Benefits of Immigration
By Arnold Kling
Since high-skilled natives with a higher opportunity cost of time are more likely to purchase domestic services from immigrants, native high-skilled workers will spend more time working in the labor market.
To the extent that migration of foreign private household workers leads highskilled natives to increase labor supply to the market, wage inequality among natives is reduced. The increase in labor supply of high-skilled workers leads to a decline in their relative wage and an increase in the relative wage of complementary low-skilled native labor. By allowing women to work more flexible hours, foreign private household workers may also reduce gender disparities among high-skilled natives and help eliminate the glass ceiling.
Moreover, when high-skilled women hire immigrant private household workers and transfer their labor from home production to market work, their output becomes taxable, providing a fiscal benefit for the population, even without considering the taxes paid by the migrants themselves.
As I wrote in this post, beware the unintended consequences of restricting immigration.
Thanks to Greg Mankiw for the pointer.
Meanwhile, Reuven Brenner discusses immigration in the context of Ireland’s economic miracle.
What happened to the financial center that was once in Montreal? It moved — together with some 400,000 people — to Toronto. Where are the Cuban brains? In Florida, and that’s where they prospered while Cuba lapsed into dire poverty. Where is Mexico’s human capital? Ten percent or more has come to the United States. Where did hundreds of thousands of Russian scientists, engineers, and technicians go? Israel. And where has the talent been flowing in Europe? To Ireland: Over roughly a decade, more than 400,000 newcomers have moved there, an addition of 10 percent to the Irish population.
Read the whole thing.