I’m a little frazzled this week, so I haven’t caught up with all the comments on Monday’s
post on immigration, but I know there’s been some discussion about the actual costs and benefits of admitting unskilled immigrants. I thought I’d supply some numbers that might inform that discussion; all of this is lifted from Chapter 20 of The Big Questions.
When an unskilled Mexican immigrant arrives in the United States, his wages typically rise from about $2 a hour to $9 an hour — call it a $7 an hour gain. He also bids down the wages of American workers by (and this is a high-end estimate from the labor economics literature) about $.00000003 per hour; multiply that by a hundred million American workers and you’ve got a collective $3 an hour loss.
Now there seems to be something like a consensus that it’s okay for US policies to benefit US citizens at the expense of Mexicans, but there also seems to be something like a consensus that there’s a limit to that; we would not want, for example, to allow Americans to hunt Mexicans for sport. So when we consider turning someone away at the border, one good question is: Are we willing to do $7 worth of harm to a Mexican in order to confer $3 worth of benefits on American workers?
Note that the potential Mexican immigrant is typically much poorer than those American workers, and that it’s not uncommonly argued that we should care more about the poor than about the rich. If you weight that $7 loss to the Mexican and that $3 gain to the Americans accordingly (i.e. assuming logarithmic utility, which is a quite conservative assumption — that is, one that biases the result in the anti-immigration direction), you discover exclusion hurts the Mexican about five times as much as it helps the Americans.
So, at least if you buy into that way of thinking (which pervades a lot of the policy literature) then exclusion is justified only if you “count” a Mexican as less than one-fifth of an American. That’s a pretty extreme position. It’s not as extreme as hunting Mexicans for sport, but it’s still pretty extreme.
Now add to all this the fact that our Mexican immigrant typically brings well over $3 worth of benefits to Americans, which more than offset the $3 wage drop. As a source of cheap labor, he brings down the prices of American goods, so that even the workers whose wages dropped can come out ahead. If your wages drop by 10% while prices drop by 20%, you’re a winner.
So: The easiest way to justify an anti-immigration stance along these lines is to 1) ignore all benefits of immigration to Americans and focus solely on the costs, and then 2) treat a $3 loss to Americans as more consequential than a $7 gain to Mexicans, even when the Mexicans are much poorer than the Americans. That seems to me to be a very difficult calculation to defend.
I do realize that some commenters have raised issues regarding culture and politics that are not directly addressed by the above. But insofar as there’s been discussion about effects on American wages, etc., I hope these numbers will help to focus things.