Immigration.ca - Canada Immigration News - December 2006
Thursday, December 14, 2006
A new study of U.S. immigration by two Italian-born economists suggests immigrants may actually be good for native-born workers in the countries they go to. This approach contrasts with the practice of issuing policies that bar to the free movement of people across countries due to xenophobic sentiments and fear of wage depreciation.
One result of all these barriers is the big differences in wages and incomes the world round. Rational Choice approach to migration rests upon the assumption that people would move across borders until the differences disappeared. Economists regard these differences in income as "efficiency losses." As Watson, the author of the article explains, "If people are paid according to their productivity, and if they produce 10 times more in one country than another, then having them stay in the country where their productivity is 10 times less is a massive cost both to them and to the world economy. If people could work where their productivity was highest, the world could have a lot more wealth."
One reason why governments arguably maintain from liberalizing labour flows is that people are xenophobic. Culturalists believe that this will become more true as as differences between cultures seem to grow. Watson also states that citizens "fear for their jobs and incomes", a fear resting on the false premise that immigrants are good substitutes for native-born workers.
The Italian economists find the premise falsely based in many cases, and use the United States as an example where "in large measure, immigrants and natives aren't substitutes, they're complements" to the economy. Immigrants, regardless of their education and experience, cluster in occupations and form an economic niche. When a new immigrant arrives, he or she probably does depress wages in those occupations, and may be no direct competitive to the occupations dominated by native-born citizens.
While previous studies have suggested that immigrants have depressed the average wages by something less than a per cent, this new study suggests the inflow may actually have raised wages by 1% to 2% for native-born workers.
It is the foreign-born workers that lose economically, although for some their wages are still higher than they would be in their home countries. And, more important, while chain migration and the entry of friends and family into the economic niches may depress wages, the latest arrivals have "a huge personal, affective and amenity value" to those whose wages they depress. As Watson stats, "What workers lose in income they gain in love, friendship and community".
In order to address the anxiety of native-born workers, Watson still has a few suggestions, including a reference to Harvard’s economist Richard Freeman’s solution of selling green cards. As the average immigrant to the United States is better off by at least $US100,000 over his or her lifetime, the gain should be spilt and by charging "immigrants $US50,000 to get in, payable via higher taxes once they've arrived, and move the money to the people whose jobs and incomes are most at risk". Acknowledging that it would be a tricky measure to implement, Watson concludes by stating, amongst other things, that "If Harvard buys that argument, maybe Washington and Ottawa will, too."
Source: Financial Post
Author: William Watson
http://www.canada.com/nationalpost/financialpost/story.html?id=7e2781cc-5d34-4517-b906-5672d3cc326e
