There are two basic effects of immigration that can be measured, however inadequately, to determine immigration’s economic impact on a country: immigration surplus and net fiscal transfer. Immigration surplus tries to count the ways immigrants contribute to the economy – the goods they produce, the stuff they buy and other jobs created in the economy because of their presence, e.g., more houses might get built because people need places to live. Net fiscal transfer subtracts the amount of increased government spending – on things like health care, education and the like – from the tax revenue immigrants contribute.
Obviously if the net fiscal transfer is positive, then immigration as a whole is an economic benefit. If, however, as is often the case with low-skilled immigrants, the net fiscal transfer is negative, then the immigration surplus needs to counter this or else an economic case could be made against immigration.* However, unless current immigration policies change and legal temporary immigrants are given more labor flexibility, there really is no case against immigration, not even against illegal immigration.
Here’s why I don’t think it even matters if the net fiscal transfer is negative. This model doesn’t account for the amount of money the government spends on internal enforcement (detention and deportation), stricter border patrol (fences) and more intrusive policing tactics (driving while Hispanic). And while it may be the case that stricter border patrols are a part of a more general, and more amorphous, anti-terrorism policy, the real impact is on immigration. It would take an elephantinely negative net fiscal transfer for these numbers to add up in such a way as to support strict anti-immigration policies.
It’s also interesting to note that in the nativist argument, there’s hardly any mention of curbing the flow of goods and capital. If immigrants take jobs away from natives and somehow burden economic growth, wouldn’t the same logic apply to goods and capital? Obviously goods and capital don’t go through often difficult periods of acculturation, but acculturation is usually an economic positive – there’s a higher demand for ESL schools and otherwise decaying communities can be revived.
Clearly a country would do well to attract the highest-skilled immigrants possible. But an economy with a lot of demand for low-skilled jobs in service industries, such as the US economy, would also benefit from more lenient low-skilled immigration policies. Low-skilled here should not be confused with ‘bad’ or ‘problematic’; instead, it should be understood as describing the kind of worker who doesn’t find cleaning food or cleaning buildings particularly demeaning.
Even NYC mayor Michael Bloomberg, who gets all queasy at the thought of protests, thinks immigration is a good thing. In a recent speech he gave addressing the US government deficit he beats some pretty reasonable drums on immigration (and other policy proposals as well). Of course, a cynic would argue that he only does so to appeal to his constituency, but who cares:
And most urgently, we need an immigration system that stops depriving us of the entrepreneurs, scientists, engineers, and laborers that we need to grow our economy. It’s terrible economics – I call it national suicide – and it’s one more example of how Washington is preventing our economy from adding jobs.
* Of course there are all sorts of externalities, positive and negative, that are, by definition, more difficult to measure. It goes without saying that I think the positive ones greatly outweigh the negative ones.