Milton Friedman, Immigration, and the Welfare State

by Don Boudreaux on May 12, 2010

in Immigration

In my latest column in the Pittsburgh Tribune-Review I undertake a risky task: to disagree with Milton Friedman.  But Friedman was one of history’s greatest scholars – and great scholars never accept arguments exclusively, or even chiefly, on authority.  Specifically, I here challenge Friedman’s argument that the existence of America’s welfare-state makes it unwise to return to the more-open immigration regime that America had until the 1920s.

Anticipating one objection – namely, that immigrants are in fact a drain on the American welfare state – I point here to this article in the Concise Encyclopedia of Economics by George Borjas.  Among all serious scholars researching the effects of immigration, Borjas is among those who are most inclined to see today’s immigrants as burdensome.  Even Borjas, though, concedes that the data do not show that immigrants are a significant drain on Americans’ wealth.  Here are some relevant passages from Borjas’s article:

Although the entry of immigrants reduces the wages of comparable natives, it increases slightly the income of U.S. natives overall.

Many people believe that because a large percentage of immigrants go on welfare, the costs to American taxpayers may wipe out the gains from immigration. Increasingly, the evidence tends to indicate that because of these fiscal impacts, immigration is essentially a wash for the U.S. economy….

Borjas goes on to point out that something that is “a wash for the U.S. economy” is hardly the economic boon that many of its proponents make it out to be.

That’s an argument best left for future blog posts.  I add here only that the data that Borjas uses are all from a regime in which immigrants’ abilities to find gainful employment (and, hence, to pay taxes for whatever public goods they use) are severely hampered by Uncle Sam.

UPDATE: Here’s a 2006 essay by Shikha Dalmia with some additional numbers.

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