Quotation of the Day…

by Don Boudreaux on February 3, 2016

in Budget Issues, Immigration, Myths and Fallacies, Seen and Unseen

… is from pages 63-64 of Alex Nowrasteh’s excellent article “The Fiscal Impact of Immigration,” which is Chapter 3 of the new collection (2015), edited by Ben Powell, The Economics of Immigration (citations omitted):

The economic benefits of immigration are unambiguous and large, but the fiscal effects are dependent upon the specifics of government policy over a long time period, which means that the net fiscal impact of immigration could be negative while the economic benefit is simultaneously positive.  Looking at the results of all these studies, the fiscal impacts of immigration are mostly positive, but they are all relatively small.  They are rarely more than 1 percent of GDP in dynamic models.  Even dramatic changes in the level of immigration have small effects on government budgets and deficits.

Alex here emphasizes an important distinction that is typically overlooked in the public discussion of immigration – namely, the distinction between immigration’s fiscal effects and its economic effects.  The former is a subset of the latter.  That is, even if immigration causes a net increase in the amount of money that non-immigrant citizens of the destination country pay in taxes (or causes a net increase in government budget deficits), this fact does not mean that non-immigrant citizens of the destination country are made poorer by immigration.  The impact of immigration on economic growth must also be considered.  It is quite possible that the immigration-caused positive growth in the economy is larger than whatever negative fiscal impacts immigration might have in the destination country.

As Alex’s article shows, the fiscal impacts of immigration in the U.S. are likely positive but, be they positive or negative, these impacts are small.  And so because the non-fiscal economic benefits of immigration are unambiguously huge, it is a myth to believe that immigration is making non-immigrant Americans poorer on the whole.


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