There seems to be an assumption among many populist elements within both the U.S. and the U.K. that immigrants – legal and otherwise – are a net-drain on the economy. This view isn’t completely absurd. After all, basic economic theory would suggest that immigrants steal jobs and depress wages. The neoclassical model, for example, would argue that more workers competing for roughly the same number of jobs would lower wages because there would be an oversupply of labor. The specific factors model comes to a similar conclusion, arguing that an influx of immigrants would seek employment in labor-intensive industries. However, because capital levels would largely remain constant, the increased labor supply would lead to decreasing marginal returns, thus driving down wages due to decreased productivity. Ultimately, neither model is correct. Immigration is a boon for the economy.
The problem with the aforementioned models is they assume all other variables remain constant. Or, to use an economic term, immigration occurs ceteris paribus. Obviously this isn’t really how the market operates, though. As more immigrants enter the country, they expand the overall economy by raising demand. They also need to buy groceries and rent apartments, so while they do take jobs, they also create jobs. It’s also not clear that the jobs taken by immigrants are equivalent to jobs held by citizens. For example, imagine a yard care firm. Often, yard care is quite expensive, and many households aren’t willing to pay such large sums of money for landscaping and lawn care. However, immigrants without much capital or experience might be able to provide a much cheaper and more basic lawn care service. The immigrants would be able to work for households that wouldn’t otherwise have used a lawn care provider. Thus, they aren’t stealing anyone else’s job, they are simply serving a previously ignored sector of the lawn care market. This dynamic also leads to increases in native citizen’s wages because it allows citizens who know the culture, language, and city better to take on higher level jobs that require coordination and interpersonal interaction. This is referred to as complementary task specialization, and it enjoys robust support in the economics literature. Indeed, most economic models estimate that for every immigrant that arrives in the United States (legal or illegal), 1.1-1.2 jobs is created.
Some people accept that immigrants don’t steal jobs and depress wages, but they still are opposed to immigration (especially illegal immigration) because they feel that immigrants free-ride off state welfare programs. This is also wrong. First, most immigrants are relatively young, at least by the standards of the country they are moving to. This is because developed economies like Japan and Germany tend to have relatively low birth rates and aging populations. Therefore, immigrants actually help refill welfare coffers because they put money in but rarely take money out. You can’t receive social security at age 30, after all. In the United states, illegal immigrants are also barred from receiving a number of major welfare benefits like Medicaid, Supplemental Security Income, and TANF. Thus, it’s very hard to credibly argue that illegal immigrants are stealing welfare money from deserving citizens. It’s also a myth that illegal immigrants don’t pay taxes. They most definitely do. For example, a study by the Institute on Taxation and Economic Policy estimates that illegal immigrants paid the state of Texas $1.5 billion in taxes for fiscal year 2012. So sure, it is definitely true that certain undocumented individuals have ripped off the government, but this is hardly a systemic problem.
Finally, it’s important to remember that Obama has deported more illegal immigrants than any other president in history, and he has done so during a period of time in which illegal immigration is decreasing. In fact, there are actually more illegal immigrants leaving the U.S. each year than there are entering. So, even if all the economists and tax experts are wrong, there still is no real justification for the anti-immigrant hysteria on the far Right. We certainly need to deport illegal immigrants who threaten our safety and security, but the idea that immigrants are crushing our economy and bankrupting our government is laughably absurd, and anyone who believes this conspiracy has no understanding of economics.