Illegal immigration into the US - the good, bad and the ugly
 ONE of the big issues that has kept the United States electorate in its thrall has been illegal immigration from Mexico with some arguing that it is a good thing, at least not a bad thing, while others insist it is ruinous to the nation and its economic prospects.
Illegal immigrants are five per cent of America's work force. There is almost no way for low-skilled Mexicans who lack American relatives to go north legally.
That means Mexicans make up half of all illegal immigrants, but only a fifth of all legal ones, reports London's Economist newspaper.
Mexicans tend to be less educated than other immigrants. In 2014 nearly 60 per cent had less than a high-school education, compared with less than 20 per cent of immigrants from other countries, according to the Pew Research Centre, a think-tank.
Illegal immigrants are more likely than legal ones to work in unskilled occupations like services and construction.
Saying who are the main economic losers from this flood tide of low-skilled immigration is hard to say when the question is fully explored.
Typically, American economic booms have induced Mexican across the Rio Grande that divides the two countries, often encouraged by corporate America, anxious to exploit the affordable labour.
Economic slowdowns have had Mexican and other Central American immigrants demonised as "wetbacks", a reference to their swimming across the Rio Grande, the river separating the two nations.
There is nothing new in today's hostility. The 1930s and 1950s both saw indiscriminate mass-deportations; in 1976 President Gerald Ford wondered how best to "get rid of those six to eight million aliens who are interfering with our economic prosperity".
The latest bout of immigrant bashing fits the mould: it comes on the heels of an economic downturn. But it is also strange, because the undocumented population levelled off after 2007.
In 2015 there were just 188,000 apprehensions of Mexicans at the border, down from 1.6 million in 2000. This is partly because the recession reduced the magnetism of America's labour market. But the Economist notes it also reflects a much more secure border - the number of border agents quintupled between 1992 and 2010 - and changing demography in Mexico, where the birth rate has been falling since the early 1970s.
The costs and benefits of this migration is debated by academics about the impact of low-skilled migration, both legal and illegal, on wages.
Most recently this has centred on a dispute between two economists, David Card at the University of California, Berkeley, and George Borjas, at Harvard, over the effect of an unexpected surge in Cuban migrants to Miami in 1980, the so-called "Mariel boatlift".
In 1990 Mr Card found this influx had no effect on the wages of low-skilled workers in Miami; Mr Borjas has now revisited the analysis, and claims that wages of high-school dropouts in fact fell substantially.
This dispute, however, is only part of a much broader debate. Most other research finds that immigrant flows harm at least some workers, as economic theory usually predicts they should when immigration changes the balance of skills in an economy.
The debate is over who suffers, and how much. Findings depend on two factors: First, how to define unskilled workers. Mr Card and others like to include both high-school graduates and dropouts.
In 2014, there were 64 million such workers aged between 25 and 64 in America. Mr Borjas prefers to treat high-school dropouts separately in his research, so that the lowest-skilled migrants compete with fewer existing workers: 20 million, at last count.
The second factor is whether migrants and native workers are substitutes or complements for each other. In 2011, a study by Gianmarco Ottaviano and Giovanni Peri, two economists, found that immigrants seem to compete mostly with other immigrants, even when controlling for age and education. One possible explanation is that unskilled natives respond to an increase in migration by specialising in work that makes better use of their command of English.
Ottaviano and Peri concluded that between 1990 and 2006 immigration had a small positive effect on the wages of unskilled American-born workers, but reduced the wages of previous generations of migrants by 6.7 per cent.
Mr Card says the "worst-case scenario" is that immigration has cut the wages of high-school dropouts by about five per cent over 20 years, which, compared with the effect of technology and other trends, is not much. Mr Borjas says larger effects are possible.
But everyone agrees that the more workers and new immigrants can substitute for each other, the more likely it is that immigration will change relative wages.
If the workers most comparable to illegal Mexican immigrants are legal ones, they will be most likely to have seen their wages depressed by illegal migration. Any such effect would probably have been compounded by the fact that firms who hire undocumented workers off-the-books need not pay them the minimum wage or adhere to other regulations.
One survey of low-wage workers in Chicago, Los Angeles and New York in 2008 found that 37 per cent of undocumented workers had been paid less than the minimum wage, compared with 21 per cent of legal migrant workers.
Illegal migrants also may find it hard to move jobs, especially in states that require employers to check their papers. Their immobility could reduce their bargaining power.
It certainly seems to stunt their wage growth. In 2009, Pew found that among those who had been in the country for less than 10 years, legal migrants earned 18 per cent more than illegal ones; among those with more than a decade under their belts, the gap was fully 42 per cent. It is possible, though, that the wages of both these groups had still been dragged down relative to those of native workers.
The flipside of low wages for illegal immigrants, though, is greater economic benefits for those who are not competing with them for work. A rare study of the effect of illegal immigrants specifically found that in Georgia, a one-percentage-point increase in undocumented workers in firms boosted wages by about 0.1 per cent.
One explanation is that such firms benefit from a richer mix of skills within their workforce. Another explanation is that they are sharing the spoils of the savings that stem from hiring workers on the black market.
Just to show there are other ways of looking at the problem, one can turn to Joseph Stiglitz, of New York's Colombia University Business School, who says much of this talk is irrelevant.
"Large corporations are sitting on a couple of trillion dollars of liquid funds. The problem is access to finance by small and medium sized enterprises (SMEs)," said Mr Stiglitz.
"There is an agenda that will work to restore growth: Climate change. Imposing a carbon price, reflecting the social cost of emissions, would stimulate investment," he said.
"With the real interest rate at which government can borrow much at lower rates than the returns on public investments in infrastructure and technology, such investments would increase growth both today and in the future," he said.
"Institutionally, this investment could be financed through an infrastructure bank: the European Investment Bank has proven to be an effective way of financing infrastructure on a large scale.
Mr Stiglitz said social inequality dampens economic growth. "The conventional economist focuses on supply and demand; how shifts in the demand and supply curves enrich the top at the expense of the rest.
"In this perspective, the task of reducing inequality is to identify the forces, change them, and perhaps identify forces that would move demand and supply curves in a more salutary way," he said.
In any case, were a president to deport all illegal immigrants, the economy would suffer greatly. Just ask Arizona, where a crackdown on illegal immigrants in 2007 shrank the economy by two per cent, according to a private analysis by Moody's ratings agency, for the Wall Street Journal. The incomes of most workers would fall. Yet strangely enough, those best placed to benefit from a mass deportation would be those who had crossed the border legally.
Illegal immigration from Mexico is almost 100 years old. A law of 1917 was the first to regulate the southern border. Stricter controls followed all through the 20th century, often during the low points of a recurring cycle of sentiment towards immigrants, which promises to have a controversial future at least as long as its history. |
