In his first speech announcing his candidacy for president, then-candidate Donald J. Trump argued that immigration, legal and illegal, posed a serious problem for the United States.
Candidate Trump emphasized border security and a border wall to stop illegal immigration, but he also spoke about his desire to restrict legal immigration. His unexpected victory put immigration at the front and center of the national debate and forced us to take his policy recommendations seriously.
His statement of principles on immigration, if turned into law, would cut legal immigration by about two-thirds and potentially halt illegal immigration.
Although President Trump has largely focused on immigrants’ supposed criminal behavior, the low rate of immigrant incarceration and falling crime rates in areas with more immigrants indicate that this is not a serious argument against immigration.
Instead, Trump’s criticism hinges on the economic impact of immigrants.
In the language of economics, Trump’s criticism of immigrants is that the costs they impose on American society exceed the benefits they produce.
Many of the economic problems facing America today that are often blamed on immigrants are not worsened by them. Rather, immigrants have either a tiny effect on those problems or actually help alleviate them.
Immigrants do tend to be less educated than natives although the gap is narrowing. Their lower levels of human capital mean that they are generally less productive and thus earn lower wages, potentially competing with many lower-skilled Americans. But, while immigration has an overall positive effect on American economic growth, immigrants only have a small effect on the wages of native-born Americans.
The downside risks of immigration liberalization such as wage competition and the possibility of negative institutional changes that could undermine future growth are at most very small or turn out to be correlated with improvements, respectively.
Meanwhile, immigrant entrepreneurship is an important driver of innovation and firm creation in the United States. Immigrant self-employment has grown dramatically over time and exceeds that of native-born Americans, especially for those with lower education. And, immigrants also add trillions of dollars in value to the national housing stock.
Immigration is an emotional subject for many Americans. About a quarter of us are immigrants or their children. Virtually all of us can point to relatively recent ancestors who came here from a foreign land. Similarly, many Americans are outraged that so many illegal immigrants have violated American laws.
Our hope is that a serious analysis of immigration’s economic impacts will help cool some of those emotions and instead shed light on this important policy debate.