This Economist Says Immigration is Good for the Economy

All the talk about immigrants misses the point that immigration is actually slowing right now.

By Alain StephensApril 25, 2016 11:11 am

It’s hard to talk about the issue of immigration without getting mired into the politics or the rhetoric of the hour. But hard data is often missing from the conversation. Is there a way to understand immigration through the lens of economic data? Perhaps there is.

Pia Orrenius is the Vice President and Senior Economist at the Dallas Federal Reserve Bank, and a fellow at the John Tower Center for Political Studies at Southern Methodist University. She says there’s no need for alarm, despite the fearmongering – immigration is actually good for the economy.

“We know that when immigrants come into the economy, there’s a lot of good effects that follow from that,” Orrenius says. “It’s a larger labor supply, which means that the economy produces more output.”

That benefit is passed on to consumers, who see cheaper goods and services.

“Consumers buy cheaper houses, or we get better technology,” Orrenius says. “These benefits flow to us as consumers, but we don’t directly recognize those as coming from immigration. But a large chunk of them do.”

While she says that the net gain outweighs the downsides, there are some negatives.

“There’s no free lunch, there’s benefits and costs to immigration like theres benefits and costs to most economic change,” Orrenius says. “One of the costs of immigration is that workers compete directly with immigrants, especially on the low scale end of the labor force. They do face and experience decreases in their wages as a result of higher competition from immigrants.”

But rather than blame immigration as whole, we should look at those effects and try to find solutions, she says.

“The research doesn’t tend to find that these effects are large on average, but we don’t want to sweep that under the rug,” Orrenius says. “We have to recognize that if we want to create an immigration system that works for everybody.”

Listen to the full interview in the audio player above.

Post prepared for web by Alexandra Hart.