It’s an eye-opening finding: If the U.S. no longer had any illegal immigrants, its GDP would be $5 trillion smaller over 10 years. That’s the conclusion of a recent study. But while the number is big, it’s not clear it tells us much about what to do about illegal immigration.
Normally, the expectation that a policy would shrink our economy by that much would be a very powerful argument against it. But that’s because normally, we would expect this shrinkage to take the form of lost jobs and lower living standards for Americans.
That assumption is unsafe in this case. Americans certainly could see their welfare decline in the hypothetical world of this study. But it almost certainly wouldn’t decline by $500 billion a year.
Some large portion of the total hit would represent income no longer being made by illegal immigrants in the U.S. They would still make some income -- probably less -- somewhere else, but none of it would be counted in our GDP.
If we want to figure out whether deporting illegal immigrants would hurt our economic interests, we might want to know what it would do to the total size of the U.S. economy. That’s relevant to questions about the size of our tax base, for example. But what we most want to know is the effect their removal would have on the incomes of everyone else: that is, of native-born Americans and legal immigrants.
The study doesn’t answer that question. Nor does it examine how important subsets of those groups, such as those without college degrees, would fare.
It’s not unusual for research on the economic effects of immigration to have this blind spot. The last time Congress considered major immigration legislation, in 2013, the Congressional Budget Office estimated that legalising illegal immigrants and taking in more legal immigrants would boost economic output. After a decade, the legislation would make the economy 3.3 per cent larger, and after two decades 5.4 per cent larger.
The CBO also found that the economy would be 0.2 per cent larger after two decades on a per capita basis. That's a little closer to what we should want to know. But even that was an average including both the illegal immigrants and all the extra newcomers invited by the legislation. Left unaddressed was whether U.S. citizens (including legal immigrants) would see any economic benefits at all, let alone substantial ones, from these policy changes.
My point isn’t that the economic interests of citizens are the only thing worth considering in setting immigration policy. (Still less is it that we should deport all illegal immigrants.) But they are very important interests, and it is remarkable how often they are ignored. - Bloomberg View