Economic Growth

The Vital Importance of Immigration Policy to Enrich the World


Economist David Henderson writes at The Freeman about the vital importance of liberalizing immigration policy to make a richer, better world. Highlights:

Relaxing immigration laws is the most pro-growth measure the rich countries' governments could take. Not only would it enhance well-being in the rich countries, but it would also be the most effective antipoverty measure any wealthy country's government could take….

There is copious evidence that people in poor countries—from engineers down to unskilled laborers—could earn three to ten times as much in the United States as they do in their home countries. If they were allowed to come to the United States, they would clearly benefit themselves. So, for example, there are people near starvation in Sudan, Haiti, and Cambodia who in the United States would earn what many of us would regard as a pittance but many of them would regard as riches….

When an American buys a service from an immigrant, it is not just the immigrant who gains. The American gains too, or else he wouldn't have bought the service. Boston University economist Patricia Cortes, in a study published in the Journal of Political Economy, found that cities with larger influxes of low-skilled immigrants had lower prices for labor-intensive services such as dry cleaning, childcare, housework, and gardening. In a later study, Cortes and coauthor Jose Tessa found that these low-price services allowed Americans, especially women, to spend more hours working in high-skilled, high-paying jobs.

The gains from eliminating barriers to immigration are huge. In a recent article in the Journal of Economic Perspectives, economist Michael Clemens finds that getting rid of all immigration restrictions worldwide would approximately double world GDP…..

Still, relaxing immigration laws doesn't get nearly the respect of newer, sexier, less effective means of helping the non-American poor:

Immigration reform would dwarf any other measure economists have considered to help people in poor countries. Take microcredit, the lending of small amounts to small businesses. In his recent book, Borderless Economics, Robert Guest notes Harvard University economist Lant Pritchett's observation that the average gain from a lifetime of microcredit in Bangladesh, such as that provided by Nobel Peace Prize winner Mohammed Yunus's Grameen Bank, is about the same as the gain from eight weeks working in the United States. Asks Pritchett, "If I get 3,000 Bangladeshi workers into the US, do I get the Nobel Peace Prize?"


Reason's classic 2006 cover story "Immigration Now, Immigration Tomorrow, Immigration Forever."

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  1. found that cities with larger influxes of low-skilled immigrants had lower prices for labor-intensive services

    And they’ve identified the source of opposition. People don’t want floating wages. I’ve talked to a guy who built stone walls and facades for a living who complained about the immigrant competition underbidding him. “I don’t care if they come here and get jobs,” he said,” but they have to charge more. I’ve got a mortgage to pay.”

    1. “I don’t care if they come here and get jobs,” he said,” but they have to charge more. I’ve got a mortgage to pay.”

      They used to say the EXACT same thing about the uppity negroes.

  2. Asks Pritchett, “If I get 3,000 Bangladeshi workers into the US, do I get the Nobel Peace Prize?”

    No. You only get the Nobel Peace Prize if you bomb and kill thousands of brown people.

    1. I was going to take a completely different direction on that…
      If they all look like Hasin Roushan, give those ladies green cards!

      1. Isn’t that the Octomom?

    2. He should get some kind of award, because I imagine that would take fifty years of navigating red tape and bureaucracies. The Sisyphean Award, maybe?

      1. I thought you only got that for rock ‘n roll.

        1. Ha! Took me a second.

  3. Xenophobia and protectionism are stronger than the desire for an improved economy. Far, far stronger.

    1. The use of force is strong in this one…

  4. Good article. It would be interesting to see if any countries decide to become labor havens in the same way some are tax havens.

    Imagine some place with a generally good climate and access to trade routes were to do both.

    Of course they would have to eradicate all labor laws and other mercantalist schemes to have the best effects.

    Hong Kong could have been described that way sometime back but I’ve not kept up with how they are doing lately.

  5. I think we should tax foreigners living abroad.

    1. Finally some common sense! I mean if it wasn’t for us they wouldn’t be able to dream of coming to a better place and that’s worth something, isn’t it?

      Like scream and laugh were in Monsters Inc.

    2. The Romans managed it pretty well for the better part of a millenium.

      The Spanish only managed it for a couple of centuries.

      The Greeks tried it, but after a decade, the Germans finally caught on.

  6. Reality check

    I’ve lived in a border city. The border with Mexico brings with it a whole slew of social ills.

    1000 miles away now, yeah, I do sometimes think it would be nice to have near-slave-labor at my disposal instead of mowing my own lawn. However, not having my car stolen (yes, it happened to me more than once), or burglarized (happened to me more than ten times), being able to leave something outside overnight without it disappearing, etc., more than make up for that.

    Libertarians will not gain a lot of traction in otherwise-sympathetic border regions of the southwestern US, by pretending that there is no price to be paid. There is, and I’m not talking about depressed wages for low-skilled jobs, at all, here.

    You’ll have to convince people in places like West Texas, Southern California, or Tucson, that the libertarian goal isn’t to “enrich the world” at their expense — sometimes at the cost of their lives.

    Protectionism carries with it a whole set of social ills, too. I’m with you there.

    But the whole “let’s have open borders and everybody will live happily ever after!” is not going to fly. It sounds like silly hippie talk.

    This article isn’t about that, specifically, but the grand scheme of Reason writing on the topic seems to be.

    What about some more in-depth discussion of the realities of living near the border, and how we can have much more open immigration, but also address the real concerns of those who live with the downsides of the border, every day?

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