Don’t Forget Division!

Ramesh Ponnuru writing at Bloomberg starts by summarizing a recent working paper by Edwards and Ortega.  He doesn’t mention it was funded by the Center For American Progres (CAP), a progressive group.

It’s an eye-opening finding: If the U.S. no longer had any illegal immigrants, its GDP would be $5 trillion smaller over 10 years. That’s the conclusion of a recent study. But while the number is big, it’s not clear it tells us much about what to do about illegal immigration.

Normally, the expectation that a policy would shrink our economy by that much would be a very powerful argument against it. But that’s because normally, we would expect this shrinkage to take the form of lost jobs and lower living standards for Americans.

It is unclear why this data is eye-opening.  If we take a large number of folks out of the economy the size of the economy will go down.  What is interesting is division.  What will happen per capita?  Here is the real money quote from Edwards and Ortega considering the source of their funding:

Our results show that the economic contribution of unauthorized workers to the U.S. economy is substantial, at approximately 3% of private- sector GDP annually, which amounts to close to $5 trillion over a 10-year period. These effects on production are smaller than the share of unauthorized workers in employment, which is close to 5%. The reason is that unauthorized workers are less skilled and appear to be less productive, on average, than natives and legal immigrants with the same observable skills.

Just to be clear, according to the study, unauthorized workers are 5% of the workforce and contribute 3% of private sector GDP.  Later Ramesh cites a CBO study that finds the per capita economy would be 0.2% after two decades [emphasis added].  So we have two studies.  One suggests that eliminating unauthorized workers would improve the economy and the other suggesting a tiny positive change.  Conclusion: no overall economic harm will come from exporting unauthorized workers.  As Ramesh says, it is not the only issue to consider but it could be an important one.  It turns out that it is not important.

What else should be considered: There could be specific areas of the economy that might harmed or improved.  There might be specific groups or areas of the country  to consider as well.  The impact on law enforcement needs to be considered.  Just don’t worry about the overall economy.

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