Economics of Illegal Immigration

One of the arguments you hear against illegal immigration, or at least, as an imperative to defend against it as if it were some great threat to the national economy, is that it has a downward effect on wages.

It’s important to be skeptical about economic assumptions. Even experts get overwhelmed, and most of us simply rely on ideology for the gray areas.

Unfortunately, political points are frequently made on the basis of very simplistic and often entirely faulty premises. The classic example is the comparison of the national economy to one’s household budget.  If we find ourselves struggling to pay the rent, we need to cut back on spending.  Yet Keynesian economic theory tells us that often times the very best thing to do is for the government to actually increase spending so as to "stimulate" a stagnant economy.  Even this is is a dramatic simplification, but the larger point remains that things are not as simple as they often appear on the surface.

With immigration, the story is no less complex. It might seem reasonable to imagine that illegal immigrants, willing to work for less, push wages down. But it is just as reasonable to imagine that this increased productivity pushes other wages up – if a dishwasher can be had for less, more might be spent on the chef, etc.

In the end, all we really have (those of us lacking a serious background in economics), is our philosophical judgment and where it finds adherence among credible experts in the field. This always presents a range, but is at least a reasonable hook upon which to hang our hat.