Immigration and the US Economy
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Case Code: ECON029 Case Length: 25 Pages Period: 1900-2007 Pub Date: 2008 Teaching Note: Not Available |
Price: Rs.400 Organization : - Industry : - Countries : USA Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
In 1790, there were 4 million Americans in our first census. Today, there are 301 million in the country, a 75-fold increase. Now, what happened to that nation, which suffered from the most terrible population explosion? It became the most prosperous and influential nation in human history - so what's the problem?
- Ben Wattenberg, Senior Fellow at the American Enterprise Institute (AEI), in response to opposition to immigration, in August, 2007
"Standard economic theory predicts that the shifts in the supply of labor caused by immigration should produce some economic gains for natives. But every attempt to measure the size of those gains based on actual data shows that it is extremely small....Moreover, those gains are generated by the wage losses suffered by natives in competition with immigrants, who in the case of illegals tend to be the poorest and least-educated Americans. Lowering their wages so that the rest of society can be made imperceptibly richer is hardly sound public policy."
- Steven Camarota, Director of Research, Center for Immigration Studies, June 2006
Introduction
On August 10, 2007, George W. Bush (Bush), President of the United States (US), announced new measures to address some of the challenges thrown up by the high levels of immigration into the US. The announcement followed the rejection of the Comprehensive Immigration Reform bill – a bill that dealt with immigration issues including those relating to homeland security – in both legislative bodies. Bush said that the new measures represented steps that his administration could take "within the boundaries of existing law to better secure [US] borders, improve worksite enforcement, streamline existing temporary worker programs, and help new immigrants assimilate into American society."
Economists have always been interested in understanding the role of immigrants (foreign-born persons) and the part they play in the economy of the host country. For them, the US with its history of immigration, offered the ideal opportunity to study the economic implications of a continuous flow of immigrants. Large-scale immigration into North America started in the 16th century, with people coming in from Europe. Hordes of immigrants populated the towns, cities, and villages of the country and took up jobs as laborers, farmers, physicians, etc. Until 1882, the US authorities did not restrict the entry of immigrants.
However, with the rapid increase in population, the US government decided to regulate immigration and a new immigration policy was implemented. Over the years, the US government introduced different acts in its efforts to control immigration. Nonetheless, as of 2000, immigrants constituted 11% of the total population of the US. The terrorist attacks of September 11, 2001 (9/11) polarized public opinion on immigration. Debates on the topic on the floors of legislative bodies as well as in the print media grew more heated. In response to the attacks, the US government tightened immigration regulations.
Some analysts supported the new regulations and even demanded further restrictions on immigration on the grounds that high levels of immigration caused population increase, stagnation or reduction in the wages of blue-collar workers, and job losses for US citizens, besides having far-reaching social and cultural consequences.
However, a majority of analysts were not in favor of further restricting immigration. They argued that immigrants had made a positive contribution to the US economy. With the decline in fertility rates among US-born citizens, immigration would play a key role in future population and economic growth of the US, they added. The US government drafted the Comprehensive Immigration Reform Act to address the problems associated with immigration. However, the bill, introduced in the US Senate on May 9, 2007, failed to muster sufficient votes.
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