The most neglected fact in immigration economics

Donald Trump not only wants to build a wall across the US-Mexico border, he wants to find a way to make Mexico pay for the construction of the wall. It’s part and parcel of Trump’s bombastic nationalism shtick. But it raises an obvious question: If stopping people from moving here is so important, why quibble about the money? And that, in turn, raises the single most neglected point about the economics of immigration: Even the studies by the most immigration-skeptical economists show that immigration raises the incomes of native-born Americans on average.

Don’t take my word for it. Ask George Borjas, who tends to be far and away the leading economist in the immigration-skeptical camp. He says the current level of immigrant workers in the United States raises US GDP by about $1.6 trillion relative to where it would be in a zero-immigration universe.

But he cautions (emphasis added):

Of the $1.6 trillion increase in GDP, 97.8 percent goes to the immigrants themselves in the form of wages and benefits; the remainder constitutes the “immigration surplus” — the benefit accruing to the native-born population, including both workers, owners of firms, and other users of the services provided by immigrants.

Wow — 97.8 percent! That sure sounds like a high number.

But the key thing about it is that 97.8 percent is less than 100 percent. Which is to say that immigrants — unlike, say, thieves — are not imposing any net costs on the native-born. In fact, while drastically raising their own income they are slightly raising everyone else’s income. And that’s according to an economist who thinks high levels of immigration are bad public policy. Other studies by more immigration-friendly economists see considerably larger gains to the native-born. But the whole argument is about how big the net economic benefits to the native-born are, not whether they exist.

Under the circumstances, Trump is correct. In strictly economic terms it doesn’t make sense to be expending resources on trying to keep Latin Americans from moving to the United States. Immigration isn’t costly, it’s beneficial.

Of course, this makes the rest of his punitive anti-immigrant plan seem very costly in economic terms. But people have lots of concerns about language and culture that aren’t captured in dollars and cents, and research indicates that these fears are what drives most anti-immigration politics. Trump does a good job of expressing that.