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Brooks Wilson's Economics Blog: Economists' on Immigration

Friday, October 7, 2011

Economists' on Immigration

As best I can tell, economists favor increased immigration by a large margin. Nick Schulz, an author of "From Poverty to Prosperity” makes an economic pitch for immigration that illustrates typical economic thought in “Yes, There Is Such Thing As A Free Lunch: It’s Called Immigration.”
Kick open the nation’s doors to high-skilled immigrants. There isn’t a bigger no-brainer move than this…
Put aside concerns about low-skilled immigration for a moment. There is wide consensus among those who have studied the issue that skilled immigrants are a net positive for the receiving country.
As Barry Chiswick, the editor of “High-Skilled Immigration in a Global Labor Market” and one of America’s deans of immigration research, notes, “ High-skilled immigrants expand the productive potential of the economy in which they reside, thereby increasing the growth rate of total-factor productivity [technology for principles students]. High-skilled immigration to the United States, therefore, enhances the international competitiveness of the U.S. economy and attracts foreign capital to the country. High-skilled immigration adds workers to the labor force who tend to pay more in taxes than they receive in public benefits… As a result, they tend to have a positive net fiscal balance.”
Immigration of high-skilled labor can be depicted using a simple supply and demand model familiar to principles students.  The first graph depicts the supply and demand for laborers with a BA degree in genetics.  The normal disclaimer applies.  I have no idea how many geneticists with BA degrees are hired nor do I know their monthly salary.  Equilibrium occurs at a monthly salary of $3,600 with 89,760 geneticists employed.

The supply of geneticists is a function of the wage, the number of native born workers (N) and the number of foreign born workers (F) [Q=S(W, N, F)].  As immigration of foreign born geneticists increases, supply shifts outward (from S0 to S1 in the second graph), and the wage decreases to $3,500 per month. 

Many Americans fear that immigration will lower wages stop their analysis here, but this excludes perhaps the most important change, the change in demand.  The demand for geneticists is a function of the wage and technology, and, in turn, technology is a function of the number of native born and foreign born workers [Q=D(W, Tc(L(N, F))]. 
Technology advances with the interaction of high-skilled laborers, the more laborers, native or foreign born, the more interactions between these high valued workers, the greater the technological advance.  As technology advances, the demand curve for geneticists increases in the third graph.  The new equilibrium wage is $4,000.  Because the market is in equilibrium, any geneticist who wishes to work at $4,000 will be employed and the number of geneticists employed increases.  Firms hiring geneticists are better off as well because the burst of creativity achieved by the greater interaction between geneticists allows them to produced new and varied products.  Consumers are better off as well as they have a wider variety of products to buy. 
Students who wish to disagree with my analysis may want to examine the relative shifts in the supply and demand curves. 


  1. I agree with your analysis, but I am wondering about a few things. First off - the article says to put aside concerns about low-skilled immigration.. how are we supposed to do that? There is no guarantee that every immigrant will be highly skilled. How do we account for this? Do we return to some kind of screening process for immigrants? Second, if we make immigration for labor legal, won't immigrants demand higher, more equal wages?

  2. There are several countries, one is Australia that you have to be skilled and have a job ready for you to immigrate into their country. I think the United States should be just as particular who we let in especially with our economy in such a mess. There aren't enough jobs now for the people that live here so why make the situation worse. It is like having a family if you can't support 2 children then why would you have another child. I am sure there is a screening policy already in place for people immigrating into the United States.

  3. This analysis seems logical-- welcoming skilled immigrants to help boost the economy. Though they take spots in the work force, they essentially produce more than they take in public assistance thus making money for our country. However, with legal immigrants comes thousands of illegal, less-skilled immigrants. It is hard to spread good feelings about immigration when people, especially those in the southern states, have created hard perceptions because of those who are illegal, yet taking citizens' jobs, assistance, and skipping on taxes. If you can overtake this mind setting, high-skilled immigration seems like a great idea to help the United States boost its international worth and economy. Finding those skilled workers, however, is the problem.

  4. This is really interesting Professor Wilson, I've always thought immigrants had a negative impact on our resources.
    Like the other people that have commented though I do have concerns about those that are unskilled workers and come here. Yes, the increase demand and possibly help supply but what about the government resources they use such as Medicaid and Welfare.
    I guess we should all do a little more research before we jump to conclusions about others.