IPR News-Summer 1999-A New U.S. Immigration Policy for a New Millennium?

Institute for Policy Reserach News, Northwestern University

A New U.S. Immigration Policy for a New Millennium?

Summer 1999, Volume 20, Number 1

The debate over immigration policy, like some perverse perennial that blooms only when the weather takes its annual turn toward winter, has lain dormant for much of the seven years of the nation's current economic expansion. But it will no doubt bloom once again when the current boom has run its course. And that's unfortunate. The time to discuss issues of profound national importance is not when passions are inflamed by the inevitable stress of a downturn in the economy, but rather when historical perspective, serious scholarship, and considered judgment make it possible for us to take a longer term view. That time is now,

Joseph Ferrie

rather than two or three years from now.

The current crisis in Kosovo provides a convenient context in which to frame some of the principal issues involved. For example, what would be the consequences of accepting into the U.S. all of the Kosovar Albanians displaced from their homeland? What if we were to go even further and abolish all restrictions on immigration into the United States? Though such policies are politically infeasible, considering them for a moment might make clear both the costs and benefits to the United States of its current immigration policy and the areas in which reasoned adjustments ought to be made.

The United States has had a long historical experience with immigration. Most of that experience (132 years‹ nearly two-thirds of the time since 1789) was of almost completely unrestricted immigration, the only exceptions being the Chinese Exclusion Acts of the early 1880s and the imposition of the Literacy Test in 1917. Several episodes in that experience (the middle 1850s, the early 1880s, and the first decade of the twentieth century) were characterized by rates of immigration (the number of immigrants per thousand U.S. residents) that dwarf anything seen in the nation's recent experience. That historical experience also witnessed the settlement of a large fraction of immigrants in the nation's cities, their rapid accumulation of human and financial wealth, and their gradual assimilation into the nation's larger culture. The impact of these waves of immigration on U.S. workers was quite limited: in the 1850s, only native-born craft workers in the urban Northeast suffered from their arrival, though by the early 1900s there is some evidence of slightly more distress and a political realignment against open immigration policy that culminated in the imposition of the Quota System in 1921.

Though rates of immigration over the last three decades have never reached half of the peak rates achieved in the 19th and early 20th centuries, we now have a copious scholarly literature on the costs and benefits of immigration in the contemporary United States. Under the aegis of the National Research Council, a nonpartisan affiliate of the National Academy of Sciences, a team of researchers spent two years assembling the latest research on immigration. Their work, summarized in The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (National Academy Press, 1997), edited by James P. Smith and Barry Edmonston, provides little comfort to those who support more restrictive immigration policies today. This study finds that immigration produces net economic benefits of up to $10 billion per year for U.S. residents (and virtually no discernable adverse impact on the earnings and employment of U.S. workers), net long-run fiscal benefits at the federal level and for all but a handful of states (with immigrants paying more in taxes over their lifetimes than they draw in social benefits), and rapid social assimilation.

When coupled with the additional benefits immigration could provide if the U.S. economy exhibits increasing returns to scale in the aggregate (rather than constant returns to scale as the relatively conservative projections in The New Americans assumed), and if the arrival of large numbers of prime-age workers helps alleviate permanently or postpones significantly the coming shortfall in the Social Security system, these findings suggest that the nation should be considering a less restrictive immigration policy, rather than one that excludes large numbers of workers from whom the nation could derive significant benefits. These calculations are made only from the perspective of the U.S. population. If we factor in the benefits that immigrants themselves derive from coming to this country, an even stronger case can be made for a less restrictive immigration policy. The United States could clearly absorb the entire Kosovar Albanian refugee population with little difficulty, and many more immigrants in addition. The only question is how many more? Perhaps the question we can most fruitfully ask at the start of the 21st century is not whether immigration policy is too lax, but instead whether in a world of increasingly free trade and globalization, there are sound reasons for having any restrictions on immigration at all.

Joseph Ferrie is an associate professor of economics at Northwestern and an IPR faculty fellow. He is the author of ŚYankeys Now': European Immigrants in the Antebellum U.S., l840-60 (Oxford, 1999), and Southern Paternalism and the Rise of the Welfare State (Cambridge, 1999).