Earlier this year I wrote about research from Rice University that found that illegal immigration benefits nations and regions more than it harms them. The study suggests that the economic gains from illegal immigration far outweigh the costs of the public services utilized. Indeed, for Texas alone, the state collects $1.21 in revenue for every $1 spent on providing public services to undocumented immigrants.
“Undocumented residents have a positive influence and impact on the economy, since they pay taxes and fees and constitute an important part of the labor market,” the researchers say. “Even if we consider the costs of undocumented immigrants to the state of Texas, the benefits outweigh the costs.”
Of course, often when nations discuss immigration, they’re not talking solely of the illegal kind, but a second study, from University College London, finds that immigration more generally has next to no impact on the wages of native US citizens.
The impact of immigration
The researchers used a spatial equilibrium model to gauge the impact of immigrants on wages. The model encapsulated not only the numbers and skill levels of immigrants, but also the welfare effects of the border wall between Mexico and the United States. The impact of immigration on workers across the country was measured according to wage, rent, and welfare effects.
The analysis reveals that the entry of high-skill immigrants usually results in wage gains for native workers, especially those at the lower end of the skills spectrum. For these people, they gain a 4% boost to their income. There is also a positive effect, albeit a smaller one, for high skilled natives. The only group that appear to lose out are fellow high-skilled immigrants, who see their wages drop by around 5%.
“The adverse effects are concentrated on the wages of incumbent high skilled immigrants since they are in direct competition with the new high skilled immigrants,” the researchers explain. “But since these new arrivals are not close substitutes to high skilled natives, and given some complementarity between the new arrivals and low skill workers, a skill selective policy can lead to higher productivity and raise natives’ wages regardless of their skill levels. However, the gains are larger for low than high skilled natives. As a result, this policy can reduce local real wage inequality.”
Cost of the wall
The researchers then used the same methods to assess the costs/benefits of the border wall proposed by Donald Trump. The assessment found that the effects on wages and welfare would be small for all four states bordering the wall.
What’s more, when the construction costs of the wall are factored in, it would cost approximately $47 per worker, which suggests that even if 80% of the inflow of potentially undocumented immigrants was removed, the gains compared to the baseline cost of having no wall at all, are marginal.
“In all cases, there is a significant increase in rental income accruing to landlords from increased immigration,” the researchers conclude. “An appropriate tax scheme on rental income and housing regulations would be an important consideration if policymakers want to redistribute gains or losses more evenly.”
