When Pfizer and BioNTech announced that they had developed an effective COVID-19 vaccine, arguments erupted over whether Pfizer was part of Operation Warp Speed, and by extension, whether the vaccine’s success ought to be attributed to government support or private-sector innovation. Though people squabbled over who deserved credit for the breakthrough, just about everyone extolled the virtues of immigration: BioNTech was founded by the children of Turkish immigrants, Dr. Özlem Türeci and Dr. Ugur Sahin. Most strikingly, some people went so far as to suggest that the vaccine would surely convince skeptics of the value of immigration — because who could possibly justify denying entry to brilliant scientists like Türeci and Sahin? But this point betrays a fundamental misunderstanding of the debate over immigration. It is “low-skilled” immigration, not “high-skilled” immigration, that provokes intense nativist outrage. So it is low-skilled immigration that must be defended — on moral, political, and economic grounds — in no small part because before Sahin was a world-renowned scientist, he was the son of a car factory worker.
An Economic Perspective
Most of the U.S. immigration discourse centers around high-skilled immigration, where the benefits intuitively outweigh the costs, both economically and politically. High-skilled immigrants tend to be highly innovative and entrepreneurial, promoting long-term economic growth and prosperity while paying substantially more in taxes than they consume in government services. As a result, a majority of the U.S. public supports high-skilled immigration and many economists and politicians rightly advocate for the expansion of the H-1B visa program.
But in making the case for high-skilled immigration, we are merely picking the low-hanging fruit and failing to engage with the more complicated objections to immigration, which typically involve low-skilled immigration. Low-skilled immigration presents more of a challenge due to the complexities of the philosophical, theoretical and empirical matters that underlie the seemingly straightforward question of whether we should admit more low-skilled immigrants.
My views on low-skilled immigration are partly informed by my personal experiences. When I was eight years old, a computer program drew my father’s name out of millions of entries and my family won the Diversity Visa Lottery, which allowed us to move to the United States. Since then, my parents have been working labor-intensive jobs and would probably be classified as low-skilled immigrants (though the phrase “low-skilled” is a nebulous term that often conflates low educational attainment and low wages). This is all to say that some people, myself included, approach this issue from an internationalist perspective. If you are concerned about foreigners’ welfare — even a little bit — the gains associated with low-skilled immigration are tremendous. When the average Nigerian worker moves to the U.S., he earns 16 times as much as he would back home. According to calculations by development economist Michael Clemens, an expansion of international migration could generate economic gains that amount to 20 to 60% of global GDP. These findings suggest that migration is our most powerful tool for reducing global poverty and inequality.
But if you only care about the well-being of people contained within your borders, then the case for low-skilled immigration is not quite as clear-cut. Low-skilled immigration does raise labor productivity and increase the GDP per capita of host economies, producing gains that are broadly shared across the population. Yet, people on the left and the right have voiced concerns about the possibility of adverse distributional effects, claiming that low-skilled immigration depresses the wages of low-skilled natives. Standard economic theory would predict that an increase in the supply of labor would lead to a decrease in workers’ wages. But this is not borne out by empirical evidence.
At the heart of the debate surrounding the economic implications of immigration lies a massively influential paper by prominent labor economist David Card. In his seminal 1990 study, Card exploited a “natural experiment” to examine the effects of an exogenous influx of immigrants on the labor market. The 1980 Mariel Boatlift represented an ideal “natural experiment”: It resulted in a large, unexpected increase of low-skilled workers in just one city, following the mass emigration of 125,000 Cubans, who arrived in Miami after being permitted to leave Castro’s Cuba. Card found that the Mariel Boatlift did not negatively impact the wages nor employment outcomes of native workers. A number of recent studies have confirmed Card’s results, both in the context of the Mariel Boatlift and other inflows of low-skilled immigrants.
Economist George Borjas, America’s leading immigration skeptic, reignited the debate when he published a study that challenged Card’s findings, concluding that the Mariel Boatlift caused dramatic decreases in the wages of native-born high school dropouts in Miami. However, other economists have thoroughly discredited Borjas’ findings, critiquing its limited sample size and its failure to account for shifts in the racial composition of the sample. This naturally raises the question of why reality diverges from economic theory. One reason is that immigrants contribute to labor demand as well as labor supply, consuming goods and services in addition to starting businesses. Moreover, Borjas assumes that immigrants and native workers are perfect substitutes, when in reality, immigrants often complement natives’ skills, pushing less-educated natives to pursue less manual and more cognitive employment.
Now, it is not inconceivable that low-skilled immigrants could theoretically supplant American workers, particularly in the short run. But even if we were to accept this as true, it does not logically follow that we must restrict immigration to protect American workers. Economic dynamism often creates “winners” and “losers” but there are ways we can support and uplift the “losers” without depriving everyone of the immense benefits of globalization.
Immigration versus Trade
To some extent, the debate over immigration resembles the debate over free trade. After all, immigration can be thought of as a form of trade, i.e. trading labor. But before we can begin to discuss the significance of this comparison, it is important to note that it is far from a perfect analogy. For one, it understates the benefits of immigration. Both trade and immigration boost productivity through the same mechanism — comparative advantage (the ability to produce a particular good or service at a lower opportunity cost). The economic gains from immigration partly stem from specialization, which is implied by comparative advantage: Immigrants tend to specialize in manual-intensive tasks, so natives respond to immigration by pursuing communication-based jobs, where they have a comparative advantage. Yet, the act of trading goods does not have an overt effect on the productivity of the workers who produced the goods. Immigration promotes even more growth and prosperity because it enables workers to become more productive simply by relocating from low-productivity countries to high-productivity countries, which are characterized by greater amounts of capital, superior technology and better institutions.
Furthermore, most economists recognize that free trade has costs; evidence suggests that exposure to Chinese import competition hurt American workers. However, they generally agree that this problem cannot be solved by imposing tariffs. Tariffs are economically disastrous, serving as taxes on domestic consumers. In an ideal world, the “winners” from free trade would compensate the “losers” in an effort to achieve a Pareto improvement (a reallocation of goods that benefits at least one person without harming anyone). But given how difficult it can be to identify “winners” and “losers,” some economists argue that we must take additional steps to strengthen the social safety net, such as funding a generous welfare state, empowering unions, and so forth. These measures would enable us to aid workers harmed by these policies and build support for trade in the first place. The same logic can and should be applied to low-skilled immigration. Even if one believes that Borjas is correct, the “losers” from immigration could theoretically be compensated by redistributing money from the winners, in addition to being protected by a strong safety net. This is how we can effectively address income inequality and lift people out of poverty — not by restricting immigration. It strikes me as ideologically inconsistent to simultaneously advocate for free trade and oppose immigration when both create “winners” and “losers.” This is a stance made all the more insupportable by the fact that the gains from the reduction of migration barriers outstrip the gains from further relaxation of trade barriers, with vanishingly small costs.
Some leftists and libertarians maintain that increased levels of immigration erode the sense of trust and solidarity needed to sustain popular support for a robust welfare state, a phenomenon that has been deemed the “progressive’s dilemma.” Attempts to determine whether this trade-off exists have yielded mixed and inconclusive results, but we should not be so quick to dismiss the issue of political feasibility. This trade-off is particularly frustrating because it does not reflect the actual costs of low-skilled immigration, which have been greatly exaggerated: most studies find that first-generation immigrants cause a small to modest fiscal drain on the state and local level, although some argue that their long-run fiscal impact is positive. However, the children of immigrants (the second generation) are unquestionably “among the strongest fiscal and economic contributors in the U.S.,” contributing more in taxes than their parents or their native-born counterparts. Furthermore, a recent study even challenges the assumption that low-skilled immigrants are a fiscal burden, finding that one low-skilled immigrant adds between $700 to $2100 to public finances through indirect fiscal effects, which may exceed the negative direct fiscal effect.
None of this is to say that immigration and welfare are necessarily incompatible. For instance, we could potentially placate native workers by prioritizing high-skilled immigration and favoring universal benefits over means-tested ones. But at higher levels of low-skilled immigration, political considerations may constrain how many low-skilled immigrants we are able to welcome to the U.S. or how many benefits we are able to provide or who can access those benefits and when, etc. At any rate, these are the types of conversations we should be having — rather than solely fixating on high-skilled immigration. As the daughter of “low-skilled” immigrants, I hope to convey what has always been abundantly clear to me: that the well-being of foreigners matters, and that low-skilled immigrants add so much value to the economy and our lives. The latter, in particular, is perpetually obscured by that designation.
Image by Elias Castillo is licensed under the Unsplashed License
