more (yes) immigration

13 Apr 2006

Because I know Katherine can’t get enough, here’s yet more on immigration. Kleinheider responds to my response.

Econ 101 would tell us that legal immigration is fine because these immigrants are subject to the same labor laws and whatnot as natives and that this is merely healthy competition and does no real damage to the economy. Those workers who are displaced have been so due to the refreshing and legal free market rumble. No harm, no foul.

…

But in the real world we know that immigrants new to this country are often just happy to be here and will work for less than natives.

There’s no evidence that I know of to support this claim, and if it exists, again, I’d like to see it. I think this idea stems from a myth about Mexico – that it’s some depraved economic Mad-Max wasteland, and everyone that manages to elude its clutches is forever ingratiated to the United States, and will clean any amount of toilets for peanuts to make up the debt they owe. But this is silly. Last time I checked, Mexico had more or less the same “free market” that we have here (with all its ups and downs. pun intended). Mexico has a fairly decent standard of living by international standards. The main reason that people migrate from the south have more to do with many market factors – where wage differences are but one:

… the probability of migration is related more to variation in real interest rates, which indicates the degree of access to capital and credit, than to expected wages. This is demonstrated by using data from Mexico to predict the yearly probability of migration to the United States from both the real interest rate in Mexico and the ratio of the wages an individual could expect to earn in the United States to the wages he or she could expect to earn in Mexico. As figure 5 illustrates, the effect of interest rates on the odds of U.S. migration is 5.6 times greater than that of relative wages. Other such analyses yield similar results.

AC continues:

With a constant stream of immigrants, there are always workers coming in and undercutting the American worker. If this were on a small scale with brief interludes that allowed the economy to absorb these immigrants, it would be fine, but we keep bringing people in.

Well, except that we don’t. We hardly let anyone in – that’s the problem. The “brief interludes” that jostle our labor markets are more due to labor law than economics.

There is nothing wrong with legal immigration but it has to be limited and there needs to be lulls to allow for the absorption of these workers into the economy and the culture.

Why does it need to be limited? I have never gotten a straight answer to this question.