Immigration, as a previous post noted, has profoundly impacted the United States both historically and contemporarily. Hidden within the layers of the New York Times map linked in that post are a few larger questions: Does immigration, especially the illegal kind, really affect the U.S. economy? And what different, if anything, should the U.S. government do to control the flow of illegal immigrants across the borders?
David Besanko, Professor of Management and Strategy, and Brad Wible address some of these concerns in a Kellogg Insight article based on Besanko’s Insight Live sessions held in Mexico late in 2007. The article examines the topics of immigration, the economy, and their intersection in expansive detail, but the highlights offer a few surprises.
Immigration can benefit the economies on both sides of the border. In the United States, immigration added about $13 billion to the economy in 2005, Besanko estimated, raising GDP by 0.11 percent that year. While the overall impact on the U.S. side is small, the emigrants’ nations can benefit substantially. Mexican immigrants sent $26 billion in remittances back to their homeland, boosting its economy in 2006 by 2 percent. “This is enormous,” Besanko said. “Your jaw should drop.”
Still, immigration is not a zero sum game. High school drop outs in the U.S. have the most to lose, Besanko said, as their wages are the ones most impacted by immigration. For some, the solution is to lock the border down, implementing strict immigration policies that stem the tide of migration into the country. That may not be the best answer, though, and would likely spark sharp protests from the majority of U.S. citizens. According to Besanko, “The only sensible remaining options for the U.S., in my view, are to combine enforcement with some well defined path to citizenship, and to continue experimenting with something along the lines of a guest worker program.”