Immigration Cannot Significantly Reduce Inflation

2022/05/05 Leave a comment

Of note. Many of the arguments also apply to the Canadian context:

Many immigration advocates have recently called for increasing the number of immigrants allowed into the country to fill lower-wage jobs in order to decrease wages by increasing the supply of workers, thereby lessening inflation. In this post, we attempt to roughly estimate the possible impact of immigration-induced reductions in wages on consumer prices. We focus our analysis on the lower-wage sectors of the economy that primarily employ workers without a bachelor’s degree (the less-educated) because many of those advocating for more immigration have specifically called for more workers in these sectors. Our analysis shows that reducing wages for the less-educated is not an effective means of controlling inflation because such workers earn relatively little and as a result account for only a modest share of economic output. There is also the equally important question of whether reducing the wages of workers who are the lowest-paid is sound public policy.

Among our findings:

  • Reflecting their relatively modest average compensation, workers without a bachelor’s degree account for an estimated 25 percent of GDP. This means that even a substantial reduction of 10 percent in their wages could likely reduce consumer prices by only an estimated 2.5 percent. More educated workers and capital account for most of the economy.
  • If we look at just lower-wage occupations done primarily by those without a bachelor’s degree, we find that they account for only 22 percent of GDP. As a result, a 10 percent reduction in wages in these occupations could reduce prices by only an estimated 2.2 percent.1
  • It might be possible to reduce wages in specific occupations by dramatically increasing the number of workers in relatively few occupations. But since individual lower-paid occupations account for only a tiny share of the economy, the impact on overall consumer prices would be correspondently tiny. For example, the compensation earned by construction and extraction workers is only 2.2 percent of GDP, for cleaning and maintenance it is 1 percent, for food preparation and serving it is 1.1 percent, and for healthcare support it is 0.9 percent.
  • Prior to Covid, workers, including those without a bachelor’s degree, have generally seen their wages decline or grow very little for more than two decades, so reducing their wages by admitting more immigrants can be seen as unfair and unwise.
  • More than one in seven of these less-educated workers are currently eligible to receive cash payments from the Earned Income Tax Credit and Additional Child tax Credit — the nation’s largest cash assistance programs for low-wage workers. Reducing the wages of such workers could undo some of these important efforts to help low-income workers.
  • Nearly two-thirds of all children in poverty in America are dependent on a worker who does not have a bachelor’s degree. Using immigration to reduce wages for less-educated workers has significant negative implications for American’s low-income children.

Source: Immigration Cannot Significantly Reduce Inflation

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Canada Admits 3 Times More Non-College Immigrants per Capita than the U.S.

2022/02/25 Leave a comment

Useful comparative data:

Many Americans want a more “merit‐​based” legal immigration system, and the country most commonly associated with this framework is Canada. Former‐​Attorney General Jeff Sessions, for example, characterized U.S. immigrants as largely “illiterate”, with “no skills”, and argued that America “should be like Canada” on immigration, evaluating them on their skills. But while Canada does favor economic‐​based paths to residence, it still admits far more non‐​college educated immigrant workers than the United States does as a proportion of its population—and it is planning to let in even more in the coming years.

According to Canada’s statistics, 244,800 non‐​college‐​educated immigrants over the age of 25 in the labor force entered Canada from 2015 to 2019, 0.65 percent of the Canadian population. During the same period, 729,797 immigrants with the same characteristics entered the United States, 0.22 percent of the U.S. population (Figure 1). In other words, Canada saw nearly three times more entries into its labor force from lower‐​skilled workers than the United States did in recent years on a per capita basis. This disparity would be greater if illegal immigrants were excluded from the calculation.

Despite admitting far more non‐​college‐​educated immigrant workers, Canada also admitted nearly 5 times as many immigrant workers with bachelor’s degrees and 4 times as many immigrant workers with advanced degrees as the United States did from 2015 to 2019 on a per capita basis. This means that overall, Canada admitted nearly 4 times more immigrant workers into its labor force than the United States did from 2015 to 2019. Note that the Canadian share of lesser‐​educated workers would be even higher if they were not also admitting so many higher skilled immigrants.

While it is true that Canada admits a much larger share of immigrants through economic channels than the United States does, it also makes it easier for them to qualify based on jobs where a college education is not required. It also admits as a share of its population more immigrants based on family ties and humanitarian grounds than the United States. Canada has just announced its largest ever legal immigration targets for the next several years, which will increase the rate of admission for both skilled and lesser‐​skilled workers.

While college‐​educated immigrants offer the United States the greatest productivity boost, the fact that a majority of job growth will come from jobs not requiring a bachelor’s degree provides a strong basis for the United States to increase both skilled and lesser‐​skilled immigration in tandem.

Source: Canada Admits 3 Times More Non-College Immigrants per Capita than the U.S.

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The Decline of Legal Immigration | Cato at Liberty Blog

2022/01/20 Leave a comment

Useful stats. MPI had a very good webinar assessing the Biden administration immigration policy and program changes. Lot more happening through executive orders (close to 300 in the past year, about 100 related to reversing Trump administration measures) than the high level debates would indicate:

Legal immigration collapsed in the last year of the Trump administration. The number of green cards issued abroad were declining prior to the pandemic, partly for policy and other reasons, but the American government’s overreaction to COVID-19 caused immigration to collapse as we’ve detailed here, here, here, here, and here.

Since President Biden took office in January 2021, the recovery of legal immigration has been much slower than we anticipated. The new vaccine mandate for immigrants (as we’re seeing in other countries with the Novak Djokovic scandal), the remaining closure of many embassies and consulates that reduce interviews for visas and their subsequent issuance, the delayed release of extra visas approved by Congress, and additional haphazardly imposed travel restrictions have greatly reduced the scope of legal immigration.

Despite those restrictions, the number of legal immigrant visas issued abroad has partly recovered from a low of 697 (that’s not a typo) in May 2020 to 35,647 in November 2021 (Figure 1). That’s 16 percent below the average of 42,390 immigrant visas issued monthly from January 2017 through February 2020, during Trump’s presidency but prior to COVID-19. December 2021 and January 2022 will likely show lower numbers.

As bad as the numbers for immigrant visas are, the number of non‐​immigrant visas issued abroad every month is even worse. Non‐​immigrant visas are for students, temporary workers, tourists, and others who can temporarily travel to the United States or reside here for a specific time and purpose. Figure 2 shows that 40,939 were issued in May 2020, the low point of the series, down from a monthly average of 738,642 from January 2017 through February 2020 – a 95 percent decline. The numbers have since climbed to a paltry 391,022 in November 2021 – far shy of their pre‐​pandemic numbers.

The Biden administration needs to rapidly reverse this situation, recover the lost visas through legislation, and go even further or the U.S. economy will suffer long run drags on its growth.

Source: The Decline of Legal Immigration | Cato at Liberty Blog

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Share of World Population Allowed to Immigrate Legally to U.S. 85% Below Its Peak

2021/11/17 Leave a comment

Canada’s peak year for immigration in relation to its population was 1913, when over 400,000 arrived, or 5.2 percent of our total population of 7,632,000. In world population terms, that would be 22 per 100,000; today’s 400,000 is about 5 per 100,000. So not sure how meaningful this argument is but fun to work the numbers:

In fiscal year 2021, the share of the world population that the U.S. government permitted to immigrate legally to the United States was about 85 percent below its peak year of 1907 when 74 in 100,000 people became legal permanent residents of the United States. By 2021, that number had fallen to about 11 in 100,000—slightly lower than the 13 in 100,000 in 2019 or 16 in 100,000 in 2016.

Unlike those with various temporary statuses or no status, legal permanent residents are the only non‑U.S. citizens who may naturalize to become U.S. citizens. Measuring legal immigration as a share of the world’s population contextualizes potential immigrants’ actual opportunity to immigrate to the United States better than the absolute number of immigrants. No year has seen more than a fraction of a percent of the world’s population become U.S. legal permanent residents, but the share has declined, even as the desire to immigrate has increased.

Figure 1 shows the number of new legal permanent residents to the United States as a share of the non‑U.S. world population from 1840 to 2021. The lines after 1952 reflect the fact that some immigrants could adjust to legal permanent residence while already the United States. The share of “new arrivals” who enter from abroad as permanent residents fell even more dramatically from its high—nearly 95 percent below its peak in 1907.

During the era of mostly free immigration prior to 1925, legal immigration fluctuated wildly based on world events and the U.S. economy. But after visas were capped, an unnatural consistency developed at a low level. The one anomaly is in the period of 1989 to 1991 when the immigrants legalized by the 1986 amnesty adjusted to legal permanent residence. This experience was a small window into the demand that would exist if the United States had retained free immigration.

Table 1 ranks the years based on the share of the world population immigrating to the United States. Out of the 182 years, fiscal year 2021 ranks 122nd in terms of total new legal permanent residents as a share of the world population and 167th in terms of newly arriving legal permanent residents from abroad—which means only 15 years saw fewer new arrivals as a share of the world population than 2021.

If the United States had retained the same level of new legal permanent residents as a percentage of the world population as it saw during 1900 to 1924—the 25 years before the borders were closed—from 1925 to 2021, 160 million immigrants would have received permanent residence, compared to the 51 million who did. The level of legal immigration for 2000 to 2021 would be about 2.7 times the rate it actually was, permitting about 62 million immigrants as opposed to 22 million.

It’s reasonable to suppose that the actual rate would be higher than this, had the United States maintained its earlier policies. It certainly looks like the trend before World War I was upward from peak to peak. Transportation has also decreased significantly in price as well. The upshot is that the United States has extremely closed borders relative to what a reasonable person would expect under an even relatively open immigration system. This fact also explains why the country is experiencing so much more illegal immigration than in the past. When legal immigration is closed off, illegal immigration becomes most people’s only option.

Source: Share of World Population Allowed to Immigrate Legally to U.S. 85% Below Its Peak

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USA: Criminal Illegal Immigration Rates Fall Along the Border

2021/10/25 Leave a comment

Of note:

Customs and Border Protection (CBP) just announced that they have encountered 1,431,179 people out of 1,960,519 total enforcement actions in FY2021 along the borders of the United States. When it comes to immigration enforcement, the two components of CBP are the Office of Field Operations and the Border Patrol. Relative to the 478,648 individuals encountered by CBP in FY2020, the number of individuals encountered is up by a factor of three in FY2021. Although the number of individuals encounters by CBP rose enormously in FY2021, the rate of criminals among them dropped to new lows.

CBP defines criminal noncitizens (they used to be called criminal aliens) as individuals who are not U.S. citizens and who have been convicted of crimes here or abroad if the conviction is for conduct which is also a crime in the United States. The CBP data also include noncitizens and U.S. citizens who are arrested as a result of being wanted by other law enforcement agencies. So as to not exclude any criminal illegal immigrants through unintentional omission, this blog post counts all apprehensions of criminals by CBP as noncitizen illegal immigrants. This results in an overcount of illegal immigrant criminals, but it’s better to make errors that overcount illegal immigrant criminality rather than errors that undercount it. In 2016, about 6.4 percent of all illegal immigrant individuals encountered by CBP were criminals. In FY2021, only about 1.9 percent of illegal immigrants apprehended by CBP were criminals (Figure 1).

The absolute number of criminal illegal immigrants encountered by CBP also fell from FY2016 to FY2021, but not in every year. In FY2016, CBP encountered 38,758 criminals out of approximately 607,761 individuals encountered. In FY 2021, CBP encountered 28,213 criminals out of 1,431,179 total illegal immigrants encountered. During that time, the number of illegal immigrants encountered by CBP increased by 236 percent and the number of criminals encountered fell by over 27 percent. In some of the intervening years, the absolute number of criminal illegal immigrants rose, but it generally trended downward.

It’s remarkable that such a vast increase in the number of illegal immigrants apprehended in FY2021 included a lower percentage of criminals than earlier years. Perhaps the supply of criminal illegal immigrants seeking to enter the United States is relatively inelastic and massive changes in the number of individuals seeking to enter unlawfully or ask for asylum are non‐​criminals. In other words, reforms in U.S. immigrant policy that could attract more illegal immigrants or changes in foreign conditions that prompt mass migration do not seem to much affect the flow of criminals.

Many Americans want to keep the border closed, increase harsh border security methods, or restrict asylum because they fear that those encountered are criminals. Based on data supplied by CBP, the criminal illegal immigrant proportion of all encounters along the border are lower in FY2021 than in previous years despite the large increase in the number of encounters. Illegal immigration is a serious problem that imposes high costs on Americans and migrants, but it does not pose a serious criminal threat.

Source: Criminal Illegal Immigration Rates Fall Along the Border

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Americans Conflate Border Chaos and Legal Immigration | Cato at Liberty Blog

2021/10/09 Leave a comment

Of note (irregular crossings at Roxham Road in Canada provoke similar reactions):

A new poll released by Quinnipiac shows strong disapproval of President Biden’s immigration and border policies. According to the poll, 25 percent of respondents approve and 67 percent disapprove of Biden’s handling of immigration issues. Similarly, 23 percent approve and 67 percent disapprove of his handling of the situation on the Mexican border. This poll offers deep insights into how Americans think about immigration and ways for the Biden administration to get out of its chaotic immigration and border mess.

First, the similarity between the polling numbers suggests that Americans conflate what happens on the border with all of immigration policy. Of course, immigration policy is more than just border security. Legal immigration, such as allowing immigrants and migrants to legally come here from abroad, is the most important portion of immigration policy. Second, Americans are deeply concerned about border security issues. Apprehensions of immigrants along the border are up substantially over earlier years. The recent debacle over Haitian arrivals, the government’s heavy‐​handed response, and the certainty of future border arrivals from around the world feed the justified public perception of chaos along the border.

Border chaos makes Americans more opposed to immigration, both legal and illegal. As I’ve written before, there is a convincing academic literature on how public perceptions of chaos and illegal immigration reduce support for legal immigration around the world. When people feel like their government has lost control of immigration, voters are more likely to oppose legal immigration. That’s why the public’s opinion of immigration and the Mexican border are virtually identical in the Quinnipiac poll.

Smart commentators have noticed that the Quinnipiac questions do not indicate precisely what people disapprove of in Biden’s immigration policies. They’ve pointed out that Biden has pursued Trump’s immigration policies with some minor changes, many of which are more restrictive than Trump’s. There is evidence for this in other polls where a trend has emerged that those who are dissatisfied with immigration levels are increasingly dissatisfied because the numbers are too low – although more who are dissatisfied still want less immigration. Perhaps, these commentators claim, people are upset at Biden’s restrictive policies and harsh enforcement along the border? Unfortunately, that interpretation is too clever by half.

The Quinnipiac poll breaks down responses by political party. Democrats, who are more pro‐​immigration, support Biden’s policies while more immigration‐​skeptical Republicans oppose it. We’d see the opposite if the disapproval registered in the Quinnipiac poll were about Biden’s anti‐​immigration policies. The only confounding poll result is that 51 percent of respondents disapproved of deporting some Haitians without allowing them to apply for asylum, with 49 percent of Republicans and 30 percent of Democrats approving. This result is evidence that people are more supportive of immigration when people know how the immigration and enforcement systems actually operate.

Decoupling the immigration issue from the U.S.-Mexico border is key to liberalizing immigration. Candidate Biden ran on the most pro‐​immigration platform since Lincoln’s platform in 1864. If he wants to pursue those policies, his administration will have to reduce perceptions of chaos along the border.

How can he do that?

The first step is to recognize that more enforcement won’t reduce the perceptions of chaos. Even if 100 percent of illegal border crossers are returned or removed from the United States, the images of people crossing will continue to fuel the perceptions of chaos. With more enforcement, we’d even have more images and stories of chaos. The second step is realizing that few people are animated by opposition to legal immigration numbers. Sure, there are some organizations run by population control radicals like NumbersUSA that wants to reduce legal immigration, but they are not the norm. The third step is finding ways for these border crossers to enter legally and in an orderly fashion through ports of entry. By doing so, the scary images appearing in the media will disappear and the public will correctly perceive a vast reduction in chaos. Border Patrol agents can then focus their limited resources on intercepting actual security threats rather than asylum seekers and otherwise law‐​abiding illegal border crossers.

A streamlined parole process run at U.S. embassies and consulates far away from the border, expanded guest worker visa programs, and more green cards would channel many of the would‐​be border crossers into the legal immigration system and away from crossing between ports of entry. More importantly, such systems would allow vetting of migrants.

Opposition to immigration and the border chaos is mostly not a reflexive nativist reaction to immigrants. Americans like immigrants and are generally very welcoming, but Americans are rightly alarmed by chaos. For libertarians and many others, chaos is a sign of government failure and an indication that liberalization will reduce illegal immigration and chaos as it has in the past. For most Americans, their reaction to chaos is to be opposed to anything related to the cause of that chaos. This is the immigration Catch‐​22: Liberalization is required to get control over the border but border chaos politically prevents liberalization. The Biden administration can break that Catch‐​22 only by liberalizing first and incurring that political cost upfront. The political benefits for the Biden administration as well as the economic, social, and security benefits to U.S. society of a bold pro‐​immigration policy would be delayed but also much larger. As the Quinnipiac numbers show, Biden doesn’t have much to lose by following this approach.

Source: Americans Conflate Border Chaos and Legal Immigration | Cato at Liberty Blog

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USA: Public Opinion Shifts in a Pro-Immigration Direction

2021/08/06 Leave a comment

Of note. Dysfunctional US political system does not translate shift into political action:

Since 1965, Gallup has been polling Americans about whether they want immigration levels to decrease, increase, or remain the same. Last year, the percentage of Americans who want to increase immigration rose above the percentage who want to decrease it for the first time. In 2021, that shift held with more respondents again supporting increasing immigration than decreasing it (Figure 1). The support for increasing legal immigration may have narrowed in 2021 to 33 percent from 35 percent in 2020, but the changes are so small that they are likely statistically insignificant.

Consistent with the general rise in support for increasing immigration, a large majority of Americans still believe that immigration is a good thing for the United States (Figure 2). Just like in Figure 1, the percentage saying it’s a good thing has declined by 2 percentage points but that is a small shift a statistically insignificant shift. Although this is consistent with pro‐​immigration policy views, it also includes those who like the current level of immigration.

However, an even more important shift has continued in U.S. opinion about immigration. Since 2001, Gallup has asked this question: “(Asked of those dissatisfied with level of immigration into U.S.) Would you like to see the level of immigration in this country increased, decreased or remain about the same?” Respondents who are dissatisfied with the level of immigration are increasingly likely to be dissatisfied because they think that there is too little immigration. I wrote about this last year but the trend has grown in 2021 (Figure 3). In 2020, 26 percent of respondents were dissatisfied with the level of immigration and they wanted to decrease immigration. By 2021, that percentage had fallen to 19 percent. The percent of those who were dissatisfied and wanted an increase stayed about the same and the percent of those satisfied climbed slightly.

That’s a tectonic shift. From 2001–2016, an average of 63 percent of respondents were dissatisfied with the level of immigration. Only about 5 percent of respondents were dissatisfied and wanted to increase immigration levels and a whopping 44 percent of the dissatisfied wanted to decrease them (Figure 3). This began to change shortly after President Trump took office. From 2017–2020, an average of about 11 percent of respondents wanted to increase immigration levels while 28 percent were dissatisfied and wanted to decrease them. By the end of the Trump administration, there was still quite a gap among those dissatisfied with immigration, but it had narrowed.

We’re clearly seeing a shift in public opinion where those who dislike the current system are beginning to dislike it because it’s too restrictive. To the extent that we can believe surveys that measure opinions unexpressed through concrete actions like voting, this is a big shift. So far, virtually all of the political energy and enthusiasm has been for immigration restriction. Anti‐​immigration voters cared a lot more about this issue than pro‐​immigration voters. Now, the decline in the percent of respondents who are dissatisfied and who want less immigration is beginning to look like the collapse in anti‐​immigration sentiment that began in the mid‐​1990s (Figure 1).

One doubt I had about this change in behavior last year was that this increased pro‐​immigration opinion was just a reaction to President Trump and that it would fade out after he left office. In other words, I was worried that this was just an ephemeral liberal reaction of President Trump rather than a real and sustained change in opinion. But since the 2021 survey results show that only 19 percent of respondents are dissatisfied and want less immigration, a number 7 percentage points below the previous response in 2020, that is an indication that the pro‐​immigration sentiment of the American public is continuing to increase in the Biden administration. That improvement is especially surprising considering the rise in apprehensions along the border.

This appears to be a positive and sustainable change in American public opinion.

Source: Public Opinion Shifts in a Pro-Immigration Direction | Cato at …https://www.cato.org › blog › public-opinion-shifts-pro…

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Immigration Can Offset US Population Decline | Cato at Liberty Blog

2021/08/04 Leave a comment

Cato Institute’s reply to the CIS post highlighting the limits of immigration in addressing an aging population ( Immigration and the Aging Society ). Not convinced. And like all immigration debates, the question is one of balance and understanding the limits of immigration in addressing ongoing policy and demographic issues:

The U.S. population is growing slowly and the average age of Americans is increasing as a result. Although the United States is not as old as other countries and likely to age better, the future looks demographically grim. Some social scientists and commentators think that boosting immigration can help delay or reverse those trends. Steven Camarota, director of research at the Center for Immigration Studies, makes a series of silly argumentsagainst the notion that immigration can slow the aging of the U.S. population. Camarota’s points below are in quotes and my responses follow.

In reality, a significant body of research shows that the impact of immigration on population aging is small. While immigration can certainly make our population larger, it does not make us dramatically younger.

Camarota might be correct that the current and historically low rate of immigration to the United States doesn’t much lower the average age of the population, but that does not mean that immigration could not lower the average age if it were expanded. He merely shows that current U.S. immigration policy, which is very restrictive and much closer to his ideal level than mine, cannot much affect the average age. We shouldn’t expect a restrictive immigration system that allows in, at least prior to the immigration restrictions adopted by President Trump and partly maintained by President Biden (so far), a number of immigrants roughly equal to 0.3 percent of the population annually to have a big effect on the average age of the population. In 2018, 32 OECD countries had higher immigration flows as a percent of their populations and only five had lower flows, relative to the United States. Camarota’s point does not rebut the argument that expanded immigration would lower the average age and expand U.S. population.

But demographers have known for a long time that, absent truly gargantuan and ever‐​increasing rates of immigration, it isn’t actually possible for immigrants to undo or dramatically slow the overall aging of society. As Oxford demographer David Coleman observes, ‘it is already well known that [immigration] can only prevent population ageing at unprecedented, unsustainable and increasing levels of inflow.’

Do demographers know that? I looked up the source of the quote by David Coleman, former British MP and member of the Galton Institute. Camarota clipped a portion of a longer quote that makes a slightly different point. Coleman’s full quote is: “Although immigration can prevent population decline, it is already well known that it can only prevent population ageing at unprecedented, unsustainable and increasing levels of inflow, which would generate rapid population growth and eventually displace the original population from its majority position [Camarota’s quote italicized].”

Coleman agrees that immigration can prevent population decline. He identifies two problems with more immigration: It would “generate rapid population growth and eventually displace the original population from its majority position.” Rapid population growth is one of the many goals of those of us who favor liberalized immigration, so I have no argument with Coleman there. We simply disagree as I believe that population growth is positive and he thinks it’s negative. When it comes to “displace the original population from its majority position,” Coleman means that immigrants and their descendants would eventually become the majority of the population in the United Kingdom at a high level of immigration.

There’s no good reason for Camarota to find that shocking as it has happened at least once in U.S. history. As sociologist Charles Hirschman pointed out, the population of the United States today would only be about 100 million if immigration had stopped in 1800. Since the current population is about 330 million, that means most Americans are immigrants or the descendants of post‐​1800 immigrants. That doesn’t mean that boosted immigration would be “unprecedented” or “unsustainable.” It sounds like a return to immigration normality for Americans.

There are four broad reasons why the demography doesn’t support the political credo. First, not all immigrants arrive young — in fact, a growing share are arriving at or near retirement age. Second, immigrants age just like everyone else, adding to the elderly population over time. Third, immigrant fertility rates tend to converge with those of the native born. Fourth, to the extent that immigrants do have higher fertility rates than the native born, their children add to the dependent population — those too young or old to work.

Camarota’s first point is a curious criticism of the current restrictive immigration system. If this is his concern, why not just increase legal immigration opportunities for younger immigrants? Camarota’s second point somewhat answers that criticism – because “immigrants age just like everyone else, adding to the elderly population over time.” After all, newborn babies age too and will one day retire, which is a particularly poor argument against having children or increasing immigration.

Camarota’s third point is that immigrants assimilate. While a surprising admission from Camarota given his research, immigrants and their children still increase the population, and it takes time for immigrant fertility to approach that of natives – which he admits in his next point. Camarota’s fourth point is that immigrants have higher fertility rates that produce children who are also dependents.

To sum up, Camarota thinks that our current immigration system doesn’t help reduce the ratio of dependents to workers, immigrants age like everybody else, immigrant fertility shrinks too rapidly, and immigrant fertility doesn’t shrink fast enough.

The Census Bureau also estimates that, in 2060, 59% of the population will be of working age. Again, this is based on the assumption that net migration will amount to an average of 1.1 million each year. Under a zero‐​immigration scenario, just under 57% of the population would be of working age. In other words, while immigration is projected to add 75 million people to the American population by 2060, it will only increase the working‐​age share of the population by about two percentage points. Even if annual net immigration were expanded by 50% above what the Census Bureau projects, so that it averaged about 1.65 million a year, it would still only increase the working‐​age share of the population by three percentage points.

In other words, Camarota writes that the U.S. can increase immigration by 50 percent and have a working‐​age share of the population in 2060 similar to what it would otherwise be in 2027 or, on the extreme other side, 2060 America will look like Japan will in 2032. The percentage point spread is small, but the social, economic, and fiscal impacts are larger than they appear. Japan’s looming population collapse is terrifying and a few percentage points difference caused by expanded legal immigration can delay it for decades or longer. Even better, expanding legal immigration is a lot cheaper than birth subsidies.

You can read the rest of Camarota’s piece as it merely expands upon his points, offers some politically correct suggestions for reforming entitlement programs, and adds more figures. Nowhere does Camarota contest the obvious counterargument that immigration’s currently small effects on America’s age distribution result from very restrictive immigration policies.

The U.S. fiscal imbalance is a serious problem created by a poorly designed entitlement system. Declining U.S. fertility exacerbated the problem of the fiscal imbalance in a way that a well‐​designed system would not face. In addition to that, a growing population is correlated with increasing prosperity over the long term. More people mean more ideas, workers, consumers, investors, as well as potential friends, neighbors, and family members.

The worldwide and American increase in economic output from expanded legal immigration would be large and much of it could be captured to resolve the fiscal imbalance – at least for a few more generations. According to some estimates, massively expanded immigration would place the United States in an unassailable economic position. Allowing Americans and immigrants to interact as they see fit would also be a more ethical policy. In short, there are many reasons to support expanding legal immigration, and reversing expected US population decline is one of them, despite what Neo‐​Malthusians say.

Source: Immigration Can Offset US Population Decline | Cato at Liberty Blog

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Is American Economic Freedom Determined by Ancestry, Ethnicity, and Immigrant Countries of Origin?

2021/07/15 Leave a comment

Interesting study and methodology by Cato Institute that counters some of the populist and academic rhetoric:

The best potential counter argument against vastly expanding legal immigration is that immigrants might bring the less-efficient economic institutions, political systems, or cultural mores of their homelands with them to the United States. Ultimately, the United States and other rich countries are prosperous because of our economic and political institutions with some variation potentially explained by culture.

Most immigrants come from poorer countries with worse economic institutions, especially as measured by the Economic Freedom of the World Index. My co-author Benjamin Powell and I investigated whether immigrants worsened domestic economic institutions in our new book Wretched Refuse? The Political Economy of Immigration and Institutions, and we found it either to be unsupported by the evidence or that the evidence suggests that more immigration can sometimes increase economic freedom and improve institutions. There’s not much worry that immigrants would kill the institutional goose that the lays golden eggs of economic growth.

Some supporters of the so-called deep roots hypothesis, that events many thousands of years ago affected culture, genes, or both in such a way that our economic outcomes were basically determined long ago, are also worried that immigrants could undermine our institutions. Proponents of this view argue that it’s impossible for immigrants to not bring support for the bad economic institutions of their ancestral homelands with them. Although economic institutions have changed substantially over time, even recently in some countries, and the deep roots theory can’t explain why economic institutions change, it’s still a thoughtful counter argument.

To test whether there is support for it, we created a predicted economic freedom index for a hypothetical United States whose economic freedom is entirely a product of the economic freedom of the countries where immigrants and their ancestors came from. In other words, a native-born American of Irish descent and a native-born American of Italian descent would each support economic freedom in the United States to the extent that economic freedom exists in Ireland and Italy, respectively. For example, if half of a country’s population were of Irish ancestry and half were of Italian ancestry then the predicted economic freedom score of that country would be 7.82 ((8.13+7.51)/2) under this theory. Thus, we created an average weight of the U.S. population by ancestry, attributed the economic freedom scores of those countries to those Americans, and then took the weighted average of economic freedom for the United States in 1980 and 2019. The former date was the first year that the U.S. Census asked about ancestry.

We obtained ancestry data from the American Community Survey (ACS). We used the Economic Freedom of the World (EFW) index to gather data on the economic freedom of the United States and other countries over time. The EFW estimates a country’s economic freedom by looking at five variables: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation.

The ACS data is reported using either demonyms, broader regional terms, or ethnic terms. As a result, we had to interpret some proportionally. For example, if an ACS respondent said that he was “Eastern European,” we calculated his inherent EFW score as coming from all Eastern European countries proportionally. Similarly, we combined some terms together. For example, both English and Scottish were combined into British. We then applied the EFW score for the United Kingdom to them, since EFW is reported by country. The biggest challenge was apportioning the ancestry of Black Americans who are the descendants of slaves. We know the general area where they came from but not the specific countries. Thus, we followed the general methods here for allocating black American ancestry. The different allocations made in this study are listed in Table 1.

In order to perform later calculations, we needed to determine which countries were relevant to the study. To be relevant, ACS and EFW data needed to both be available in each year. Some countries did not qualify, but their exclusions did not impact the final result as they were generally smaller countries with few historical immigrants to the United States. All demonyms and ethnic terms were interpreted by their national association to match the ACS and EFW data, but this was straight-forward.

To predict the ancestry-only EFW score for the United States, we multiplied the proportion of the population of ancestry by the EFW score in that country for that year. We then simply added up the results.

If ancestry alone determined the United States’ EFW score, it would have had a score of 6.32 in 1980 and 7.46 for 2019. In reality, the United States’ EFW was 8.13 in 1980 and 8.22 for 2019 – 1.8 and 0.76 points higher than what the ancestry-only score would predict. The economic freedom of the United States is substantially higher than its ancestry adjusted EFW score would predict if the deep roots theory were correct. For example, if American ancestry determined our EFW score then we should have the economic freedom score of Hungary in 2019 (7.44) rather than the much higher actual score of 8.22.

Interestingly, the average EFW score of the ancestral homelands of Americans and immigrants has increased considerably over time from 6.32 to 7.45. If deep roots really did drive our economic destiny by affecting economic freedom, we should be much less concerned today than in the recent past, as the ancestral homelands of immigrant groups are much freer today than in the past.

Ancestry and country of origin are not destiny, at least not in the United States in these two years.

Source: Is American Economic Freedom Determined by Ancestry, Ethnicity, and Immigrant Countries of Origin?

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USA: The Skill Level of Immigrants Is Rising | Cato at Liberty Blog

2021/07/12 Leave a comment

Of note, despite a relative lack of programs to encourage skilled immigration. Same trend in Canada but more of conscious policy and program choices:

A major immigration debate over the last several years is whether the U.S. immigration policy should be more meritocratic by attracting higher educated workers. President Trump supported such a system if it were pared with many fewer legal immigrants coming in while Democrats are mostly supportive of increasing all types of immigration. Although Congress did not pass a law to create a more meritocratic immigration system, new immigrants to the United States are increasingly skilled. In other words, the U.S. immigration system is becoming more meritocratic on its own.

The United States is an increasingly attractive place for highly educated immigrants. From all regions except for Africa, the share of immigrants arriving with a college degree has risen since 1995 while the share arriving with a high school degree or lower has dropped. Figure 1 shows the change in the proportion of recently arrived immigrants, 5 years in the United States or fewer, in different education groups between 1995 and 2020. Persons under 30 are excluded, as they are more likely to have not completed their education.

Some of these changes are striking. The proportion of recent immigrants from Central America with graduate degrees increased by more than 350 percent in 35 years, from 2 percent of recent immigrants in 1995 to 9.5 percent of recent immigrants in 2020. The share of new immigrants who are high school dropouts has declined or every region or origin from 1995 to 2020.

The same trend is true when comparing individual countries. Figure 2 shows the change in educational attainment from four of the top sending countries in 1995 and 2020. Mexican immigrants, who are often criticized as being low‐​educated and low‐​skilled, are now 2.4 times more likely to have received a bachelor’s degree at arrival than they were just 35 years ago.

Figure 3 shows that immigrants have higher high school dropout rates than natives, but immigrants who come here at a younger age (younger than 10) typically end up getting more education eventually.

Native‐​born Americans are not the only ones who benefit from more highly educated immigrants. The children of immigrants consistently earn more education than their parents, and since 2010, more than native‐​born Americans (Figure 4). Again, persons under 30 are excluded from analysis to avoid over‐​counting individuals with less than a high school education.

Congress did not create a merit‐​based immigration system as President Trump wanted, but we seem to be getting one nonetheless as immigrants become more skilled over time.

Source: The Skill Level of Immigrants Is Rising | Cato at Liberty Blog

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