The effect – and the PURPOSE – of mass immigration is to enrich employers and to impoverish employees

by 1389 on July 2, 2013

in 1389 (blog admin), Blazing Cat Fur, Canada, government spending, immigration, unemployment, USA

Who has the money to make most of the political campaign contributions? The question answers itself.

Herbert Grubel: The true cost of immigration

(h/t: Blazing Cat Fur)

Do immigrants place an undue burden on our society, or are they a vital component of our economy? Discussions about the effects of mass immigration are becoming increasingly more evidence-based and reliant on widely accepted economic theory. The theory, known as the migration effect, implies that migrants moving from low- to high-income countries increase their own incomes, as well as those of the populations where they settle.

This theory has been subjected to numerous empirical investigations. George Borjas, who teaches migration economics at Harvard, reviewed the available evidence and concluded that immigrants raise the national income of the United States by $1.6-trillion annually. Of this, $1.565-trillion goes to immigrants themselves, in the form of wages and benefits. The remaining $35-billion represents the migration effect and goes to the native population.

Standard economic theory also tells us that the increased supply of labour caused by mass immigration depresses wages and raises the incomes of employers. According to Borjas, the annual incomes of U.S. workers are reduced by $400-billion due to the influx of new workers. But employers’ incomes increase by $435-billion, thanks to the lower cost of labour. The $35-billion in benefits from the migration effect all goes to employers.

Immigrants make up 18.8% of the population in Canada and 12.8% in the United States. Assuming that the economies of the two countries are very similar in most other respects, applying Borjas’ findings to Canada implies that labour loses $40-billion a year and employers gain $43.5-billion, including the migration effect of $3.5-billion.

The most important problem with these studies is that they abstract from the existence of the welfare state, which is characterized by progressive income taxes and the universality of access to social services. It is well documented that the average incomes of immigrants are well below the average of the native population. Immigrants, therefore, pay less taxes than everyone else. At the same time, immigrants are entitled to virtually all the benefits provided by the welfare state, such as free education, health care and other benefits. They also benefit from the country’s non-targeted spending on internal and external security, research and cultural projects.

The fiscal burden arising from the difference between the average amounts of taxes paid, and the average value of the benefits received, by immigrants has been the subject of numerous studies. According to a report written by Patrick Grady and myself, the difference is at least $20-billion a year in Canada; Jean-Paul Gourevitch found the burden in France is 3.2-billion euros; and according to Robert Rector and Jason Richwine, illegal immigrants alone place a fiscal burden of $103-billion a year on the United States. These results suggest that, in Canada and France, the migration benefits to the native populations are dwarfed by the fiscal burdens imposed by mass immigration.

More here.

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