6. Effect on Natives' Human Capital Utilisation
Do immigrants make natives and the economy as a whole more productive or less so?
Though the direct effect on industrial productivity is hard to nail down statistically, in the long run the beneficial impact upon industrial efficiency of additional immigrant workers and consumers is likely to dwarf all other effects. (The Economic Consequences of Immigration, p. 370)
On the positive side, Simon notes
working at the forefront of world technique. American citizens benefit along with others from contributions to world productivity, in, say, genetic engineering that immigrants would not be able to accomplish in their home countries. [...T]here are more persons who will think up productivity-enhancing ideas.
Other increases in productivity due to a larger population [...] come from increased production through learning-by-doing, together with other gains from larger industry scale. Also, increasing the number of customers and workers increases investment, which brings more new technology into use, due to immigrants swelling the population. (Ibid.)
On the negative side, Simon points to the trade-off between skill levels of immigrants that
- produce gains from positive comparative advantage (a less skilled assistant may improve the overall productivity of a specialist), and those that
- drag down the skill level in the receiving country:
[I]f there is a huge flood of immigrants from Backwardia to Richonia, Richonia will become economically similar to Backwardia, with loss to Richonians and little gain to immigrants from Backwardia. (Ibid.)
7. Effects on Natural Resources and Environment
Simon reasserts his thesis spelled out in the Ultimate Resource:
Additional people do increase resource demand and prices in the short run. But in the longer run, when the system has had a chance to find new sources and substitutes, the result is that resources are typically more available and cheaper than if the temporary shortages had never arisen. (Ibid., p. 371 - emphasis added)
8. Aggregate Effects
When looked at by natives as an investment, similar to such social capital as dams and roads, an immigrant family is an excellent investment worth somewhere between $15,000 and $20,000 to natives, even calculated with relatively high rates for the social cost of capital. (ibid. and here)
9. Labour Market Effects
No study has found across-the-board unemployment caused by immigrants [...] And effects on particular groups are surprisingly small or non-existent, even groups (such as blacks and women in California) seemingly at special risk from Mexican immigrants. In short, immigrants not only take jobs, they make jobs. They create new jobs indirectly with their spending. They also create new jobs directly with the businesses they are more likely than natives to start. (Ibid. p. 372)
10. Income Distribution
Simon maintains, there is no evidence that immigration widens the income distribution in the US.
While Simon does see problems related to the influx of illegals, economically speaking he notes, representing
lower-than-average amounts of human capital, [...] they increase the competition that native unskilled workers face. But the damage to the latter group is far less than is popularly imagined; and the overall effect of the illegals is positive in every manner of influence examined here. [I]mmigrants use very small amounts of public services [...] both because of their favorable age distribution and because they are afraid of apprehension if they attempt to obtain services. At the same time they pay income and Social Security taxes many times the cost of the services that they use. (Ibid. p.373)
12. Policy Recommendation
Popular misgivings concerning overloading the welfare system and creating deleterious labour market effects are exaggerated, and, indeed, non-existent or - when occurring in selected areas - overall insignificant, according to Simon. He considers inundation by mass immigration unlikely, and the assessment of its putative impact hard to anticipate with any precision and certainty:
Taking immigrants in at a rate equal to, or even far above, our present admission rate improves our average standard of living, on balance. [...] Rather than being a matter of charity, we can expect our incomes to be higher rather than lower in future years if we take in more immigrants. Therefore, increasing the total immigration quota is recommended. (Ibid. 373)
He explains further:
Therefore, a policy which is both prudent and also consistent with these observations would be to increase immigration quotas in a series of increments of significant size - perhaps half a percent, or one percent, of total population at each step - to check on any unexpected negative consequences, and to determine whether demand for admission ever exceeds the supply of places. (Ibid. p. 376)
His ultimate conclusions leave me somewhat uncertain as to the scheme he is actually proposing, as he concedes that mass immigration may alter the positive picture drawn by him disadvantageously, yet he recommends large increases in admission quotas, and then again seems to hedge his position by recommending a system that favours relatively wealthy and highly-skilled applicants:
If a country is to ration by the amount of human and financial capital that the potential immigrants will bring to invest, why not go even further and simply auction off the right to immigrate, with the proceeds of the auction going to the public coffers? [...] The key to the efficiency of an auction system is that individuals are likely to assess their own economic capacities better than can an arbitrary point system; the latter process does not take into account many of the most important characteristics because they are not identifiable with demographic criteria. Those persons who will stake their own money upon correct identification of such capacities are ipso facto the best possible bets to be high economic producers in the US. Recommendation: Adopt an auction plan.(Ibid. p. 363)
At any rate, the purpose of the first and second part of the present post is to get to know the arguments of the contending schools (here the position taken by Julian Simon) and build up a more comprehensive picture of the structure of dissent in the debate surrounding immigration.
At this early stage, I do not know where I am heading.