THE ECONOMICS OF IMMIGRATION Alex Nowrasteh Introduction Giovanni Peri The Impact of ...

181 Pages·2017·5.82 MB·English

AN INTERDISCIPLINARY JOURNAL OF PUBLIC POLICY ANALYSIS
THE ECONOMICS OF IMMIGRATION
Alex Nowrasteh Introduction
Giovanni Peri The Impact of Immigration on Wages of
Unskilled Workers
Ethan Lewis How Immigration Affects Workers:
Two Wrong Models and a Right One
Alan de Brauw Does Immigration Reduce Wages?
Gary D. Painter Immigrants and Housing Demand
Jacob L. Vigdor Immigration, Housing Markets, and
Community Vitality
Susan M. Wachter Immigration and Segregation
Magnus Lofstrom Immigrant Entrepreneurship:
Trends and Contributions
Benjamin Powell Economic Freedom and Mass Migration:
Evidence from Israel
Ryan H. Murphy Immigration and Its Effect on Economic Freedom:
An Empirical Approach
Douglas S. Massey The Counterproductive Consequences of
Border Enforcement
Bryan W. Roberts Illegal Immigration Outcomes on the
U.S. Southern Border
BOOK REVIEWS
• •
VOLUME37NUMBER3 PUBLISHEDBYTHECATOINSTITUTE FALL2017
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catojournal • volume 37 number 3 • fall 2017
THE ECONOMICS OF IMMIGRATION
AlexNowrasteh
Introduction 445
GiovanniPeri
TheImpactofImmigrationonWagesof
UnskilledWorkers 449
EthanLewis
HowImmigrationAffectsWorkers:
TwoWrongModelsandaRightOne 461
AlandeBrauw
DoesImmigrationReduceWages? 473
GaryD.Painter
ImmigrantsandHousingDemand 481
JacobL.Vigdor
Immigration,HousingMarkets,and
CommunityVitality 487
SusanM.Wachter
ImmigrationandSegregation 495
MagnusLofstrom
ImmigrantEntrepreneurship:
TrendsandContributions 503
BenjaminPowell
EconomicFreedomandMassMigration:
EvidencefromIsrael 523
RyanH.Murphy
ImmigrationandItsEffectonEconomicFreedom:
AnEmpiricalApproach 531
DouglasS.Massey
TheCounterproductiveConsequences
ofBorderEnforcement 539
BryanW.Roberts
IllegalImmigrationOutcomesonthe
U.S.SouthernBorder 555
BOOK REVIEWS
TheArtofPeace:EngaginginaComplexWorld
JulianaGeranPilon
ReviewedbyThomasBlau 573
IlliberalReformers:Race,Eugenics,and
AmericanEconomicsintheProgressiveEra
ThomasC.Leonard
ReviewedbyArtCarden 577
TheGreatLeveler:ViolenceandtheHistory
ofInequalityfromtheStoneAgetothe
Twenty-FirstCentury
WalterScheidel
ReviewedbyAnthonyComegna 580
GainingCurrency:TheRiseoftheRenminbi
EswarS.Prasad
ReviewedbyJamesA.Dorn 586
DemocracyinChains:TheDeepHistoryof
theRadicalRight’sStealthPlanforAmerica
NancyMacLean
ReviewedbyStevenHorwitz 593
TheBigStick:TheLimitsofSoftPowerand
theNecessityofMilitaryForce
EliotA.Cohen
ReviewedbyChristopherPreble 608

Introduction
The Economics of Immigration
Alex Nowrasteh
Immigration was the most distinctive policy issue debated in the
2016presidentialelection.Theissuedominatedtheelectioninsharp
contrast to every other election in U.S. history, where it was gener-
allyaminorconcern.Inhisfirstspeechannouncinghiscandidacyfor
president,then-candidateDonaldJ.Trumparguedthatimmigration,
legal and illegal, posed a serious problem for the United States. He
said, Mexico is “sending people that have lots of problems. . . .
They’rebringingdrugs.They’rebringingcrime.They’rerapists.And
some,Iassume,aregoodpeople.”
Trump’s criticism hinges on the economic impact of immigrants.
Hisunexpectedvictoryputimmigrationatthefrontandcenterofthe
national debate and forced us to take his policy recommendations
seriously. Candidate Trump emphasized border security and a bor-
derwalltostopillegalimmigration,buthealsospokeabouthisdesire
torestrictlegalimmigration.Hisstatementofprinciplesonimmigra-
tion, if turned into law, would cut legal immigration by about two-
thirdsandpotentiallyhaltillegalimmigration.
ThiseditionofCatoJournalbringstogetherleadingscholarswho
have written widely on the economics of immigration. They pre-
sented their research at a Cato Institute conference on “The
Economics of Immigration” on September 2, 2016, funded by the
generous support of the Searle Freedom Trust and the Ewing
CatoJournal,Vol.37,No.3(Fall2017).Copyright©CatoInstitute.Allrights
reserved.
AlexNowrastehisanImmigrationPolicyAnalystattheCatoInstitute’sCenter
forGlobalLibertyandProsperity.
445
Cato Journal
Marion Kauffman Foundation. This volume is based on their
conference papers, which summarize some of their most relevant
andinterestingfindingsrelatedtotheeconomicsofimmigration.As
President Trump finishes his first year without significant new
immigrationlegislation,thisvolumeispublishedatjusttherighttime
toaddtothepublicdebate.
Inthelanguageofeconomics,Trump’scriticismofimmigrantsis
that the costs they impose on American society exceed the benefits
they produce. Although he focuses on their supposed criminal
behavior, the low rate of immigrant incarceration and falling crime
ratesinareaswithmoreimmigrantsindicatethatthisisnotaserious
argumentagainstimmigration.
Thehumancapitalcomponentofhiscomplaintismoresubtlebut
also more serious. Immigrants do tend to be less educated than
natives although the gap is narrowing. Their lower levels of human
capital mean that they are generally less productive and thus earn
lower wages, potentially competing with many lower-skilled
Americans.
Immigration could have an overall positive effect on American
economic growth but lower wages for Americans at the low end of
the labor market. The articles by Giovanni Peri, Ethan Lewis, and
AlandeBrauw,showthatisnotthecase.Theyfindimmigrationhas
hadonlyasmalleffectonthewagesofnative-bornAmericans.
Although the impact of immigrants on the labor market gets the
most attention in public policy debates, the impact on the housing
market is also important. The next three articles discuss that aspect
ofimmigration.GaryPainterexamineshowimmigrantsmakehous-
ing decisions and how those decisions affect local housing markets.
SusanWachterexplainshownativesandimmigrantssortthemselves
after settling here and how they impact neighborhoods, and Jacob
Vigdor explores how immigrants affect county-level economic indi-
cators such as housing prices and finds that they add trillions of
dollarsinvaluetothenationalhousingstock.
Immigrant entrepreneurship is an important driver of innovation
andfirmcreationintheUnitedStates.MagnusLofstromshowsthat
immigrant self-employment has grown dramatically over time and
exceeds that of native-born Americans, especially for those with
lowereducation.BenjaminPowellandRyanMurphybothshowhow
immigration affects political and economic institutions and thus
futureeconomicgrowth.
446
Introduction
Inthefinaltwoarticles,DouglasMasseyandBryanRobertspres-
ent different explanations for the flow of illegal immigrants. Massey
argues that immigration enforcement has virtually no effect on the
flow of illegal immigrants to the United States while Roberts con-
tends that it can explain a significant amount of the decline since
about2010.Theanswertothisdebatecoulddeterminewhetherthe
federal government should continue to spend tens of billions of
dollars a year on immigration enforcement. Resolving the issue of
what drives flows of unlawful immigration is essential to moving
forwardwithother,morepositiveimmigrationreforms.
PresidentHarryTrumanfamouslyquippedthathewantedaone-
handedeconomistsotheywouldactuallyreachagreementandform
firm policy recommendations. Many of these articles do not make
specificpolicyrecommendationsbuttheydoreachfirmconclusions
thatareconsistentwiththebroadfindingsoftherestoftheacademic
literature that even a one-handed economist could firmly grasp: the
economicbenefitsofimmigrationoutweighthecosts.
Policymakers who are interested in increasing economic growth,
entrepreneurship,andotherpositiveeconomicindicatorswouldget
a few messages from these essays. First, a liberalized immigration
policy that includes legalization for illegal immigrants and boosts
legal numbers of immigrants will have a net-positive impact on
native-born Americans. Second, many of the economic problems
facing America today that are often blamed on immigrants are not
worsened by them. Rather, immigrants have either a tiny effect on
those problemsoractuallyhelp alleviatethem. Third, thedownside
risksofimmigrationliberalizationsuchaswagecompetitionandthe
possibility of negative institutional changes that could undermine
futuregrowthareatmostverysmallorturnouttobecorrelatedwith
improvements,respectively.
ImmigrationisanemotionalsubjectformanyAmericans.Abouta
quarterofusareimmigrantsortheirchildren.Virtuallyallofuscan
point to relatively recent ancestors who came here from a foreign
land. Similarly, many Americans are outraged that so many illegal
immigrantshaveviolatedAmericanlaws.Ourhopeisthatthisissue
of Cato Journal will help cool some of those emotions and instead
shedlightonthisimportantpolicydebate.
447