Immigration Helps The Economy

Writing on Megan McArdle’s blog on The Atlantic, Adam Ozimek highlights one of the glaring contradictions in the economic vision held by  many conservatives.  Specifically, although most conservatives believe that the free market will usually perform better than government interventions in the economy, many if not most conservatives also are hostile towards immigration.  Sometimes this hostility even advances to the point of outright racism.

But as Ozimek notes, immigration helps the economy.

One important reason is that immigrants aren’t just workers, but also consumers. Economists Bodvarsson, Lewer, and Van den Berg studied the Mariel boatlift and found that migrants increased labor demand enough to offset the increase in labor supply so that there was no negative impact on natives that one might otherwise expect when labor supply increases drastically. This result shouldn’t be surprising. Immigrants buy stuff, that means businesses sell more, and they need to expand and hire new workers.

The bonus here is that aside from the affect on overall consumer demand, immigration has a particularly large impact on the demand for housing. Research by Albert Saiz has shown that a 10% increase in immigration drives up house prices by 1%. Whatever immigration research you’re looking at, this is an order of magnitude larger than the labor market effects. This is important because immigrants tend to migrate to areas where there are already large numbers of immigrants. This means some of the worst housing markets will benefit the most from more immigration. will benefit the most. For instance, California, Nevada, Florida, and Arizona, are ranked 1st, 4th, 5th, and 9th by percent of population foreign-born. Since falling house prices are hurting the wider economy, the economic benefits of immigration would have secondary positive effects on GDP.

And there isn’t anything about “illegal immigration” that makes it an exception either, so nativists can just keep the rant on hold for now.

Republicans should reconsider their hatred towards “amnesty” and other pro-immigration policy options.  It is in their own political interest and in the country’s economic interest to do so.



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