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Brooks Wilson's Economics Blog: The Social Cost of Illegal Immigration

Tuesday, June 21, 2011

The Social Cost of Illegal Immigration

Bloggers and economics teachers face a paradox.  We want to convince students and readers that economic ideas are valuable and the best way to grab attention is to use those ideas to analyze the economics of current events.  The best way to lose them is to use economic ideas to come to a conclusion that contradict their prior beliefs.  The intersection of economic analysis and prior beliefs is small; if it were large, there would be no reason to teach economics.

The current debate about illegal immigration illustrates the gulf that often separates the views of economists and everybody else.  The popular debate posits high domestic net costs to illegal immigration and the economic literature finds empirical evidence of net benefits or small net costs.

Arizona, Georgia, Indiana, Oklahoma, Texas and Utah have passed or are considering legislation aimed at reversing the tide of illegal immigration.  The severity of these laws hints at the large costs that backers believe illegal immigration imposes on society.  The new Alabama law, heralded or decried as the toughest yet to be enacted would require public schools to determine the citizenship status of students, force police to detain someone they have stopped for any reason if they believe that person may be an illegal alien and if the person cannot produce documentation.  It would make it a crime to transport or harbor someone who is in the country illegally, and allows government to suspend or revoke the business licenses of a business that knowingly hires an illegal alien.  It also requires businesses to use the E-Verify database to confirm the immigration status of new employees. 

In my last post, “Political Chicken and the Debt Ceiling,” I sided with the Republican position on the debt ceiling negotiations.  In this post, I will take a shot at them.  Republicans claim to support smaller government, a lighter regulatory burden, and constitutional rights.  The anti immigration law is more strongly supported by Republicans than Democrats.  It is increases the size and scope of government, increases regulatory burden of schools and businesses, and limits my first amendment right of freedom of assembly, the right to collectively gather to promote, pursue and defend common interests.  The impact of these laws is the opposite of the claimed position of the Republican party.

A petition to President Bush and the Congress that was signed by 523 economists presents what I believe is the majority opinion.  In part, it reads

Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy. 

Immigrants do not   take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.

In recent decades, immigration of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to have been small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent.

While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices. As with trade in goods and services, the gains from immigration outweigh the losses. The effect of all immigration on low-skilled workers is very likely positive as many immigrants bring skills, capital and entrepreneurship to the American economy. 

Legitimate concerns about the impact of immigration on the poorest Americans should not be addressed by penalizing even poorer immigrants. Instead, we should promote policies, such as improving our education system, that enable Americans to be more productive with high-wage skills.
To my knowledge, there is not a competing anti-illegal immigration petition (see David Hedengren, Daniel B. Klein, and Carrie Milton.  “Economist Petitions: Ideology Revealed,” Econ Journal Watch, Volume 7, Number 3, September 2010, pp 288-319).


  1. Morgan Heeke7/7/11 12:57 AM

    I completely support cracking down on illegal immigration. As a Houstonian, over my lifetime, I have witnessed how strong illegal immigration has become. Crime rates have risen and now it is odd if someone doesn't know Spanish. I support people wanting to leave their homeland in search of a better life, but go through the proper steps please. I have a family friend who is a teacher at a school that is dominated by immigrants, and she finds it painful to teach those students. They are less willing to learn, less interested in school, and are often disruptive. It angers me to know that my parent's and other Americans tax dollars are going to support students who don't even want to attend school. We have worked for our money and we shouldn't have to spend it for someone who doesn't want to put it to good use. However, I do disagree with the part where police can pull over whoever looks like an illegal alien. That is racist and offensive to those who have worked to become members of our country and they should not feel outcasted because of appearances.

  2. I immigrate to U.S. in 1982, coming from Brazil. My husband applied for my green card and it took a few monhts until I got it. I think all immigrants should follow the same legal steps that I did. The illegal immigrants add an extra burden to the taxpayers. I don't agree with Spanish language spoken in all locations or in the publications. The immigrant should assimilate into the American culture keepping their own culture at home. I think it is far to show identification when you are asked to do so.