Against Zero-Sum Immigration Games
There’s something troubling about this paper, at least based on the abstract:
In this paper, we quantify the labor market effects of migration flows in OECD countries during the 1990′s based on a new global database on the bilateral stock of migrants, by education level. We simulate various outcomes using an aggregate model of labor markets, parameterized by a range of estimates from the literature. We find that immigration had a positive effect on the wages of less educated natives and it increased or left unchanged the average native wages. Emigration, instead, had a negative effect on the wages of less educated native workers and increased inequality within countries.
If I understand that right, then they are saying that when country A experiences immigration from country B, country A’s natives do better, particularly at the bottom of the education scale, whereas country B’s natives do worse, particularly at the bottom of the education scale.
That doesn’t sound like the positive-sum dynamics that advocates of more open immigration usually claim. Instead, it sounds like the dynamics of “brain-drain” – the migration of the most-educated or -talented portion of a population to zones of greater opportunity. Yes, I suspect that would benefit the receiving country – and particularly those at the bottom of the wage scale, who would not be facing a great deal of increased competition and would get the benefit of improved economy-wide productivity. And, obviously, the opposite would be true for the sending country.
But I don’t think that’s a great way for rich countries to approach immigration – precisely because it’s transparently trying to benefit the receiving country at the expense of the sending. And, indeed, that’s why we have agreements with a variety of countries (particularly poorer western hemisphere countries) not to try to poach their most valuable citizens – for example, doctors who have been educated expensively (and often at public expense) in their home countries, but who would earn a lot more in America than they would in, say, Brazil or Jamaica.
I agree with Tyler Cowen that “open borders” is not a realistic policy in an age of high mobility and a substantial welfare state, even for large rich countries like the United States. But I don’t think that the kind of evidence from this kind of paper will do anything to convince immigration restrictionists that we should actually increase immigration.
Nor do I think you can sell immigration increases with zero-sum arguments that suggest the receiving country is getting the better end of the deal (assuming anyone believes them). You need to sell a positive-sum story. And that means structuring your immigration policy so it looks like it’s going to generate positive-sum outcomes.
Personally, I would encourage advocates of more liberal international labor markets to come up with ways to reduce the friction and dead-weight loss associated with our immigration system that do not also necessarily imply a large increase in immigration. The proposal I keep coming back to in this regard is to auction works visas. If you believe that immigration generates negative externalities, it makes sense to tax them. But if you believe that, on net, those externalities are positive, it still makes more sense to limit immigration by auctioning visas than by handing them out for free to people who jump through all kinds of costly bureaucratic hoops. And it also makes more sense to limit immigration this way than by having the government decide what kind of skills our economy “really” needs.
A freely tradable visa would make it much more difficult to exploit immigrant workers (who could now freely change employers without risking deportation), which would counter one of the strongest arguments against the current visa regime. And by generating revenue for the treasury, it would create a straightforward economic incentive to increase the number of available visas to the point where supply and demand curves crossed (not that we’d necessarily issue that many visas – but the incentive to do so would exist).
And what about the sending country? Well, if we know ways to fund positive economic development in sending countries, we could spend some of that visa revenue on such. And even if we don’t, putting a price on a visa means that there’s always an economic incentive to return home (or to settle permanently and become a citizen).
Anyway, I’ve made these arguments before, but we all have to take our hobby-horses out for a ride every now and again.
(By the way, I also wondered whether we’ve got cause and effect confused here – whether emigration is correlated with wage stagnation in the sending country because both are driven by a lousy local economy, and immigration correlated with rising wages at the bottom because both are the effects of a booming economy. But I’m assuming that the paper’s authors have a good answer to that.)