The Economic Power of Immigration

Immigration policy is a difficult issue, particularly for economists. A recent interview at Reason magazine with former World Bank researcher and current Harvard Professor, Lant Pritchett, highlights the potential of immigration as a source for help to developing countries. He cites that an 3% rise in labor forces in developed countries through legal immigration would have the same impact on developing economies as all of current foreign development aid combined. However, one question highlights the extreme difficulty of figuring out if such a policy is right.

Reason: You argue that it’s not morally permissible to discriminate on the basis of nationality. But at what point do you have to stop letting people in because the sheer numbers threaten institutions of wealth creation? What’s the limit?

Pritchett: To say it’s not morally permissible doesn’t create black and white. Right now all kinds of things that cause much smaller differences in human welfare get much more attention. If we say we are going to discriminate against ethnic Indians in Mexico vs. other citizens of Mexico, there would be a hue and cry across the world. But if we say we’re going to discriminate in favor of people of Mexican descent born in the United States vs. people of Mexican descent born in Mexico, this creates absolutely no moral outrage.

At the same time Pritchett acknowledges that those in a country should have the right to protect their existing citizens in their favor.

How we should address the tradeoff between the benefit of immigration to those in developing world and the developed world does not have an easy answer, but it is important to realize and study what the tradeoffs are so we can have a well informed debate.


h/t to Global Development Blog