Costs and Benefits of Immigration--A National Academy Report

Is immigration to the US good or bad for the economy? Both, as it turns out. Whether it is one or the other depends on who you are, but on balance some immigration is better than no immigration. That is the elevator speech conclusion of a new report just out from the National Academy of Sciences, which you can download for free from the website of the National Academies Press. It is a lengthy and impressive volume. Indeed, two members of the National Academy of Science committee responsible for the report are past presidents of the Population Association of America (Charles Hirschman and Marta Tienda) and two of the acknowledged reviewers of the volume are past presidents of the PAA (Ronald Lee and Douglas Massey). If you don't have time yet to read the whole book, check out the review by Thomas Edsall in today's NYTimes, which relates the report's findings to the current political situation.

The crux of the problem is that the plusses and minuses are not distributed equally. The academy found, for example, that the willingness of less-skilled immigrants to work at low pay reduced consumption costs — the costs to consumers of goods and services like health care, child care, food preparation, house cleaning, repair and construction — for millions of Americans. This resulted in “positive net benefits to the U.S. economy during the last two decades of the 20th century.” These low-wage workers simultaneously generated “a redistribution of wealth from low- to high-skilled native-born workers.”

In other words, low wages are not good for people having to cope with their own low wages, but the resulting lower price of goods and services is beneficial to everyone, even including those with low wages. Who benefits most from immigration? Businesses, landowners and investors who reap a greater profit from lower cost labor. Who suffers most? Low-skilled workers, including recent immigrants competing with even more recent immigrants. However, as Edsall notes, the report's conclusion is decidedly pro-immigration, as he quotes from the report itself:

Immigration is integral to the nation’s economic growth. The inflow of labor supply has helped the United States avoid the problems facing other economies that have stagnated as a result of unfavorable demographics, particularly the effects of an aging work force and reduced consumption by older residents. In addition, the infusion of human capital by high-skilled immigrants has boosted the nation’s capacity for innovation, entrepreneurship, and technological change.

As is true so often in life, complex issues can be interpreted in a variety of ways, so this report is likely to wind up being ammunition for both pro- and anti-immigrant groups. That's not very satisfying, but it is real.