Some reviewers also claimed that it was "absurd" to conclude, as I do, that the net economic benefits from immigration are small, probably less than $10 billion a year. This estimate comes from a simple application of the widely used textbook model of a competitive labor market. This is the same model that is typically used to analyze the economic consequences of such government policies as minimum wages and payroll taxes. The market for ideas provides what is perhaps the most convincing argument in favor of my estimate. The immigration area, after all, is highly contentious. If it were that simple to show that the gains from immigration are huge, there is an audience ready and willing to buy such numbers. My estimates are so "absurd" that not a single academic study has concluded that they are higher-and some studies have concluded that they are lower.
Talking this over with Alex Tabarrok, Borjas' $10 B number probably fails to count immigrants' pay increases as a net social gain. But for the most part they should be. Moving from Mexico to the U.S. actually raises worker productivity, so the pay gain is not a transfer to the worker from someone else, but a straight increase in surplus. If we figure that immigrants would have made between 10 and 50% of their U.S. income at home, then 50-90% of their U.S. wages should be counted as a welfare gain.
So suppose we have 10 M more immigrants than we would have under Borjas' regime. Their wage doubles from half the U.S. minimum wage in Mexico to the U.S. minimum wage. That's a net gain of $5000 per immigrant per year, or $50 B per year.
This is analogous in IO to an increase in productive efficiency, which are typically of a much larger magnitude than increases in allocative efficiency.
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Prof. Bryan Caplan
Department of Economics George Mason University
http://www.bcaplan.com [EMAIL PROTECTED] "Infancy conforms to nobody: all conform to it, so that
one babe commonly makes four or five out of the adults
who prattle and play to it."--Ralph Waldo Emerson, "Self-Reliance"
