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Could Immigration Policy be the Key to the U.S.’ Redistribution Problem?

Could Immigration Policy be the Key to the U.S.’ Redistribution Problem?

The 2016 Presidential Election amplified the discussion of U.S. immigration policy, as Donald Trump used it as the basis for his policy platform. Not only was immigration policy a campaigning highlight for both Trump and Hillary Clinton, but it also stirred a more verbally xenophobic public in America. The election of a nationalistic U.S. president, coupled with the United Kingdom’s Brexit, has created a global anti-immigration sentiment in an era of growing international strife and political refugees. Do these xenophobic developments on a global scale mean that all immigrants are inherently bad, and in turn bad for all societies? I will argue that this cannot, ethically or logically, be the case.

Current U.S. immigration policy classifies immigrants into several different categories, and federal regulations dictate the numbers from each country and classification that are granted legal U.S. citizenship. Although the story behind each immigrant is vastly different, two of the primary categories are: merit-based and family-based. Let’s take a merit-based system for example, where immigrants would be granted U.S. citizenship depending on their knowledge and ability in a certain field. More specifically, these immigrants would be skilled workers whose success in their field would grant them citizenship status. On the other hand, a family-based immigration system would see that immigrants would be granted citizenship status based on their familial relations in the United States. This merit based-immigration system focuses on economic evaluations of candidates, while the family-based immigration system makes a more sympathetic or ethical case.

While lower skilled immigrants with lower levels of education do create a fiscal deficit for the U.S. government, immigrants with higher education levels actually have a “net fiscal benefit of +$105,000” (Center for Immigration Studies). The argument for a family based immigration system is an extremely empathetic one, and one people are more emotionally inclined to, yet it may be more economically feasible to implement a merit based system. As I have stated previously, a merit based immigration system would accept certain immigrants’ requests for U.S. citizenship status so long as they met a certain skill level. Taking a hypothetical approach to a solely merit based immigration system, and excluding the effects of other low skilled immigrants, could actually benefit both the United States’ economy and different social structures. This hypothetical approach would foster a system similar to the temporary H1B visa, but would grant immigrants permanent residency.

George A. Akerlof and Rachel E. Kranton introduce the idea of inside and outside workers in their book, Identity Economics, which can be applied in considering a merit based immigration system. They state that inside workers are workers who feel a connection to the firm they work for and therefore do not need monetary incentives (apart from their salary/wage) to be productive. The outside workers on the other hand will only become more productive if they receive extra monetary compensation, which increases output for the firm but also increases its costs (Akerlof, Kranton 70). Assuming that skilled immigrants are granted citizenship for the sole purpose of applying their advanced skills to a certain firm, they could be considered as inside workers. Seeing as the firm they work for and their individual merit were the keys for their newfound citizenship, these skilled immigrants might be extra thankful for their jobs. In turn they would exert high effort and productivity for these firms, and participate in increasing overall GDP (since skilled immigrants don’t generally participate in welfare programs).

If, again, this immigration system is solely confined to a merit based policy, then it could have the potential to provide beneficial redistributive effects for low skilled workers. However, there would need to be a strong commitment from lawmakers towards creating fair redistributive fiscal policy in addition to this proposed immigration system. As a warning, this immigration system could have detrimental effects in widening the U.S. wealth gap without a more radical fiscal policy. The overall increase in income through this merit system is a small gain in comparison to the continued poverty of America’s working class. Stephen A Camarota addresses this in his 2013 testimony, regarding the fiscal benefits of skilled immigration, to the Senate Joint Economic Committee. While an increased productivity level is helpful, the decreased wages that result ultimately hurt “the native born-workers... those without a high school education, who are a significant share of the working poor” (Camarota). Ultimately a merit based immigration system just persists the redistribution of wealth to the wealthy, seeing as wages are constantly driven down. Similarly, in his study, The Economic Benefits from Immigration, George Borjas uses basic economic theory and empirical to determine any welfare trends stemming from the education levels of different immigrant groups. research According to Borjas’ study all output is given back to “the owners of capital,” as they are the ones who profit from an increase in skilled labor (Borjas, 6).

While a merit based immigration system can boost overall economic production, it needs to be supplemented with other economic policy in order to foster better redistributional effects. In his Capital in the Twenty First Century, Thomas Piketty highlights that redistributive policy, in this day and age, needs to be focused on the “principle of equal access to a certain number of goods deemed to be fundamental” (Pickety). These goods Piketty refers, are things such as education, infrastructure, healthcare, etc. With little to no or low skilled immigrants, then the increased productivity from the increase of skilled labor would generate a higher GDP for the U.S. economy. In turn, the government would be able to spend more money on possible education reforms instead of welfare programs. If the government was able to spend more on education due to the economy’s increased productivity, then the country would have a better chance at increasing the supply of skilled native labor for future generations. Therefore a merit based economic system could help to both raise the employment, education, and skill levels of native citizens, and also decrease the dependency of documented and unskilled immigrants on government welfare programs.

Overall a merit-based system would create a more skilled society; however, there’s not much it can initially do to fix America’s issue with undocumented immigrants. A prolonged H1B immigration system, as demonstrated above, can increase productivity, overall GDP for the United States economy, and in turn the promote the public education system (if politicians commit to it). If this can happen, then an increase in skilled laborers can generate greater productivity and efficiency in the U.S. economy for years to come. Therefore, in the long run, this system in junction with redistributive fiscal policy could give way to a more open U.S. policy on all immigration.

This is where the empathetic argument for family-based or refugee-based immigration can be solved. If the U.S. government and society used a permanent H1B visa system to bolster the economy, it would give the government the proper resources, over time, to allow more immigrants to become citizens. This facilitated openness of U.S. borders could then help alleviate the struggles of refugees or undocumented immigrants in the future. Although, the case for a merit-based immigration system is an economically effective one, it could also provide the U.S. with an ethical platform to solve its most ingrained racial and structural issues in the future.

Works Cited:

Akerlof, George A. and Kranton, Rachel E. (2010). Identity Economics: How Our

Identities Share Our Work, Wages, and Well-Being. Princeton, NJ: Princeton

University Press.

Borjas, George J. “The Economic Benefits from Immigration.” Journal of

Economic Perspectives 9, no. 2 (1995): 3-22.

Piketty, Thomas.  (2014). Capital in the Twenty First Century. Cambridge, MA: The

Belknap Press of Harvard University Press.

Camarota, Steven A. “The Fiscal and Economic Impact of Immigration on the United States:

Testimony Prepared for the Senate Joint Economic Committee.” Center for Immigration Studies. 17 May 2013.

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