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  • Economist.com podcast on costs and benefits of immigration

    Posted by Dr. ARUDOU, Debito on December 15th, 2010

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    Hi Blog. Here is what Robert Shapiro, former economic adviser to President Clinton, says about the positive financial impact of new waves of immigration, in this case to the United States:

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    (Courtesy Economist.com Podcast June 23, 2010, from minute 1:44; typos mine)

    Economist: Even in the best of economic times, there are concerns about the fiscal impact of immigration: How they’re using services, what they’re contributing in taxation… that’s obviously become more of a concern given the recession. What can you tell us as far as what you know about the fiscal burden of immigration, and the fiscal benefits of immigrants?

    Shapiro: Particularly in five or six states, where immigrants are highly concentrated, there’s a fiscal deficit. Much of that has to do with educating children of immigrants. That’s the single largest cost. But if you look at it more dynamically, immigrants tend to be aggressive about improving their conditions. Aggressive enough to leave their homeland. These are not the kinds of people who take life as it’s been given to them. They try to make the best of their lives, and so you would expect to see some income gains — whether they start out as a day laborer or as an entrepreneur. The whole issue of entrepreneurship is interesting, because we find that not only do you see a lot of entrepreneurship among educated immigrants, particularly from Asia — and this has been commented on: the large volume of Silicon Valley startups that were started by immigrants, particularly from India. You see this also among undocumented immigrants, who are generally low-skilled people. Now they’re different kinds of businesses they’re starting. But that’s entrepreneurship, whether it’s a software startup, or a small corner business…

    [There is] another benefit of immigration — and a fiscal benefit. And that is, immigrants — and they generally come in early working age — they work their whole lives, if they stay here their whole lives, and then they retire. That’s the same as an American, except that the American working young worker has parents. Who claim social security and medicare. Immigrants come without their elderly parents, and in that sense we get a contribution to the labor force without having to pay out the benefits to the parent. When you’re talking about millions of people, that’s big money…

    Economist…Is immigration responsible for holding down wages in the US, or for slow wage growth?

    Shapiro: If you look at the aggregate, there is no evidence that shows that immigrants have had any depressive effect on the average wage in the United States.  However, there are winners and losers. Immigration actually appears to be responsible for gains in wages for higher-skilled Americans.  The reason for this is that you have large numbers of relatively low-skilled immigrants that allow the expansion of organizations — because they can hire more people because they are less expensive.  That expansion requires more higher-skilled people to manage it, for all the ancillary services, advance services associated with a large organization. And so it seems be associated with putting upward pressure on the wages of highly-skilled people.  It also puts downward pressure on the wages of low-skilled Americans.

    EXCERPT ENDS

    7 Responses to “Economist.com podcast on costs and benefits of immigration”

    1. Getchan Says:

      Debito, I’m wondering about your stance concerning details.
      Listening to, and reading excerpts from the above, I take it that Mr. Shapiro is referring to the situation stateside, where immigration consists mainly of Latin American and Chinese immigrants.
      The situation in Europe, for example, presents itself in a totally different way, and I am wondering whether you support uncontrolled (i.e. everybody who wants in will be admitted) or controlled (i.e. those whose presence benefits the host country) immigration.
      Please clarify.

      – I don’t support uncontrolled immigration. I believe every country has the sovereignty to regulate and choose non-citizens who come within its borders. However, those criteria should be made clear, reasonable, and fair, and a system of oversight and appeal should be available for the application process. For the record.

      As for the points being made in the podcast, I am citing this as examples of how immigration helps societies. Too often we get alarmist rhetoric saying that immigrants are somehow spongers on the state etc.. These arguments say that they are not. Is all.

    2. Getchan Says:

      Debito, agreed on all points. ;-)

    3. Shinrin Says:

      Costs and Benefits, as far as I understand, also involves “cultural costs” and questionable “cultural benefits” for the average Japanese way of thinking.

      Let us focus on one “monetary cost”.

      Cost of “Language acquisition” for “non-Asians” and “not-spoused of Japanese”:
      How much time and money would be necessary to have a “fully operational” foreign skilled worker in Japan, let us say, medical doctors, engineers, etc. ?

      In my opinion, Japan is not yet a “Rakuten-Koku” and, for those who do not have the intention, or time, to have a “dual degree” (Their own + Part-Time Japanologist)things are pretty tough.

      How many skilled medical doctors or engineers would spend, let us say, the next 5 years mastering the Japanese language, after a quite intensive workload ?

      How many would do that, before coming to Japan, with the intention of experiencing the “Japanese dream” ?

      Yes…They could be “educated”…But we are living in times like these: (And Japan seems poorly equipped to deal with it)
      RSA Animate – Changing Education Paradigms in 11 minutes
      http://www.youtube.com/watch?v=zDZFcDGpL4U

    4. Steve Says:

      The United States was built by immigrants. Until about 1900, the only requirement for emigrating to the US was a steamer ticket and a clean bill of health. It worked very well for building a dynamic country. When Americans decided to close the doors was the beginning of the end. Now, stasis has set in and it shows.

    5. DS Says:

      Steve;

      The only hole in your argument is that it is wrong. The US lets in more immigrants and refugees than any other country in the world- something like a million people a year. The doors are hardly closed.

      The issue is the economic damage done by illegal immigrants. They artificially drive down wages, lean on public health care far more than the general public, and tragically end up incarcerated for crimes committed after entering the US.

      – Sources please.

    6. DS Says:

      Well, you can check Wikipedia for immigration numbers, or the INS. In terms of new citizens, the US naturalizes 900,000 people per year, which is half the world’s total according to Nationmaster.com. From the same website, the statistic that there are now a total of 38 MILLION immigrants (both naturalized citizens and non) in the US.

      As for the economic cost, when the US unemployment rate is hovering at around 10%, it makes no sense to allow an underclass of 12 million people to stay.

      – If you’re giving online sources, give links too please.

    7. Jonadab the Unsightly One Says:

      > I take it that Mr. Shapiro is referring to the situation stateside

      Obviously, Shapiro is primarily talking about the situation in the US, yes. However, several of the things he says would apply equally in any developed nation, including Japan.

      DS,
      > illegal immigrants … artificially drive down wages,

      That is arguable, but this is not the proper venue for that argument, since it’s largely irrelevant to Japan. Japan has relatively little illegal immigration, as they don’t really have any problematic borders. North Koreans can’t even get to South Korea without going through China, so how would they get to Japan? From China you just about have to go through Russia or South Korea to get to Japan (unless you want to sail across a medium-sized sea). Going through Russia would be problematic for Chinese people, for political reasons, and anyway Manchuria isn’t really the part of China with the most serious economic problems or political unrest. From South Korea people could make it across the strait, no doubt, but South Korea is economically developed now, so people who make it that far can just stop there. There’s no major economic motivation for any significant population of illegal immigrants to sneak across the border from South Korea to Japan. It’s categorically not the same kind of situation as the US/Mexico border.

      When we talk about immigration issues in the context of Japan, we’re generally talking about people who arrive with passports and visas in order.

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