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Monday, March 27, 2006

Immigration Is a Nuisance

From Arnold Kling at TechCentralStation:

I believe that illegal immigrants bring relatively little economic benefit and cause relatively little economic harm. I believe that there are substitutes readily available for the work done by illegal immigrants. Legal residents could do some of the work. Other labor could be replaced by capital or by alternative production techniques. By the same token, because there are many substitutes available for unskilled labor, the salvation of American workers does not lie in immigration restrictions.

My prediction is that effective restrictions on illegal immigration would cause a shift in the location of unskilled labor, but not a meaningful long-term change in real wages. In the short run, wages for unskilled labor would rise in the United States. This would cause more manufacturing plants to relocate outside the United States, driving wages back down. Compared with the situation today, the net effect of immigration restrictions would be to shift some Mexican workers out of service work in America and into manufacturing work in Mexico. Within the United States, the reverse would happen: legal residents would lose manufacturing jobs more rapidly, and hang onto low-wage service jobs longer. I do not think that these economic effects are important.

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