Reducing immigration: risky business for the economy

Yet another push for immigration reform in the US is underway. Lawmakers would be smart to cast aside their personal feelings about the issue and look at the evidence. It was already established that making a humanitarian appeal can lead people to support more relaxed immigration policies.

For the people who do not respond to empathy, there is another angle: our collective wallets.

Immigrants play an important role in the US economy and in other countries. Placing heavy restrictions that reduce the flow of migration can be harmful to economic health. That is the lesson from the UK, where economists with the UK-based National Institute of Economic and Social Research projected the impact of halving the nation’s immigration rate.

Cutting immigration in the UK by 50%, as proposed by some conservative lawmakers in the country, would result in an aggregate GDP decreases by 11%, by 2060 as compared current projections. That is economics speak for saying that cuts to immigration will hurt the economy.

The damage goes much further that lower GDP growth. With fewer people coming into the UK, there are then fewer tax payers, which means less revenue, meaning fewer people have to bear the burden of taxes (aka higher taxes overall). It is a scenario that nobody really wants to face, but support persists to make cuts to immigration in the UK.

The estimates are potentially the worst case scenario. It is possible that cutting immigration into the UK will only make things marginally worse, but the lesson is that it is still not in the best interest for the country. Less known is the implications of increased immigration.

“Our simulations necessarily do not take into account the potential social impacts of higher immigration,” writes Katerina Lisenkova, Senior Research Fellow at the National Institute of Economic and Social Research.

“This is a hotly debated area, which is beyond the scope of our study, but should be considered when formulating migration policy. Unfortunately, very often on this issue opinions trump evidence.”

Whether or not the US will see immigration reform take place in the near future has yet to be seen. There is a general pessimism about reform happening this year, as evidenced by the White House deciding to change deportation rules, without Congress. Speaker of the House John Boehner was candidly spoke about the difficulty to get Congress to take action.

“Here’s the attitude. Ohhhh. Don’t make me do this. Ohhhh. This is too hard,” said Boehner at an event at the Middletown Rotary Club, reported the Cincinnati Enquirer.

“We get elected to make choices. We get elected to solve problems and it’s remarkable to me how many of my colleagues just don’t want to … They’ll take the path of least resistance.”

Speaker Boehner has said before that both Republicans and Democrats will have to work together, in Congress and the White House, to get an immigration deal done. He does not have to go far to consult research on the benefits of more relaxed immigration policies.

Michael Clemens of the Center for Global Development, located right in Washington DC, says that relaxing global migration could be a boon to the global economy, to the tune of billions of dollars. The problem is that there are gaps in research that measures just how much can be gained from such policy changes and how to actually go about it.

“Building the world economy is obviously not the only goal of policies like migration barriers, but it deserves weight, and perhaps greater weight when the world economy is sagging,” blogged Clemens in 2011.

That is where the UK and the US have something in common. The immigration policies of two of the world’s leading economies shuts people out from opportunity and the world from greater prosperity and economic growth.

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About Author

Correspondent Tom Murphy is a Boston-based reporter for Humanosphere. Tom is a prolific writer-blogger and editor of the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy(at)humanosphere.org.

  • ErikKengaard

    Nonsense. The “economy” (the 1%) is one thing. The quality of life of the middle class is another, and excessive immigration has greatly diminished that quality of life since the 40s, 50s and 60s.