Eric Rasmusen of the University of Indiana: “How Immigration Can Hurt a Country” | Blog Posts

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Eric Rasmusen of the University of Indiana: “How Immigration Can Hurt a Country”

06/21/2013

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Economist Eric Rasmusen of the University of Indiana has written what he calls an "informal paper" called, “How Immigration Can Hurt a Country”.

“Can immigration (or capital inflow) hurt the welfare of a country? Yes, if there are decreasing returns to the factor, as this little paper will explain. The idea is important, and probably is new— at least, I couldn’t find it by a google search— but an economics journal would say it is obvious, I think, so I probably will not try to publish it in a journal. I will post it on the web instead. I do hope it gets into the academic literature and the policy debates. If it is received favorably, I will tidy it up and put it into journal style, adding cites and superfluous generality, and checking my arithmetic. My target audience is trained economists even now, however. Please let me know if someone has already made the external diseconomy argument. I wouldn’t be surprised if someone had done so back in the 1920?s….”

Possibly some of those arguments can be found in the 41 volumes of the Dillingham Report, which actually goes back to 1911, although that commission provided the basis for the Immigration Act of 1924.

More from Rasmusen:

Please note what this paper is not about. To a non-economist, it may seem obvious that his city will not benefit from the entry of large numbers of uneducated young men who arrive without jobs. I think that what is foremost in their minds is that the immigrants are (a) more likely than natives to engage in crime and other disorderly activities, and (b) unlikely to pay as much in taxes as they cost in government payments (see Nannestadaz (2007), Rector & Richwine (2013), and Yglesias (2013)). Or, if the non-economist is a European, he may hope for the opposite of (b): that the young working immigrants will pay taxes to support the leisure of the old natives (see Nannestadaz (2007)). This paper will ignore those things, important though they may be. Instead, my focus is on whether immigrants reduce the earnings of the natives, earnings from both wages and other sources.

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