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What’s Worth More? One $100 Bill or Five $20 Bills?

Here’s a letter to the Wall Street Journal:

Seeking fewer restrictions on the immigration of high-skilled workers, Matthew Slaughter explains how the Employ American Workers Act (part of Pres. Obama’s ‘stimulus’ legislation) – by restricting the hiring of high-skilled immigrants – results in “Lost ideas. Lost jobs. Lost taxes” (“How Skilled Immigrants Create Jobs,” June 21).

Indeed. But the same is likely true for restrictions on low-skilled immigrants. By changing patterns of worker specialization, more low-skilled immigrants – like more high-skilled ones – can promote productivity improvements.

Consider, for example, Northwestern University economist Joseph Ferrie’s finding that “the transformation of manufacturing from manual to mechanical methods occurred most rapidly in [geographic] areas where a large unskilled labor force suddenly became available in the 1840s and early 1850s.”* An influx of low-skilled workers promoted a high-tech outcome that, in turn, helped fuel America’s economic growth. There’s no reason why similar outcomes wouldn’t occur today.

More generally, suppose that the typical high-skilled immigrant will annually enlarge America’s economic pie, on net, by $100,000, and that the typical low-skilled immigrant will enlarge this pie by only $20,000. If it’s foolish to deny ourselves the benefit that the typical high-skilled immigrant can bring, surely it’s equally foolish to deny ourselves the benefit that five typical low-skilled immigrants can bring.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

* “A Historical Perspective on High-Skilled Immigrants to the United States, 1820-1920,” in Barry R. Chiswick, ed., High-Skilled Immigration in a Global Labor Market (Washington: AEI Press, 2011), p. 37.