Tag: immigration

Emigrants Transform Institutions - For the Better

The potential negative impact of immigrants on American political and economic institutions is the best argument against liberalized immigration and the economic, social, national security, and criminal objections are not convincing.  Michael Clemens and Lant Pritchett dig into this argument, which they call the “Epidemiological Case for efficient migration restrictions,” and find it mostly wanting (their paper is the best I’ve read in a long while).  I’ve co-written an academic journal article, Cato policy paper, and other work about how immigration could affect institutions.  There is more evidence that immigration improves institutions than that it worsens them although there is still much work to be done on this issue and questions remain.

But there is evidence that emigration improves a source country’s institutions.  Fredrik Segerfeldt summarizes some of the evidence in his new book for the Adam Smith Institute in the UK.  In Chapter 6 of his book, Segerfeldt observes:

Mexican migrants play an important role in shaping political atti­tudes in the country, both through social remittances and after returning home. Political participation increases, democratic com­petition intensifies, it becomes more difficult for leading members of the party in power to enrich themselves and the chance that the rul­ing coalition will retain power decreases. In short, Mexico’s exodus makes it more democratic.

Although much of the research above deals with Mexico, there are other results indicating that emigration can strengthen democracy. In a macro study of a large number of poor countries, economists find that emigration increases both democracy and economic freedom in the sending country.

How does emigration improve Mexican economic and political institutions?  By breaking up cronyist and interventionist political arrangements:

Emigration can also help to break up or at least weaken governance based on patronage. In such countries voters tend to vote for the rul­ing party, because otherwise they risk losing the benefits that the power distributes. Entire communities will be dependent on the rul­ing party, which impairs democracy. But when people in a commu­nity receive income that is not from the state or the ruling party, citi­zens become more independent and can therefore vote for the oppo­sition if they want to. In Mexico, remittances reduce the support for the PRI, the party which, with the help of patron-client methods, managed to retain control of the country during most of the 20th cen­tury (between 1929 and 2000).

Migration and remittances may also be a way to break up old hierar­chies based on class and ethnicity. In San Pedro Pinula in Guatemala, for example, residents of the Mayan people, with the help of both returning migrants and remittances, have slowly but surely been able to challenge the ethnic underclass role they had for five centu­ries. In the oases of southern Morocco, the Haratin, poor black, land­less workers, have enhanced their status thanks to remittances from abroad.

Segerfeldt’s summary of that research can help explain the important finding by Joshua C. Hall that the ability to emigrate is correlated with improvements in source country economic freedom: 

Exitability, a variable created by Brown (2014) to capture how easy it is for citizens to “vote with their feet” is related to the change in economic freedom from 1980 to 2010 in a statistically significant manner across all specifications. This provides some indirect evidence to the importance of “exit” versus “voice” with respect to the question of institutional reform.

Emigration benefits governance in sending countries, increasing the returns from liberalized immigration policies in the developed world.  This is an exciting time to be working on how immigrants affect economic and political institutions.   

Terrorism Does Not Justify Immigration Moratorium

Some prominent conservatives like Larry Kudlow, David Bossie, and Ann Coulter have now called for a complete moratorium on immigration because of the threat of Islamic terrorism.  However, they all focus on the benefits and neglect the costs of such a policy.  An immigration moratorium will cost the U.S. economy about $200 billion annually on net, even if it is successful at significantly reducing terrorism.

Costs of Terrorism and the Benefits of an Immigration Moratorium

According to the New America Foundation, jihadists have killed 45 Americans on U.S. soil since 9/11.  John Mueller estimates that each murder by jihadists costs about $15 million – double that of other deaths.  That means the cost of jihadist terrorism on American soil, just taking in to account the loss of life, is about $50 million a year since 9/11.  Let’s double that to $100 million to try and take account of other costs, excluding counter-terrorism spending. 

Under the most pessimistic assumptions, 73 percent of convicted terrorists in the decade after 9/11 were foreign-born.  Assuming that those 73 percent of immigrant terrorists are responsible for 73 percent of the jihadist murders since 9/11, their annual cost is $73 million.  At best, assuming there are no immigrant terrorists currently in the United States, the benefits of reducing terrorism via an immigration moratorium are $73 million annually.       

Costs of a Moratorium

Of course, measuring just the benefits of a moratorium is only half of the relevant calculation.  We must also estimate the economic costs of a moratorium on all future immigration.  Professor Benjamin Powell of Texas Tech University estimated the economic costs of a total immigration moratorium at $229 billion annually – $193 billion in rent-seeking costs and an additional loss of the conservatively estimated $36 billion annual immigration surplus.  Powell’s estimate is remarkably similar to Raul Hinojosa-Ojeda’s related estimate that removing 11 million unauthorized immigrants would lower GDP over a ten period by $2.6 trillion (Powell’s ten-year cost is $2.3 trillion).

Market Solutions for Population Problems

The Wall Street Journal put out an article with some excellent visual representations of the world’s changing demographics. (Please remember that you can also explore population growth, fertility rates, and the changing age make-up of the population using HumanProgress.org’s interactive maps and charts).

The WSJ notes,

In 1798 Thomas Malthus, a British essayist, argued that humanity would reproduce faster than food production could rise, leading to destitution and starvation. He was wrong. The Western world’s population grew rapidly over the 19th and 20th centuries, with a dip in 1918-19 because of World War I and the Spanish flu pandemic. But rising agricultural productivity proved more than capable of feeding the extra mouths.

Humanity found ways to produce more food per unit of land through innovations like synthetic fertilizers and increasingly advanced genetic modification techniques. As production increased, prices fell, calorie consumption increased, and undernourishment fell even as the world’s population grew.

Malthus’ mistake was to ignore human beings’ ability to innovate their way out of problems. But, as Julian Simon found in The Ultimate Resource, people are excellent problem-solvers. A challenge (feeding a growing population), led to technological innovation (the Green Revolution and GMOs) and that led to a solution (higher agricultural productivity and falling food prices).

As Human Progress advisory board member Matt Ridley notes in The Rational Optimist and The Evolution of Everything, technological innovation depends on the exchange of ideas. The more people there are (and the freer and more timely their exchange of ideas), the better.

The WSJ article recognizes problems associated with declining working-age populations—especially when it comes to unsustainable social security commitments those countries have made to their elderly. The WSJ also notes that government programs to incentivize having more children do not seem to work very well, and are not a viable solution.

One of the ways in which nations could increase their growth rates is to attract immigrants from other countries where their talents may be wasted. To learn more about the economics of immigration and the contentious issues surrounding the debate, including the effects of immigration on the native-born population’s wages and culture, consider registering for Cato’s forum in January on the subject.

Ted Cruz’s Mixed Record on Immigration Reform

Republican presidential candidates Ted Cruz and Marco Rubio both impressed audiences in the last debate.  Senator Rubio’s positions on immigration are discussed frequently, but Senator Cruz is normally viewed as an immigration restrictionist – an unfair characterization.  It’s more important to look at Senator Cruz’s actions when he offered amendments to the 2013 “Gang of Eight” comprehensive immigration reform bill (S. 744) than it is to cherry-pick a few quotes.  Senator Cruz did end up voting against S. 744, but only after he offered many amendments.   

Senator Ted Cruz was a tremendous supporter of skilled immigration and supported massively expanding the size of those programs, even beyond what was proposed in S. 744.  He offered four amendments (1324, 1326, 1586, 1587), to expand the number of employment based green cards to over a million annually.  Senator Cruz offered two amendments (1325 and 1585) to increase the number of H-1B visas issued annually to 325,000 while S. 744 allowed an upward bound of 180,000 annually (with some upward adjustments possible).  In other words, Senator Cruz’s amendment intended to practically double the number of H-1B visas over that which was proposed in the Senate’s 2013 comprehensive immigration reform bill.  Amendment 1587 also increased the number of H-1B visas and employment based green cards.  Senator Cruz’s amendments would have also allowed the spouses of all H-1B visa holders to work legally – going beyond President Obama’s actions to increase work eligibly for those spouses.  Expanding the number of green cards and H-1B visas for skilled workers would have been a tremendous boost to the U.S. economy.   

A Tale of Two Studies

Academics and professional economists have critiqued many well known academic papers on immigration in the last year. The first was by Alan de Brauw and Joseph R.D. Russell and it replicates and expands a famous 2003 paper by Harvard University economist George Borjas entitled “The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market.” 

Borjas famously found that from 1960-2000 there was a  wage elasticity of -0.38, meaning that a 10 percent increase in the size of the labor force due to immigration in a particular skill-cell lowered the average weekly wages in that cell by 3.8 percent relative to workers in other skill-cells.  Borjas’ paper is an impressive piece of scholarship and has been the lynchpin of arguments to close the border in order to protect wages.  Many economists disagree with Borjas

De Brauw and Russell had three findings.  Their first finding was that the wage elasticity dropped to -0.22 when they extended Borjas’ study to 2010. That is an important finding by itself – if the Borjas model was correct then why would the impact of immigrants on wages decrease as more of them entered the labor force between 2000 and 2010? 

Their second set of findings is that small changes in variable definitions turned some of Borjas’ ideas into statistically insignificant results. While not definitive, that suggests that the conclusions in his paper are not reliable.     

That leads to De Brauw and Russell’s third set of findings. They looked at the relationship between annualized male and female wages in the skill-cells when women entered the workforce in significant numbers. The correlation turned out to be positive­, which means men and women with the same skill level are complementary.  Thus, they argued that Borjas’ model is misspecified as it assumed immigrants and natives in the same skill-cells are more substitutable than they really are. If this finding is true, it would call into question the assumptions Borjas’ built in to his model, namely that immigration and natives are substitutable rather than complementary.

I’m still eagerly awaiting Borjas’ response to De Brauw and Russell’s paper. The critique of Borjas’ paper was serious because it replicated his work, extended it another decade, and found the results didn’t hold up. Many academics have already contested Borjas’ claims in numerous ways as I document here and here but this challenge cuts deep.

Latinos Don’t Hate Republicans, Except for Trump

In 2012, Exit Polls revealed that President Obama garnered 71% of the Hispanic vote, while his Republican rival Mitt Romney captured a mere 27%. In 2008, Republican John McCain didn’t do much better, capturing only 31% of the Latino vote to Obama’s 67%. In sum, Latinos have demonstrated a strong affinity towards the Democrats. Is that because they hate Republicans? The data suggests no. 

A recent MSNBC/Telemundo/Marist poll finds that while Latinos are more favorable towards Democratic presidential candidates they are not antagonistic towards Republican candidates either, they just don’t know them—except for Trump.

On average, 17% of Hispanics gave negative ratings to potential Democratic nominees  Hillary Clinton, Joe Biden, and Bernie Sanders. Nearly the same share—15% gave negative ratings on average toward Republican candidates including Ben Carson, Marco Rubio, Jeb Bush, Ted Cruz, and Scott Walker. This number excludes, however, the 70% who gave a negative rating of Donald Trump, immigration provocateur.

While Hispanics don’t disproportionately view Republicans unfavorably, they do give more positive marks towards the Democrats. On average, 35% of Latinos had positive ratings of Democratic candidates and 20% had positive ratings of Republican candidates. 

A major difference between Republican and Democratic candidates was the share of Latinos who had never heard of, or had no opinion of, the candidates. On average, 42% of Latinos had no opinion of Republican candidates (again, excluding Trump from this average) compared to 27% who had no opinion of Democratic candidates. 

This data indicate that Latinos don’t hate Republicans. Instead, Republicans haven’t shown up in community venues or in news mediums to garner greater exposure in Hispanic communities as much as Democrats. When Republicans do make headlines in Hispanic communities, it’s typically for bombastic proposals like Trump’s plan to forcibly deport 11 million unauthorized immigrants, necessarily breaking apart families and loved ones.

Perhaps surprisingly, Latinos’ negative attitudes toward Trump do not spill over toward the other GOP candidates. This means GOP candidates can stake out different positions on immigration and potentially win over a fast-growing demographic in the country.

Pope Francis on Immigration

Pope Francis asked all Catholics to pray for those “who seek a home where they can live without fear” but went further by actually praising those who help refugees.  In arguing for the admission of more Syrian refugees, he said the goal should be “to give them a concrete hope, and not just to tell them: ‘Have courage, be patient!’”  No doubt the Pope would go further than many of us in arguing for welfare for refugees even though merely getting the governments of the way to stop hurting refugees is enough, but his full-throated support for granting them refuge is commendable.