Arnold Kling  

Immigration Policy

A Re-importation Parable... Social Security Reform...

Samuel Brittan calls for an open immigration policy in the UK.

If we favour the free movement of goods, capital and people, between Yorkshire and Lancashire, or between the north and south of England, why should a frontier make a difference?
Why not try complete free movement of labour for a five or ten year period and then review the evidence? Who knows? We might even enjoy the experience.

I have an essay that proposes a taxed guest-worker program for the U.S.

For citizens competing against illegal immigrants for jobs, the playing field might be more level with a tariff (guest workers paying taxes) than with a quota (laws that deter some foreign workers but not all). Today, citizens subsidize immigrant workers by paying taxes for government services that benefit the immigrant. With a guest worker program, immigrant workers would pay their fair share.

For Discussion. What are the advantages and disadvantages of using taxes rather than numerical limits to control the number of guest workers?

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CATEGORIES: International Trade

COMMENTS (15 to date)
Eric Krieg writes:

Arnold, you will have to explain this a little more. I don't get how your proposed system makes things better.

Is the employer paying the tax? Doesn't this just push down the immigrant's wage (which is already so low that he is on public assistance to survive)?

Steve writes:

We need REALLY tall walls, and men with guns guarding them.

works for China. Fastest growing economy on Earth.

potzdorf writes:

Disclosure: quick thoughts, unedited.

Current numerical limits – entirely in control of beaurocrats (ahem); since outside labor becomes a closed market, an illegal one opens up (dry laws in 1930s, current drug laws). This leads to an inequality on both sides (them being legal and illegal workers), where as the fear of prosecution on the employers’ side makes them unwilling to hire illegal workers at anywhere near the market wage. Such cheap labor tends to displace the legal workers obviously. The advantages of the taxed policy are numerous; most importantly, it’s open and controlled by the markets to a very large degree. Security - a documented immigrant is easier to keep track of than an undocumented one. Promotes more trade between borders, I’ve read somewhere that there is a large portion of immigrants that would like to go back to their countries, but only if they had the option to re-enter; currently they can’t, so they stay.

I don’t know exactly how much government services (the product) the illegal workers use. I can’t imagine it being more than the amount of resources the INS uses to find and deport the mentioned workers. From my experience, most illegal immigrants earn just enough to pay rent and food, on which do they do pay taxes on. It could be their kids who eat up the largest share of government products, that being education. I wonder how much that is. There probably is a return for that in the future; if, say the kid becomes a schoolteacher or a lawyer and goes on to pay all of their taxes.

I don’t think there is a public consensus on open immigration policy, be it in the US of Europe. Most people just don’t like immigrants, be it their lack of language or the fear that they might take their jobs. But we can hope.

Eric Krieg writes:

If Victor Davis Hanson is conflicted in his book, he is no different than any other American with respect to Mexican immigration.

We all like the benefits of Mexican immigration: cheap services like at restaurants, lawn care, building trades, etc.

We all are concerned with the costs of that immigration. I raise money for a local free health clinic, and 90% or more of the "clients" are Mexican. Our local police chief says that most of the serious crime in town occurs in an area of apartments populated by Mexican immigrants.

The question that really needs to be answered is do the costs of Mexican immigration outweigh the benefits (or vice versa)?

I don't know the answer. Maybe it depends on who you are and what (Mexican supplied) services you consume. I don't go out to eat very often, and I mow my own lawn. I tend to think that the costs probably outweigh the benefits to me.

David Thomson writes:

The real problem with Mexican illegal immigration is the contempt the males have toward education. It’s perceived not to be macho if a man can read and write. Thankfully, the Asian immigrants do value education. When are the Mexicans going to also take their next step up the educational ladder? So far, it seems that many, if not even most, of the parents and their offspring are content remaining marginally to functionally illiterate.

Victor Davis Hanson remarks in his book about the Mexican men who reach middle age and have a harder time doing backbreaking work. Unfortunately, they lack even the minimal skills to find other employment. The result is that they often feel betrayed by the American experience.

Tom Dougherty writes:

Immigration tariff

Similarities between quota and tariff system:

I am not sure how much your proposal differs from the current quota system. Under the current quota system, legal immigrants must produce a paper from the home country showing that the individual has no criminal record over the past several years. Of course, someone with a criminal record may be able to bribe a public official to get a clean record. I assume your tariff system would be no different.

Currently, to my knowledge, legal immigrants must sign a form, which says that they are not eligible for government benefits. Under your system, immigrants will be covered under a private plan, which will reduce the need for government health care benefits.

I assume under current policy it is illegal to hire immigrants that are not registered with the government, i.e., illegal immigrants. Hiring someone “under the table” is also illegal under the current system. Therefore, I don’t see any difference here.

Criticism with a tariff system:

Once a guest worker enters the U.S. how long does he have to register with a private employment agency and what if he does not? With no numerical quotas, millions of immigrants could enter the U.S. each year. There is no guarantee that immigrants, once in the U.S., will register or if registered will stay registered.

The height of a workers wage will be determined by the marginal productivity of the worker. Subtracted from the worker’s marginal productivity will be: the fee to the employment agency (probably around 10% of the wage), the health care coverage (roughly 15% of the wage), payroll tax and miscellaneous government services (20% to 25%). So, the guest workers wage will be 55% to 50% of his marginal productivity. I am not sure if this number seems too small, but if not, then working backwards, no guest worker with a marginal productivity less than $12 per hour will be able to stay in the U.S. given the current minimum wage.

Low productivity immigrants (

Tom Dougherty writes:

How much will the immigration tariff be?

One tax I forgot to subtract from the worker's wage is the amount of the tariff. I think Arnold forgot to mention the amount of the tariff in his article. With the inclusion of the tariff, the guest worker's wage will be less than half of his marginal productivity - perhaps, substantially less than half of his marginal productivity. I would imagine the greater the gap between the guest worker’s wage and his marginal productivity, the greater the incentive for the guest worker not to register with an employment agency.

Steve writes:

--> How much will the immigration tariff be?

Eric Krieg writes:

I have mixed feelings regarding Mexicans and education.

On the one hand, the analysis that without education, middle aged male Mexicans are SOL is pretty hard to argue against.

But on the other hand, Mexicans in America ARE filling a niche. They by and large go into occupations that are labor intensive, that (perhaps) Americans are unwilling to perform. If they didn't fill these positions (because they were too educated to do so), who would?

And just because they do not value formal education does not mean that they are unskilled. I'm having a garage built as we speak, and all the labor is Mexican. The concrete work is very good. Ditto the carpentry.

It is my perception that Mexicans are more interested in trades than professions. I think that this is opposite to most Americans, and thus, in many ways, Mexican labor is complimentary to American labor.

Arnold Kling writes:

I meant the payroll tax of roughly 25 percent to be the "tariff."

On this topic of education, I read somewhere--then discarded the link--that the typical Mexican coming to the U.S. has an 8th-grade education, compared with a 6th-grade education on average for those who stay behind.

Eric Krieg writes:

Okay, Mexicans are coming here with an 8th grade education.

Well, black and hispanic students who GRADUATE FROM US HIGH SCHOOLS perform as well on standardized tests as white JUNIOR HIGH students! (they read and do math at 4 grade levels below that of whites).

School vouchers in America and REGIME CHANGE in Mexico.

Lawrance George Lux writes:

The answer to limiting immigration does not lie in quotas or tariff. It comes in the form of eliminating access of immigrants to American Welfare serices. A Law should be enacted and enforced, the second more important than the first; stating Unemployment benefits, emergency care benefits, Housing Assistance, and Job-retraining will be given to Immigrants; but only with transfer back to their native countries.

American embassies could maintain these facilities for foreign workers in the American economy, who have returned home. This would seem an impossibly huge expense and additional Government expansion, but would incite a return of 700,000 foreign workers to their native land per year. It would be cheaper to provide these Services in foreign countries than here, and would prohibit the Workers from return; until they could prove they were returning to a hired position in good health.

Emergency Care would be given, along with an immediate flight to their native land after stabilization. Housing Assistance in a Mexican city would be Five percent of what States currently pay for Housing for these Immigrants. Unemployment benefits would be set as a Cost-of-Living benefit geared to the expense of the Country to which the Immigrants are returned; then only for an non-renewable number of Weeks. The Law should also state illegal residence in the United States will never apply to Citizen residence requirements. lgl

David Lloyd-Jones writes:


There you go again, asserting offhandedly that taxpayers subsidise immigrants. That's just a load of old boots: immmigrant workers are buying gasoline, cigarettes and alcohol, all highly taxed. The services they consume, e.g. education for their children, usually have marginal costs two degrees north of zilch.

Here is your basic rule: a flat tax would be a great leap forward, because at present the poor are taxed the hardest.


Eric Krieg writes:

>>The services they consume, e.g. education for their children, usually have marginal costs two degrees north of zilch.

That just defies common sense.

Immigrants are poor. The poor cost society PLENTY.

They are more likely to be caught up in crime.

They go to schools that can least afford to finance their education.

What about health care? They get sick, they go to the emergency room, that costs EVERYONE who has health insurance.

Illegal immigrants don't have drivers' licenses and thus can't get auto insurance. That doesn't stop them from driving. The accidents that they get into cost EVERYONE in the form of higher auto premiums.

Now you can say that the immigrants pay more in cigarette and alcohol taxes than they cost us for the carniage I mention above. Maybe they do, maybe they don't. I don't think that anyone KNOWS for sure. And if there IS some proof one way or the other, I sure would like to see it, because I am an immigration skeptic.

Dave Sheridan writes:

Arnold, I liked your TCS piece and agree with it as an equitable framework in concept. Americans are of two minds about immigration because the beneficiaries of cheap labor do not bear the direct costs of public services this labor pool (and their families) utilize. Your system would align costs and benefits, assuring that the taxpayer and the least skilled American workers do not bear the brunt of unrestricted illegal immigration.

As to your question, I believe your system beats quotas but I would allow exceptions for bona fide political refugees. Yoiur registration and tax structure would help ensure that the immigrants we allowed in would be best able to contribute to society, would carry their own weight and would be able to adopt our language and culture. Quotas on the other hand offer no “quality control.”

The problem is enforcement of the laws against illegals. Your framework still imposes a lot of restrictions and costs that would still make illegal entry attractive for many. If we were to offer your kind of program, it would have to be accompanied by vigorous enforcement of our laws, to an extent we've never had the political will to actually carry out.

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