Wednesday, November 25, 2015

A toxic GOP debate on illegal immigration

Published in Standard Examiner, Ogden, Utah, October 16, 2015

Vijay K. Mathur

In a blog in the Standard-Examiner in 2013 I expressed my hope that the bipartisan compromise on immigration reform would result. I also commented on the futility of the argument, advanced at that time by Sen. Mike Lee of Utah, for deporting 11 million undocumented immigrants. The deportation argument is now revived by GOP presidential candidates Donald Trump and Sen. Ted Cruz, and tacitly supported by other candidates.

Trump even blames Mexico for sending criminals and rapists to the U.S., thus making the immigration debate more toxic. He also wants to build a tall wall on the border, perhaps along over 1900 miles from the Gulf of Mexico to the Pacific Ocean. Besides the issue of how he intends to pay for such a wall, he does not realize that the economics of migration drives potential migrants to cross any hurdle. By any stretch of logic, deportation of slightly more than 11 million illegal immigrants and building a wall would be so resource-consuming that other productive programs would be starved, thus slowing economic growth.

Deportation would not contribute anything to productivity, because we might lose the most productive people, since migrants in general are risk-takers. Mr. Trump considers himself a smart businessman fit for the presidency. However, he may not be aware that being a smart businessman is no guaranty for a successful presidency. History, from Herbert Hoover to George W. Bush, shows that the most successful and admired presidents were not good businessmen. We had the Great Depression in 1929 under Hoover and the Great Recession in 2008 under Bush; both were successful businessmen.

According to the Pew Research Center, the unauthorized immigrant population has leveled off since 2010. These immigrants make up 5.1 percent of the labor force and have a higher labor force participation rate than the average, thus contributing to economic activity of this nation. Since a significant fraction of undocumented immigrants are low-skilled, they tend to work in low-skilled jobs with below-market wages, where native-born are not willing to work. The competition for low-skilled jobs does cause downward pressure on wages of native-born low-skilled workers. However, lower wages tend to benefit consumers who pay lower prices for products produced by undocumented workers. The wage effect of migration is similar to the wage effect of imports from low-wage countries, but we do not ban cheaper imports.

An orderly migration process is sorely needed, and Congress had the opportunity to accomplish this task in 2013-14. Pew Research Center reports that 72 percent of surveyed Americans would like to allow undocumented immigrants to stay legally and 76 percent think of deportation as unrealistic. Taxpayers will not be very happy if Trump allocates tax revenue for deportation at the cost of other programs that benefit legal residents. His policy to reduce taxes while increasing expenditure on building the wall and deportation is incongruous at best. A study by Doris Meissner and her co-authors at the Migration Policy Institute found the U.S. government already spends more on immigration enforcement than all principle federal criminal law enforcement agencies combined.

Researchers Peter Dixon, Martin Johnson and Maureen Rimmer, in their study in the journal Contemporary Economic Policy, January 2011, find tax and/or fines on employers is the most efficient policies to curb illegal immigration. Policies that attempt to reduce the supply by border enforcement and/or deportation are costly to the nation, as they result in increasing wages for the rest of the illegal residents with little benefit to legal residents. Either a reduction in income tax rates or increasing expenditures on desirable public programs could supplement such a tax policy.

Another issue that has not been discussed in the GOP presidential campaign is the increasing share of older people and reduction of birth rate in the U.S. In a paper in American Economic Review, May 2014, Professor James Poterba of MIT finds that between 1960 and 2010, the average growth rate of the population aged 20-64 was 1.27 percent and is projected to decline to 0.43 percent between 2010 and 2050. Therefore, less and less earning members of the population are expected to support more and more people over the age of 65. Most undocumented immigrants pay Social Security tax but do not collect benefits.

Also, Pew Research Center, April 14, 2009, found a growing share of children of undocumented parents in schools and an increasing share of college-going 18- to 24-year-old undocumented immigrants. These children and college-going young adults of illegal immigrants would provide a significant cushion to public financial support system for older and retired Americans.
I hope the GOP presidential race contenders have enough wisdom and knowledge to support an immigration policy that is devoid of emotions but grounded in sound economics.

Mathur is former chairman and professor of economics and professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio.

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