Economic Efficiencies of Illegal Immigration

Migration policies are often irrational (more on that in a later post). In economic terms, the life of a local is worth much more than that of an outsider. We would rather do business with someone we know and trust than choose the best bargain or talent. The Economist stresses this market distortion in an evaluation of the proposed immigration reform in the United States:

Unfortunately, the senators' plan ignores the economics of illegal immigration. Its laws of motion are set out in a recent paper by Gordon Hanson of the University of California, San Diego. He points out that unskilled labour is increasingly scarce in America. Since 1960 the share of native-born workers with less than a high-school diploma has fallen from 50% to 12%. In response, illegal immigration has proved to be a fairly efficient system for matching willing workers with eager employers. Some 24% of farm workers, 17% of cleaners and 14% of construction workers are foreigners doing their jobs illicitly.

This workforce is geographically mobile, and sensitive to economic conditions in America or at home. One study in the 1990s showed that a 10% drop in Mexican pay relative to American wages prompted a 6% increase in attempts to steal across the border. More recently, the incentives have shifted the other way. A slowdown in remittances to Mexico and other Central American countries suggests the housing bust, and home-building slump, may have reduced the pace of illegal immigration.

The mobility of illegal immigrants is an economic asset for the United States. The economic downside is marginal at worst. The furor over these trespassers is nothing more than flag-waving patriotism and unsubstantiated cultural anxiety.

Labor mobility is a great strategy to deal with the whims of the market and the capricious forces of economic globalization. Standing in the way of success are xenophobes and the Stuck. The Mobile threatens the Stuck, but the concern is often baseless.