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We Wanted Workers...

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WeWantedWorkers_cover.jpeg Amidst all the babble recently about building walls, travel bans, and so on, it was refreshing to find a reasoned and nuanced discussion of immigration issues in this week's EconTalk episode. Borjas, himself an immigrant, is less sanguine about the benefits of open borders than host Russ Roberts, and the friendly tension makes the conversation that much more lively. Both Borjas and Roberts agree that while supply and demand analysis is useful, it nonetheless has its limitations. In their conversation, they employ these tools to look at the effect of varying flows of labor, goods, and capital into an economy. (If you're in the classroom, this episode could be the basis for a stupendous supply and demand graphing fest!!!)

The title of the episode (and Borjas's book) is compelling, and is very illustrative of the point Borjas seems most to want to drive home. It comes from Swiss novelist Max Frisch, and the power is in the second clause: "We wanted workers...but we got people instead." Frisch was referring to the guest workers being imported into Europe, and particularly Germany, in the 1950s and 60s, contributing, in part, to the "German economic miracle." Says Borjas, "the reason that I think that's sort of one of the themes that I stress in the book is that even though I'm an economist, I tend to be a little dissatisfied with the very mechanical way in which economists view immigration. The typical--let me call it the 'economistic' way of looking at immigration looks at them as a bunch of robotic workers that you can basically move from place to place as the need arises...But the fact is that immigrants are human beings as well. And people make decisions. And people make decisions that are based on what is best for them...The point is that, the fact that immigrants are something beyond workers, and that they play a role that is not just this robotic kind of role of moving from factory to factory, means that we have to look at the impact of immigration in a much broader framework. We have to take immigrant decision-making into account, in particular."

Roberts and Borjas ultimately agree that there are in fact short-run costs implicit in immigration, particularly for native-born workers (though they do disagree somewhat on the size of said costs), and that policy makers would be well served to take such costs into account. It's much more "humanomics," to use Bart Wilson's phrase, than traditional economics. What the policy response should be to these costs remains an area of disagreement for the two. Roberts makes the argument that despite the potentially severe costs to the current generation, they may rest assured that the standard of living for their children's and grandchildren's generations will be much higher as a result. Borjas isn't so sure that's true.

The conversation closes with a very interesting discussion of assimilation (and Borjas's own experience fleeing Cuba early in the Castro regime). Borjas cites the early influence of Barry Chiswick on his early work on immigration. Chiswick argued there were tremendous benefits to assimilation, as he found immigrants who'd been in the United States longer earned much more than more recent arrivals. Again, Borjas was not sure, and relates back to the Cuban case. Perhaps, he and others have argued, the earlier immigrants were of a different sort (or more specifically, skill set) than the later, and that's what explains their higher earnings. He makes an important point about the (skill) distributional effects of immigration, again leaving a dangling policy question.

There has of course been lots and lots of discussion on immigration here at Econlog, most notably from Bryan Caplan. You might also recall this (still) popular 2010 Feature Article from Benjamin Powell, and this more recent one from Daniel Kuehn. Columnists Pedro Schwartz and Anthony de Jasay have also taken a look at the issues with immigration particular to Europe here, here, and here.

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COMMENTS (2 to date)
Thomas Boyle writes:

I take issue with your statement, "there are in fact short-run costs implicit in immigration, particularly for native-born workers".

Consider tourists. No-one says that there are short-run costs implicit in tourism for native-born workers. Why? Because tourists spend money and create jobs.

Of course, tourists spend maybe 2% of their annual income here, during their visit - perhaps less.

If those tourists actually lived here, they would spend closer to 98% of their annual income here - and that would create nearly 50 TIMES as many jobs.

What about the American worker who would lose a job? Actually, the American worker wouldn't lose a job. That tourist already works full time, somewhere in the world. Unless you believe the total work pie decreases because the tourist moved to the US, what really happens is that they bring almost an entire job with them. So, some American worker loses maybe 5% of a job, perhaps 10%. But that's nothing compared to the benefit to all the other American workers that comes from the tourist (now immigrant) spending 98% of their income here, in this economy.

Immigrants create jobs.

All we're doing, when we limit immigration, is forcing the would-be immigrants to compete against our companies, innovate elsewhere, and spend their earnings anywhere BUT in our country. That's putting America LAST, not first.

Thomas Boyle writes:

Second point, is that your post suggests that the U.S. is importing workers. It's not. Mostly, it's importing family members - and NO-ONE ELSE. As a mere worker - even an upper-middle-class one from the U.K., Ireland, Australia, Canada, Germany, New Zealand, Poland, Switzerland, i.e., modern democracies that are highly culturally compatible with the United States - there is literally no way to migrate legally to the U.S. unless you marry a citizen. Yes, there are exceptions for academic stars, media stars, corporate leaders and a few techies, but if you're merely a doctor or a teacher or an accountant or a property developer or an entrepreneur or a passionate believer in American values... no way. There is no "get in line" option.

"Importing workers" would be a big change from where we are.


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