immigration favors the economy

Immigration Favors The Economy

In 2015 there were about 250 million people living outside their country of birth.

If all these migrants were grouped together, they would form the fifth largest nation in the world with a population twice as large as Mexico today.

In countries that have traditionally opened their doors, such as the United States, 13% of the population is made up of immigrants (most of them coming from Latin America and the Caribbean), and in Switzerland or New Zealand this proportion increases to a third.

Given these figures, it is not surprising that a large body of research has analyzed how immigration impacts the destination economy.

This verdict is clear and clashes with many prejudices: immigration has positive economic impacts.

This conclusion is supported by abundant rigorous evidence that, for years, has shown that immigration contributes to higher economic growth and increases in productivity.

Immigration also has proven effects on innovation levels: in the United States, for example, the production of patents and the founding of venture capital companies are led by immigrants.

Differences between academics and public opinion

There is thus a contrast between the academic world and public opinion, where various sectors argue that immigration can be harmful. And these arguments emphasize above all the possible effects on the labor market: there is a fear that immigration will harm the natives by reducing their employment options or salary level. However, an abundant body of rigorous evidence consistently shows that immigration does not significantly reduce native wage or employment levels.

George Borjas, from Harvard University, is perhaps the academic who most notably deviates from this consensus since, unlike most authors, he finds in his studies that immigration significantly affects natives in the labor market. But even he acknowledges that the net economic effect of immigration on the economy is positive.

There is thus a contrast between the academic world and public opinion, where various sectors argue that immigration can be harmful.

One of the reasons for the disagreement between what academics say and public opinion is surely due to a logical problem that labor economists call “the fallacy of permanent jobs.”

This is a flawed argument according to which the number of jobs available in an economy does not change, it is always constant.

If this were true, the natives would necessarily be affected by the immigration of workers, either because their wages are lowered (since the number of workers increases and the number of jobs does not change) or because they take away their jobs to give them to the immigrants.

Immigrants are not like oranges

The problem with the permanent jobs fallacy is that it does not recognize the difference between the labor market and the market for any consumer good, such as oranges.

It is true that if the number of oranges available in a market increases, the price has to go down.

But immigrants are not oranges. Unlike oranges, immigrants consume, produce and invest. They buy cars, food and houses.

They also create companies, buy shares, pay taxes and save for a pension.

Their entry into the labor market has been shown to incentivize employers to adopt technological changes or invest in new, more labor-intensive products. And that, in many cases, they do not compete with natives in the labor market because they specialize in other types of jobs, which in turn improves productivity.

All of this implies that immigration can increase the number of jobs in an economy. And this is precisely the consensus that most economists have reached after decades of rigorous research.

Rarely do we find this level of unanimity in economic discipline.

The economic benefits of immigration are unquestionable and it is important to bring this knowledge to the public opinion.

But it may be that the discussion should be taken to another sphere, in which economic arguments are secondary.

Perhaps what we must agree on is the way in which immigration enriches societies, by making them more open, diverse and rich in culture.