The Benefits of Immigration: Some Implications of

Transcript:The Benefits of Immigration: Some Implications of:
The Benefits of Immigration: Some Implications of Recent Findings Ethan Lewis Dartmouth College The Standard Model Gains to immigrants themselves are huge Large cross-country income differences persist The world would benefit from a much freer immigration system (e.g., Hamilton and Whalley 1984, Kennan 2013) Gains to receiving country are comparatively small, and contingent on much larger distributional impacts (e.g., Borjas, 1999) Typical estimate of net benefit: Well <1% of GDP. The Standard Model Immigration produces benefits by tilting the wage structure: A country gains the most from immigration when it admits immigrants with “scarce” skills: those skills which are rarest in the existing population This lowers the wage of those scarce skill, but raises the wage of everyone else (the commoner skill) and on average natives benefit There are winners and losers A skill-balanced inflow produces no long-run benefits Perhaps a (very) short run benefit for native “capital owners” The standard model: what’s missing? Factors which make benefits larger: Imperfect substitutability between immigrants and natives in the same observable “skill group” ↑s natives’ gains from immigration: adverse distributional consequences are borne more by immigrants themselves Related: gains from product variety Productivity spillovers Factors which (generally) make benefits smaller: Long-run adjustments in production technology Non-wage impacts: public goods, compositional amenities Gains from Variety Immigrants increase variety of goods & svcs More small firms (Olney, 2013), ethnic diversity in restaurants (Mazzolari and Neumark, 2012) though perhaps more big-box retailers Hedonic value (Ottaviano and Peri, 2006) Another mechanism: scale effects increase the extent of the product market Large effects from scale effects of immigration, e.g., 5% of GDP in U.S. (di Giovanni et al., 2013) Productivity Spillovers Spillovers, but… But Paserman (2013) finds no evidence of productivity spillovers in Israel following the influx of former Soviet Union immigrants He looks across industries and firms Some evidence that high-tech sectors benefitted Misses aggregate effects? Israel too far from the technological frontier? Spillovers, but… more Other factors not in standard model Entrepreneurship: immigrants have high rates May also have productivity benefits Long run adjustments in production techn. Public goods Conclusions Standard model: immigration has benefits, but come with larger distributional consequences Benefits largest from immigrants with skill that are scarce in the native population (low-skill in US) Standard model leaves out many things, some of which may dwarf benefits in stand. model Although more research supporting this claim would be helpful Bonus Slides Imperfect Substitutability