December 5, 2005

Why are economists such blatant fools about immigration?

Economists are supposed to have a bias toward reductionism and Occam's Razor, but when it comes to using the Law of Supply and Demand to analyze the effects of immigration on the labor market, they start sounding as abstruse as String Theorists: "One might think that the Law of Supply and Demand applies to immigration, but due to an 11-dimensional wormhole in the fabric of the space-time continuum, ..."

Sacramento Bee columnist Daniel Weintraub, who isn't a fool about immigration, writes:

A major piece of conventional wisdom about immigrants - that newcomers take jobs away from native Americans - has been questioned in a new study of urban job growth by a Harvard Business School professor and expert on inner city economics.

The study, in fact, seems to show just the opposite: Cities with higher concentrations of immigrants are the places where the number of jobs is growing the fastest...

But the two groups of cities differed sharply when it came to one demographic measure: immigration. Inner cities that gained jobs had populations that, on average, were 31 percent immigrant. Inner cities that lost jobs had populations that averaged just 12 percent immigrants.

"There is a direct correlation between immigrant populations and job growth in inner cities," Porter writes...

A crucial question left unanswered by Porter's study is the extent to which immigrants cause job growth or are attracted by it. If the presence of immigrants in an economy leads to more business creation and job growth, then that is a very important finding. If immigrants are merely more likely to go to a place that already has a vibrant economy, then the connection between their presence and job growth is not as significant.

"We need to examine that further," Deirdre Coyle, vice president of the Initiative for a Competitive Inner City, told me.

Indeed you do.

Perhaps Dr. Porter, one of the most famous business ed gurus in the country, imagines that those casinos employing immigrants in Las Vegas were started by the immigrants, and that if only Pittsburgh were full of immigrants, its steel mills would be as busy as they were in 1944.

The concept that immigrants might instead follow economic prosperity created by others, and, being almost by definition less settled than natives might be particularly mobile in their job-seeking, seems not to have occurred to him.

And, anyway, even if immigrants create jobs, how much exactly does it benefit American citizens if most of the new jobs go to their fellow immigrants?

My published articles are archived at -- Steve Sailer

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