by The Becker Center on Chicago Price Theory at Hyde Park Center on March 1 and sponsored by Vishal Verma.

“They say, ‘Are you selling citizenship?’” Becker continued. “Well, we’re restricting citizenship, but we’re doing that now. Almost any criticism you have of  the idea, you’d have to apply to the present system, which is also restricting entry. The real issue is, does it have good attributes and do these dominate any downside?”

If terrorists, criminals, and the unhealthy are eliminated from the pool of immigrants, the fee would provide a long list of benefits, Becker said. For example, a one-time fee of $50,000 would generate $50 billion a year from the current 1 million immigrants admitted to the U.S. each year, he said.

Such revenue would reduce opposition to immigration by blunting the argument that immigrants draw on U.S. resources, such as welfare, Medicaid, and schools, Becker said. “This would lead to a greater willingness to accept immigrants,” he said. “No longer could people say they’re not paying their way. They would be paying their way, not only in income taxes but in the entrance fee, so to speak.”

Such a fee would appeal most to the young, who are healthier and more likely to invest in their own human capital over a longer horizon, and to the skilled, who would likely generate more taxes, commit fewer crimes, and use fewer government entitlements, Becker said. “Think of the advantages: young, skilled people who want to come, who are concerned about their children’s future, who are interested in freedom and family members,” he said. “Those would be people who are more likely, all things the same, to be willing to pay for the opportunity to come.”

In order to prevent limiting immigration to only the wealthy, the government should modify the federal college loan program to help finance entry to the U.S., Becker said. “This is a form of human capital and investment, namely migration to more productive areas,” he said. “It would be natural to extend this program to help finance immigration of people who may only be willing to put up $10,000 or $15,000 of the required amount and finance the rest with a loan.”

The loan could be collected through income tax in absolute amounts or as a function of a person’s earnings, Becker said. “Employers might pay the fee,” he said. “The H1B [visa] program goes through employers entirely. Immigrants don’t have to pay anything for it. Employers might say, ‘Gee, I can get you to work. I’ll pay the $50,000. I’ll work it out with the worker, as long as you’re going to repay me for this later on.’”

The effect a fee would have on illegal immigration is not clear, Becker said. “Some who are coming legally now, for free so to speak, may decide to come illegally,” he said. “On the other hand, some workers now who come in illegally because they can’t get in legally might decide to pay the fee. They could come legally, work above ground, advance, and so on.”

—Phil Rockrohr