Immigration is the movement of people to another country where they are not native. Host countries, home countries, and immigrants themselves are groups who incur many costs and benefits due to the process, resulting in winners and losers. This essay will discuss the pros and cons of immigration and specifically how the American economy has flourished due to the facilitation of immigration, but arguably also declined in some ways. Immigration has been very impactful on the American economy. The USA hosts the largest number of immigrants, with 34.8 million in 2000 and 49.8 million in 2017, as recorded by the United Nations. The vast numbers confirm that there must be benefits to the process, especially to migrate to America, a developed country. For immigrants, to influence their decision to migrate, there are push and pull factors, economic and non-economic.
Arguably, the economic costs and benefits are the most impactful due to affecting many different groups. Immigrants reap economic benefits: employment opportunities, a minimum wage rate possibly lacking in their home country, and a better standard of living and education. Likewise, host countries economically benefit from immigration as shortfalls in labour due to an ageing population in industries that require young workers are overcome, so production levels increase to obtain more capital and therefore increase tax revenue for the population of America. Migrants are typically of working age, also useful because of the rising dependency ratio reaching 54.356 in the USA according to the World Bank, therefore displaying that a significant amount of working people are supporting those younger than 15 and older than 64. Plus, migrants often do jobs which natives refuse to do, such as farming or food processing. They also work for lower wage rates, allowing businesses to develop as they save money in that respect, meaning that the American economy can succeed at a lower cost as output is increased.
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Besides, immigration also increases total factor productivity as businesses can allocate tasks according to skill. Peri (2009) notes how American natives specialise in communication-intensive production, whilst immigrants focus on manual. Specialization makes the business more efficient, reflecting a comparative advantage, and displaying that immigration is beneficial for businesses.
Furthermore, Dancygier and Donnelly (2012) affirm that the specific factors model demonstrates that when workers are specialised, they cannot easily switch sectors, therefore wage losses are incurred. As per the assumptions of the model, labour is abundant, therefore wage rates will be lower as more people are available, but wage rates will be higher in the foreign country due to labour scarcity, therefore persuading immigrants to migrate to the foreign country. In this case, both immigrants and the host country are winners of immigration because immigrants receive higher wages whilst the foreign country receives labour to overcome scarcity. Also, the home country is a winner as when immigrants leave, the labour force falls, thus natives are more valued for their work, so they are paid more to avoid labour scarcity. Correspondingly, unemployment is lower.
Though it is beneficial to have migrants in host countries to diminish labour scarcity, it can be costly as they bring dependents, putting social pressures on housing, health, and educational facilities, thereby draining the government’s expenditure. However, as immigrants put a strain on resources and capital, it can lead to an upsurge in services, creating more employment opportunities for native workers and disproving the claim of immigrants ‘taking people’s jobs’. Alternatively, though, dependents can be considered the future of the host country, so investing in their education can be advantageous in the long run. Furthermore, immigrants pay more in taxes than they take in benefits, resulting in a fiscal surplus, not a deficit as most people assume. This is a result of them being eligible for less government benefit programs. Moreover, some illegal immigrants also pay taxes even though they could easily avoid it, and this is due to their hope of one day becoming citizens, therefore they abide by the law.
As these migrants work in foreign countries, economically, home countries benefit as many send remittances home to support families, which is money put into the home country’s economy and then used by the local government to develop and economically grow. The World Bank recorded 431 billion USD worth of remittances sent in 2014 to developing countries – a substantial amount evidently as it accounted for 42% worth of GDP in Tajikistan. However, although remittances are beneficial, home countries experience a fall in population, leading to low levels of production due to a shortage of skilled labour providing their expertise elsewhere. This creates pressures for domestic employment in the host country as competition for work rises, but as it may decrease the wage rate, it helps to control inflation.
In a wider context, immigrants can benefit in non-economic ways as they may escape persecution, war, natural disasters, and strong political control, therefore resulting in them benefitting from a host country’s ability to offer social security – a clear example being the refugees escaping Syria in the recent years. However, as immigration can eliminate vulnerabilities of immigrants, it can create vulnerabilities for host countries as witnessed by terrorism. Terrorists, to enter the country, take advantage of the vast amount of applications of immigrants and therefore manipulate the system with its limitations in technology (Kephart, 2006). However, on 9/11, the terrorists entered with non-immigrant and student visas, i.e. as temporary visitors, highlighting that immigration is not entirely to blame.
Additionally, cultural factors play a part as immigrants contribute to the cultural diversity of a country, becoming appealing to tourists as there are fewer assumptions of racism and discrimination. Nevertheless, discrimination is still present in small groups. Chiswick (2008) describes how anti-Catholic, anti-Semitic, and anti-Asian opinions have influenced immigration policies in America, suggesting a possibility of hate crimes and hostility due to their thoughts of the nation-state losing its identity. Their reasoning could also be as Cohen and Sirkeci (2011) describe how receiving populations oppose migration due to the assumption of jobs being taken, crime increasing and services being used excessively, therefore leading to xenophobia. This is further backed up by Epstein and Gang (2010) who describe how the formation of immigration clusters, for example, Mexicans in California, has led to both costs and benefits. The benefit is for the immigrants themselves, where they support each other to assimilate into the foreign culture more easily. However, this can be a cost as they might be subject to adverse selection. Additionally, West (2011) comments on how cultural it can be a cost due to natives having anxiety over the loss of culture as migrants fail to integrate into mainstream life, resulting in ethnocentrism. This explains why immigrants can be losers due to language barriers and lack of awareness of the host country’s culture, possibly leading to difficulties in finding work, so often resulting in low-wage jobs being taken. Correspondingly, immigrants may lack legal knowledge of the host country, possibly landing in problematic situations.
In conclusion, immigration aids productivity for businesses and economies, such as America’s, but it can be at the cost of other countries as their labour may be stolen from them. However, arguably it can be said that the pros of immigration, both economic and non-economic, outweigh the costs, so as an overall process, immigration demonstrates to make immigrants, host, and home countries a winner, as also established by the specific factor model. The push and pull factors for immigrants are very influential, whether that be being able to find work at a higher wage or being able to escape persecution to gain their freedom.
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