Does the US need more immigrants?

Is immigration good for a country's economy? This is something that many countries in the developed world need to wrestle with as populations move from the poorer parts of the world to the richer parts.

by Knowledge@Wharton
Last Updated: 23 Jul 2013

The issue was highlighted in the US recently when an immigration bill was put to the Senate, in which it was argued that 12 million illegal immigrants should be offered amnesty. Pragmatists argued that it was important to accept that these people were going to stay no matter what; idealists thought it was important to avoid giving the impression to others that they could get the same treatment if they came to US shores.

The bill was subsequently withdrawn by Democratic majority leader Harry Reid, possibly to be brought back at a later date. The bill could eventually impose restrictions on further immigration and might put more weight on those immigrants with skills. In spite of this, hi-tech companies were still unhappy with the proposals because they included the proposal that visas for skilled workers should be capped at 200,000 a year.

Wharton professor Peter Cappelli is concerned that not enough thought is being given about the losers in the event of largescale immigration. He believes that the claim that there is a growing shortage of workers that need to be filled by immigrants is exaggerated and that an influx of labour would depress wage levels and hurt those at the bottom of the pile the most - the poor and uneducated.

Wharton's Bernard Anderson disagrees believing that immigrants largely fill jobs in the farming, personal service, food preparation, hospitality and tourism and constructions sector that domestic workers would not ordinarily apply for, or would not otherwise exist.

But Anderson dislikes the proposal that the formula for accepting immigrants should move from being based on accepting the families of immigrant workers to accepting only those individuals with needed skills. It was tried in South Africa with regard to the mining industry, he points out, and there is a risk that accepting immigrants without their families creates a "social and economic underclass".

Another Wharton professor, Justin Wolfers, fears that the restriction of immigration would upset the free flow of labour and hurt the US economy. Immigrants tend to seek out booming cities like Las Vegas, Phoenix and Charlotte, N.C. Such cities may be well able to cope. For example, Miami had to contend with a sudden influx of 125,000 Cuban refugees in 1980 and a study by Berkeley economist David Card suggests that there was no negative impact on the local labour economy as a result of this, largely because previous immigrants provided an infrastructure for the newcomers and a strong local economy provided plenty of opportunity.

On the fence: Are illegal immigarnts good or bad for the US economy?
By Knowledge@Wharton
13 June 2007
Review by Morice Mendoza

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