Inequality and immigration

Prof. Peri spoke at GMU today about immigration. There’s an economic argument against immigration that says because most immigrants are unskilled, they reduce the wages of native unskilled workers. These are the most economically vulnerable members of society, so we should care about the effect immigration has on these folks.

Well, one solution would be to tax immigrants and give the proceeds to native unskilled workers. This would make everyone better off because the natives would be compensated for lost wages and the immigrants would get to work in America where their wages are much higher than in their sending country. Besides being a little perverse, this policy would be hard to implement. You’d have to figure out who exactly is “low-skill” and you’d need to spend money to collect taxes from the immigrants. Plus, you’d get some inefficiency from the fact that people would switch from “high-skilled” to “low-skilled” jobs so they could get in on the action.

Apparently, Prof. Peri offered another solution in today’s talk. (GMU is suppose to be all internet friendly… where’s the video feed?!) Let more high skilled workers into the country. Open the flood gates. These engineers from India would compete with high-skill native Americans, thus increasing the (relative) wage of low-skill workers. Problem solved!