Is Immigration Good for America?

Cato Journal

An Interdisciplinary Journal of Public Policy Analysis
Volume 32 Number 1, Winter 2012

The Winter 2012 issue of the Cato Journal is devoted to answering a single question: “Is Immigration Good for America?” In 13 articles, 16 scholars answer with a resounding “Yes!” The consensus is that immigrants provide a net benefit to the U.S. economy and to U.S. workers. There is also a consensus among the authors that the current immigration system, with its patchwork of arbitrary numerical caps, needlessly squanders the full economic potential of immigration. The authors call for a thorough revamping of the immigration system to make it more responsive to labor demand, to attract highly skilled professionals and entrepreneurs, and to offer a pathway to legal status for the unauthorized population.

Here are highlights from the issue:

Daniel T. Griswold, former Director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, concludes that “basic economic analysis and numerous empirical studies have confirmed that immigrants boost the productive capacity of the United States through their labor, their human capital, and their entrepreneurial spirit. Instead of competing head-to-head with American workers, immigrants typically complement native-born workers by filling niches in the labor market.”

Joel Kotkin, Distinguished Presidential Fellow at Chapman University, and Erika Ozuna, Research Fellow at Pepperdine University, say that “the United States should make efforts to keep entrepreneurs and all kinds of skilled workers, whom the country will need, particularly as the Baby Boom generation retires.” The authors warn that “if attitudes harden against immigration, America will sacrifice much of its demographic and cultural uniqueness. We would also suffer the loss of a major source of entrepreneurial growth and innovation.”

Stuart Anderson, Executive Director of the National Foundation for American Policy, points out that “fixing problems with the U.S. legal immigration system does not involve raising or reducing federal spending, or designing elaborate new agencies or policies. In general, much can be accomplished by simply raising the quotas for temporary visas for both low- and high-skilled workers and increasing the number of green cards available for family and employer-sponsored immigrants.”

Pia M. Orrenius, Senior Economist at the Federal Reserve Bank of Dallas, and Madeline Zavodny, Professor of Economics at Agnes Scott College, argue that “it seems virtually inevitable that the United States will conduct a legalization program at some point given the size of the undocumented population.” However, research on the failings of the 1986 legalization demonstrates the “importance of enacting a legalization program only in the context of comprehensive immigration reform designed to reduce future unauthorized inflows as much as possible.”

Raúl Hinojosa-Ojeda, Founding Director of the North American Integration and Development Center at the University of California, Los Angeles, describes how “legalizing currently unauthorized immigrants and creating flexible legal limits on future immigration in the context of full labor rights would raise wages, increase consumption, create jobs, and generate additional tax revenue—particularly in those sectors of the U.S. economy now characterized by the lowest wages.”

In sum, the contributors to this issue of the Cato Journal make a compelling case for the creation of a rational immigration system that offers the greatest benefit to both immigrant and native-born workers, and which adds the greatest value to the U.S. economy. As the authors emphasize, this would be a welcome change from the current dysfunctional system, which has facilitated the growth of an unauthorized population now numbering 11 million. While the federal government may be unwilling to tackle immigration reform, the status quo is clearly unacceptable—and unsustainable.

1. Gordon Hanson, “Immigration and Economic Growth.”  Pretty good, especially on the interaction between high-skilled native labor and low-skilled immigrant labor:

One contribution of low-skilled immigrants is to make it possible for high-skilled workers to spend more time on the job and less time doing non-work related chores… The majority of highly educated women are married to highly educated men (Isen and Stevenson 2010: 13). For both to work outside the home often requires hiring outside labor to care for children, clean the home, launder clothes, and tend to the yard. In a study of immigration’s impact on U.S. cities, Cortes (2008) finds that metropolitan areas that have had larger influxes of low-skilled immigrants have lower prices for dry cleaning, child care, housing cleaning, yard care, and other labor-intensive services. Lower prices for these services translate into more hours spent at work for high-skilled workers, particularly among women with a professional degree or PhD (Cortes and Tessada 2009). Low-skilled immigration thus indirectly contributes to productivity growth by raising the effective supply of high-skilled labor.

2. Giovanni Peri, “Immigration, Labor Markets, and Productivity.”  If all labor is identical, the effect of immigration on domestic wages is clearly negative, at least in the short-run.  But in reality, immigrant labor and native labor are very different – and it matters.  Peri provides an excellent survey of the evidence.  One highlight:

In Peri and Sparber (2009) we show that, due to the limited knowledge of the language, immigrants have a comparative advantage in manual type of jobs. Hence they specialize in those, and in firms and sectors that hire immigrants, this produces higher demand for jobs of coordination and interaction typically staffed by natives, whose language skills are superior. This dynamic specialization in tasks according to skills pushes natives to upgrade their jobs (as communication-intensive occupations pay better than manual intensive ones) and protects their wages from competition with immigrants.

3. Joel Kotkin and Erika Ozuna, “America’s Demographic Future.”  A good intro to the demographic effects of immigration.  Immigration is keeping America young and working:

Mexican and other immigrants are one key reason why America boasts a fertility rate 50 percent higher than Russia, Germany, or Japan, and well above that of China, Italy, Singapore, Korea, and virtually all of eastern Europe (The Economist 2002; United Nations 2005; Longman 2004: 60). Consequently, it is widely believed America’s workforce will continue to grow even as that of Japan, Europe, Korea, and eventually even China will start to shrink.

Between 2000 and 2050, for example, the U.S. workforce is projected to grow by over 40 percent, while that of China shrinks by 10 percent, the EU by 25 percent and, most remarkably, Japan’s by over 40 percent (U.S. Census Bureau International Database).

4. Stuart Anderson, “America’s Incoherent Immigration System.” A solid moderate reformist piece:

[M]uch can be accomplished by simply raising the quotas for temporary visas for both low- and high-skilled workers and increasing the number of green cards available for family and employer-sponsored immigrants.

5. Pia Orrenius and Madeline Zavodny.  “The Economic Consequences of Amnesty for Unauthorized Immigrants.”  Pretty good, but most readers will get more out of the broader articles on the labor market and fiscal effects of immigration.

6. Edward Alden. “Immigration and Border Control.”  Alden wants people to acknowledge the trade-off between the ease of legal immigration and the cost of border enforcement.  Perhaps he’s just being strategic, but Alden shows little concern for the well-being of immigrants or the immorality of treating people like criminals for doing an honest day’s work:

There are certainly many–indeed the majority of the American public at the moment–who would argue against higher levels of immigration. That is perfectly reasonable. But the debate should be an honest one. Larger legal quotas, especially for less-skilled workers, would reduce the need for enforcement; smaller quotas would increase it. Instead, the discussion is a disingenuous one in which many in Congress insist that the border must first be “secured” before any serious consideration of immigration reform can be permitted.

7. Jim Harper. “Internal Enforcement, E-Verify, and the Road to a National ID.”  A frightening picture of rapid technological progress in the war on illegal immigration.  But like Alden, Harper shows little concern for the rights of immigrants.  And he frustratingly equivocates between the “values of the people” as expressed in private behavior, and the “values of the people” as expressed in the voting booth:

[T]he goal of many of E-Verify’s proponents is to bring the rule of law to the immigration environment. Fealty to law is important for the maintenance of a just and stable society, and immigration law is widely disrespected and often broken. But good law is not a hammer waved over the heads of subservient people. Good law gives expression to the values of the people.

Immigration law is disrespected and broken not because it is poorly enforced, but because it is inconsistent with the will of the people. In the main, the majority of the American people express their will quietly but insistently in their decisions to hire good, hard workers, and to enjoy the product of these workers’ labor, indifferent to where the worker was born.

8. Margaret Stock. “Is Birthright Citizenship Good for America?” Stock’s answer, of course, is yes.  But her piece is not persuasive.  People oppose birthright citizenship because they oppose immigration.  If you don’t change their minds about immigration, you won’t change their minds about birthright citizenship, either.

9. Daniel Griswold. “Immigration and the Welfare State.”  Griswold provides a careful survey of the literature on the fiscal effects of immigration, and never forgets that immigrants count, too.


False stereotypes notwithstanding, immigrants have an awesome work ethic:

The typical foreign-born adult resident of the United States today is more likely to participate in the work force than the typical native-born American. According to the U.S. Department of Labor (2011), the labor-force participation rate of the foreign-born in 2010 was 67.9 percent, compared to the native-born rate of 64.1 percent. The gap was especially high among men. The labor-force participation rate of foreign-born men in 2010 was 80.1 percent, a full 10 percentage points higher than the rate among native-born men.

Labor-force participation rates were highest of all among unauthorized male immigrants in the United States. According to estimates by Jeffrey Passell (2006) of the Pew Hispanic Center, 94 percent of illegal immigrant men were in the labor force in the mid-2000s.

Immigrants display reverse welfare magnetism:

The 10 states with the largest percentage increase in foreign-born population between 2000 and 2009 spent far less on public assistance per capita in 2009 compared to the 10 states with the slowest-growing foreign-born populations–$35 vs. $166 (see Table 1). In the 10 states with the lowest per capita spending on public assistance, the immigrant population grew 31 percent between 2000 and 2009; in the 10 states with the highest per capita spending on public assistance, the foreign-born population grew 13 percent (U.S.
Census 2011, NASBO 2010: 33).

What about illegals?

Undocumented immigrants are even more likely to self-select states with below-average social spending. Between 2000 and 2009, the number of unauthorized immigrants in the low-spending states grew by a net 855,000, or 35 percent. In the high-spending states, the population grew by 385,000, or 11 percent (U.S. Census 2011; NASBO 2010: 33; Passel and Cohn 2011). One possible reason why unauthorized immigrants are even less drawn to high-welfare-spending states is that, unlike immigrants who have been naturalized, they are not eligible for any of the standard welfare programs.

The paper goes on to cover the net multigenerational fiscal effects of immigration, with extra sections on educational spending, health spending, and Social Security.  Though the net fiscal effect seems positive, there’s a clear federal-state conflict:

The 1997 National Research Council study determined that the typical immigrant and descendants represent an $80,000 fiscal gain to the government in terms of net present value. But that gain divides into a positive $105,000 fiscal impact for the federal government and a negative $25,000 impact on the state and local level (NRC 1997: 337).

While the net fiscal effects of illegal immigration in Texas were modestly negative, the net economic effect for Texas was strongly positive:

[U]nauthorized immigrants in fiscal year 2005 paid a total of $2.09 billion in taxes at the state and local level, while consuming $2.60 billion in services (Strayhorn 2006: 20). Education was the main expenditure on the state level, and health care on the local level. Thus the net fiscal cost for state and local taxpayers in Texas from illegal immigration that year was $504 million.

The fiscal cost, however, was more than offset by the boost to the size of the Texas economy, another finding consistent with other state studies. The Texas comptroller used a general equilibrium model known as the Regional Economic Model Inc… The model found that the resulting drop in the state’s labor force would cause wages of remaining workers to rise slightly–by less than 1 percent. But the higher wages caused by a tightening labor market would make producers in the state less competitive, resulting in a modest decline in the value of the state’s exports. The state’s economy would shrink by 2.1 percent or $17.7 billion (Strayhorn 2006: 17)

Griswold’s not apologizing for the welfare state.  But libertarians who see the welfare state as an argument for restricting immigration are straining out a gnat and swallowing a camel.
10. Raul Hinojosa-Ojeda. “The Economic Benefits of Comprehensive Immigration Reform.”  Provides a computable general equilibrium model of the effects of different immigration reform scenarios.  Unfortunately, this approach just isn’t transparent enough to change a skeptic’s mind.  And I can’t understand how the same model could imply that:

(a) Comprehensive immigration reform (amnesty, more or less) “results in higher wages–and higher worker productivity–for all workers in industries where large numbers of immigrants are employed.”


(b) Under mass deportation, “Wages do rise for less-skilled native-born workers under this scenario, but they fall for higher-skilled natives and the U.S. economy loses a large numbers of jobs.”

Perhaps I’m missing something, but how can amnesty and mass deportation both boost wages for less-skilled natives?

11. Joshua Hall, Benjamin VanMetre, and Richard Vedder. “U.S. Immigration Policy in the 21st Century: A Market-Based Approach.”  A lot of good material, but it ends on a disappointingly agnostic and amoral note:

As has been shown in this article, for every pro-immigration argument there is an opposing anti-immigration argument and thus it is unlikely that there will be an immigration policy that everyone will agree on. It is possible, however, to devise an immigration policy that would appeal both to those supporting more immigrants and to those who complain about the character of immigration after 1965.

[C]reating an international market for visas. To start, each business day of the year 5,000 visas for entry to the United States would be sold in a NASDAQ-style marketplace by the federal government and each immigrant would need a visa to enter the country. There would also be a limited number of visas, maybe 100,000 annually, provided free by the federal government to refugees fleeing political, religious, or other persecution as is
done under current law.

Is Immigration Good for America?

James A. Dorn
Editor’s Note
(PDF, 2 pp., 33Kb)

Daniel T. Griswold
Introduction: Is Immigration Good for America?
(PDF, 4 pp., 49Kb)

Bryan Caplan
Why Should We Restrict Immigration?
(PDF, 20 pp., 177Kb)

Gordon H. Hanson
Immigration and Economic Growth
(PDF, 10 pp., 95Kb)

Giovanni Peri
Immigration, Labor Markets, and Productivity
(PDF, 20 pp., 175Kb)

Joel Kotkin and Erika Ozuna
America’s Demographic Future
(PDF, 16 pp., 140Kb)

Stuart Anderson
America’s Incoherent Immigration System
(PDF, 14 pp., 126Kb)

Pia M. Orrenius and Madeline Zavodny
The Economic Consequences of Amnesty for Unauthorized Immigrants
(PDF, 22 pp., 196Kb)

Edward Alden
Immigration and Border Control
(PDF, 18 pp., 151Kb)

Jim Harper
Internal Enforcement, E-Verify, and the Road to a National ID
(PDF, 14 pp., 117Kb)

Margaret D. Stock
Is Birthright Citizenship Good for America?
(PDF, 20 pp., 164Kb)

Daniel T. Griswold
Immigration and the Welfare State
(PDF, 16 pp., 147Kb)

Raúl Hinojosa-Ojeda
The Economic Benefits of Comprehensive Immigration Reform
(PDF, 26 pp., 219Kb)

Joshua C. Hall, Benjamin J. VanMetre, and Richard K. Vedder
U.S. Immigration Policy in the 21st Century: A Market-Based Approach
(PDF, 20 pp., 174Kb)

Book Reviews

James Madison
by Richard Brookhiser
Reviewed by John Samples
(PDF, 3 pp., 117Kb)

The Ethics of Voting
by Jason Brennan
Reviewed by Aaron Ross Powell
(PDF, 6 pp., 219Kb)

The Concept of Justice: Is Social Justice Just?
by Thomas Patrick Burke
Reviewed by Trevor Burrus
(PDF, 4 pp., 219Kb)

This entry was posted in Immigration, the Cato Journal. Bookmark the permalink.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.