Sunday, October 31, 2010

Would increased immigration help?

So argues NYT columnist and George Mason economist/blogger Tyler Cowen.  Cowen cites a new study by Gianmarco Ottaviano of Bocconi and Giovanni Peri of UC-Davis that argues an increased supply of immigrants here in the US (both high and low skill) reduces off-shoring and thereby helps the economy overall.  The key to their argument is whether low skill immigrants are complements for their domestic counterparts or substitutes.  As Cowen puts it, does the immigrant brick layer take the native brick layers job at a lower wage or fill in a gap as the native gets promoted to supervisor (and no natives are interested in being brick layers)?

I do not question the gain from high-skilled immigrants; economic research shows they help in many dimensions (including increasing competitive standards in our secondary schools; check out any list of valedictorians in any part of the country).  I am not so sure on the low-skill side of the equation.  Studies by my Harvard colleague George Borjas indicate that the availability of a wide range of income maintenance programs and public goods also can be drivers of immigration that end up being a drag on the economy.  Still, it is refreshing to see some positive-sum thinking on this thorny question.  If only we could get the real estate lobby to see the upside!

1 comment:

  1. I disagree with your statement " I am not so sure on the low-skill side of the equation.".

    So, were immigrants from the 16th to 19th centuries that came from Ireland, Germany, Sweden, England, Scotland, Denmark, Italy, and all other white ethic countries "high-skill"?
    It happens that these people built what now is the USA, I do not see why the "low-skill" immigrants from today should not be considered as good as those from centuries before, agree?

    Posted by an NC State MBA student.