In my very positive 2019 review of Bryan Caplan’s book Open Borders: The Science and Ethics of Immigration, I wrote:
While few people would accuse Caplan of understating the benefits from immigration, I am one of those few. Immigrants start businesses at a rate that is twice that of native-born Americans. Among the main beneficiaries of such immigrant employees, therefore, are American workers. Yet nowhere in his book did I find mention of that fact. It’s possible, of course, that this overstates the benefits to native Americans; think of the Korean dry cleaner that largely employs other family members. Still, the odds are high that most of these employers employ some non-family and non-immigrant workers.
It turns out that even I understated the case for immigration. I say that because of this interview by my Hoover colleague and fellow economist Steven Davis. He interviewed Rebecca Diamond, an economics professor at Stanford University. Here’s the takeaway:
Immigrants directly account for one-quarter of the economic value generated by U.S. patents. They account for more than one-third of that value after factoring in the collaboration benefits that immigrant inventors bring to native American inventors. Immigrant inventors also play a major role in the two-way flow of scientific and technical knowledge between the United States and other countries. Choking off the flow of immigrant inventors would hamstring the American innovation enterprise and slow the development and diffusion of scientific knowledge.
Now, you might say, “But if the U.S. government hadn’t let in a lot of those people, wouldn’t they have patented them elsewhere? In which case, we still would have gained.” (Remember that according to Nobel Prize winning economist William D. Nordhaus, 97.8 percent of the gains from innovation go to consumers, not the innovators.)
The answer is “No.” Some of them would have patented them elsewhere. But some of them wouldn’t have. With all its imperfections and government barriers, America still has one of the most vital dynamic economies in the world. Potential inventors here have others near them to work with: think Silicon Valley. So if the government had prevented a substantial number of them from immigrating, it would have prevented a substantial amount of innovation, and American consumers, along with other consumers, would have been deprived of gains from innovation.
Here’s the link to the underlying study.
READER COMMENTS
Dylan
Aug 21 2024 at 6:41pm
I think this is really important. I run a startup accelerator for idea stage companies. I don’t have the exact stats at my fingertips, but a sizeable minority (I’m guessing about 35-40%) of our founders are first generation immigrants. They move here not only because of all the pretty talented people here, but it is also where the investors and customers are. I’ve had a couple of promising founders have to close their companies because their visa ran out. And it’s been a huge sink of time and money for everyone else, time that could otherwise have been spent building their business. The fact that so many succeed despite all the barriers is a testament to their grit.
Kurt Schuler
Aug 21 2024 at 9:03pm
It makes a huge difference who is allowed to immigrate, and libertarians practice willful obtuseness on the topic. Back when large numbers of Germans were immigrating to the United States, German Jews were more entrepreneurial than my ancestors, German Christians. Today, well … look at the Census Bureau statistics on household wealth by ethnicity. Europeans are learning the hard way that not all immigrants are equally beneficial.
David Henderson
Aug 22 2024 at 10:57am
You write:
That’s true. I’m not sure why you’re saying it, though. Did you see anything in my post or in the Diamond interview that suggests that anyone is saying that “all immigrants are equally beneficial?”
Kurt Schuler
Aug 22 2024 at 8:04pm
Being “very positive” to a book called Open Borders (plus the text itself of your review) implies that it is beneficial to let anyone immigrate, barring a few convicted murderers. My comment that “not all immigrants are equally beneficial” was an indirect way, apparently not literal enough for you, of saying that certain immigrants are harmful. When immigrants come in sufficiently large numbers from countries that work less well than those they are coming to, they tend to bring with them certain dysfunctions of their home countries. Hence, for instance, bombings in Sweden, formerly so rare there wasn’t even a separate category for them in the crime statistics, occur every two or three days now that the country has a substantial population of Middle Eastern and Balkan immigrants. The libertarian position glosses over the importance of the home culture and the numbers of immigrants.
Mactoul
Aug 21 2024 at 9:49pm
Caplan possibly omitted these findings because the implications go against his policy preferences.
For the most probable reason for superior performance of (legal) immigrants is the selection performed by the barriers to legal immigration. Remove these barriers, as Caplan wants, and the immigrant lead likely goes away.
And why not look deeply into the data as well. Maybe you will find that particular subgroups of immigrants outperform greatly while other subgroups lag behind.
So, should the policy be to select the immigrants even more?
Jon Murphy
Aug 22 2024 at 8:12am
Why? I don’t see how.
The claims are comparing activities immigrants to activities of native-born Americans. Even if we (unreasonably) assume the entire increase in immigration would have no increase in activity, neither the demoninator nor the numerator change.
For demonstration purposes, let’s assume that at current immigration levels, native-born Americans start 4 new companies per year and immigrants start 8 more companies per year. Immigrants start firms at twice the rate of native-born Americans.
Now, all immigration restrictions are removed. Many more immigrants above what is normal come to America, but none of them start businesses. Thus, we still have 8 more companies per year by immigrants and 4 by year by natives. The ratio hasn’t changed.
Realistically, one should not assume that the new immigrants will not start businesses. Many will. If anything, the ratio could likely increase as more immigrants come.
To get to your conclusion, we’d either need to assume there is a fixed number of firms in the economy (unrealistic) or new immigrants (those currently kept out by restrictions) will actively destroy firms. No particular reason to think that.
Mactoul
Aug 22 2024 at 11:33am
The ratio in question is innovation per capita, which I suppose, self-evidently, would go down if barriers to immigration go down thereby increasing the fraction of less dynamic and thus less innovative immigrants.
I am not comparing total quantity of innovation.
Jon Murphy
Aug 22 2024 at 12:04pm
It’s not, though. It it were, they would have said “per capita.”
Per capita, I agree. But that’s not the claim.
Mactoul
Aug 22 2024 at 11:56pm
My point, that the immigrants lead in innovation/entrepreneurship does not support open borders, doesn’t depend upon whether the rate is per capita or not. Since one can always derive per capita from the data given.
Question is how do you explain the immigrants lead and how do you foresee this lead under the open borders scenario.
Jon Murphy
Aug 23 2024 at 6:50am
I know that’s your point, but you’ve not put forth a reasonable argument to support it. Both the per capita and the per native rationals you’ve given are incorrect, as David and I have shown.
David Henderson
Aug 22 2024 at 11:00am
You write:
Actually, they don’t.
You write:
That could well be. But if you allow more immigrants and even some of them engage in innovation, the amount of innovation by immigrants increases even while the percent of immigrants who innovate decreases.
Mactoul
Aug 22 2024 at 11:18am
If not selection imposed by barriers to immigration is not why immigrants innovative more than natives, then what are other possible explanations?
Are immigrants, irrespective of anything, better at innovation per se?
Than German immigrating to US are superior to native Americans
And by the same reasoning, American immigrants to Germany are superior to native Germans.
If could be so, but then you are thrown back to selection effect of immigration which is weakened by open borders.
Which is necessarily not a welcome conclusion to a open borders partisan.
Only other possible reason would be that the rest of the world is superior to native Americans but nobody would buy this.
Jon Murphy
Aug 22 2024 at 12:06pm
The one most supported by evidence is selection: people who choose to immigrate are more likely to be entrepreneurial.
Furthermore, institutions matter: the US is more dynamic than other economies. Thus why other places, with similarly strict (or stricter) regulations and selections on immigration than the US do not have the same entrepreneurial outcomes.
Mactoul
Aug 23 2024 at 12:11am
American policy (for legal immigrants) doesn’t select for entrepreneurship per se but does select for a STEM degree. It can be verified by just looking at STEM degree holders percentage in Indian or Chinese immigrants vs native Americans (or Indians or Chinese who stay in their native lands).
David Henderson
Aug 22 2024 at 12:13pm
You write:
My guess is two things: (1) self-selection and (2) government selection–your point.
But we’re getting away from the point: More immigrations means more innovation even if per capita innovation by immigrants falls.
Mactoul
Aug 23 2024 at 12:04am
Now this is just “more the merrier” school of thought that innovation will increase with population size. Whose corollary being, more immigration –> more population –> more innovation.
But you cannot extrapolate data under high immigration barriers (indeed the observed effect is specifically caused by high barriers) to minimal barriers situation under open borders. Under open borders America tends to populous Third World with American institutions too converging to Third World norms and then also the innovation tending to Third World levels,
America is 340 million but South Asia alone is 2 billion and African is fast catching up with projected population of 2.4 billion in 2050 and 4.2 billion by 2100.
Jon Murphy
Aug 23 2024 at 6:54am
Actually the other way around: both our open borders period and our closed borders period shows rapid assimilation by immigrants who stick around. Again, there’s selection here. Immigrants are not mindless; they’re people. They go where the opportunities are best for them and they are aware of their situations. When allowed to, they assimilate into the new areas because they’ve chosen to be there.
Mike Burnson
Aug 22 2024 at 7:48pm
Good evening, all!
Once again the discussion fails to differentiate between LEGAL and ILLEGAL immigrants. There is precious little evidence that illegals contribute anything of significance and they impose extreme costs for health care, education, and the justice system. Estimates were in the range of $125 billion when Obama was President, so we can reasonably double that today with the 8 million additional because of Biden’s terrible policies.
From the August BLS Household Survey, the civilian population has increased by 1.64 million July, 23 – July, 24. (By itself, that number lacks credibility, as it should be roughly double.) The number of people employed has increased by only 57,000, less than a rounding error. Whether legal or illegal, they are not working to contribute to the USA. Unemployment rates are up in every category since July, 23.
Legal immigrants also require a distinction. Family reunification programs may seem “kind”, but they allow immigration by many who are not especially skilled. FR is completely different from qualification thanks to a STEM degree. This category of immigrant is very unlikely to be developing patents and new technologies. Current law allows for retired parents to live in the USA, receive SSI and Medicare, and even pay the adult children to be caretakers for their parents. Anecdotally, this seems to be common and widespread.
It is rumored that Steve Jobs once told Obama that foreign exchange STEM graduates should have a green card stapled to their diplomas. Those are the immigrants and families we need.
Thank you for taking the time to read my comments.
Monte
Aug 23 2024 at 1:06pm
This is an important caveat. Most illegal immigrants lack the education, skills, and training required of the legal immigrants who contributed significantly to the innovations the underlying study references. What’s more, the implicit bargain of an open borders policy in exchange for innovation and economic growth requires a giant leap of faith. In the opinion of many, Caplan’s conclusions are overly optimistic, presumptive, and come with no guarantees.
Jon Murphy
Aug 23 2024 at 1:23pm
It’s actually an irrelevant caveat.
This is factually incorrect, at least in the US. The majority of illegal immigrants are people who came here legally but overstayed a visa.
Monte
Aug 23 2024 at 2:03pm
Citations? Your response does not address the fact that the innovations referenced in the underlying study were those contributed by highly educated and trained legal immigrants. Nor do you speak to the presumption that economic growth and innovation would necessarily follow an open borders policy.
Jon Murphy
Aug 23 2024 at 7:34pm
Again, the distinction between legal and illegal is entirely irrelevant here. That’s why I’m not addressing it.
Monte
Aug 23 2024 at 2:10pm
According to research from the Pew Research Center and the Migration Policy Institute, the majority of unauthorized immigrants in the U.S. are those who crossed the border without legal permission rather than individuals who overstayed visas.
Monte
Aug 23 2024 at 4:43pm
More specifically:
While Asian unauthorized immigrants [and immigrants from regions other than Central America] first arrive legally and then overstay a visa, Central Americans mainly arrive at the U.S.-Mexico border, either attempting to cross illegally or turning themselves in to officers to seek asylum. (Migration Policy Institute)
Central and South American immigrants constitute the vast majority of those who entered the U.S. illegally.
Jon Murphy
Aug 23 2024 at 7:42pm
Here’s a report finding overstays are an increasing number: https://cmsny.org/publications/essay-2017-undocumented-and-overstays/
There are other research papers that find similar results, but I am making dinner right now so I cannot do a detailed lit review.
As for evidence that increasing immigration will lead to economic growth, there are substantial books and papers written that demonstrate that (eg Wretched Refuse or even Bryan Caplan’s book). But just logically: why would people who are willing and able to work not increase economic growth?
Monte
Aug 23 2024 at 11:59pm
I wasn’t aware that Nowrasteh’s and Caplan’s claims were were settled science. Have their theories and conclusions been tested and verified? Have they been universally accepted by the scientific community? All such claims, both pro and con (of which there are many), are simply prognostications of what might be. The issue is much more complex than either of these authors presuppose.
Oh, I don’t know, labor market disruptions, increased competition for certain jobs, costs related to public services, cultural integration.
Jose Pablo
Aug 25 2024 at 11:57am
Every year there are 2 million high school drop-outs in the US. It used to be 3.5 million in 2006.
There were 40 million people without a school diploma in the US in 2011. Do you imply that all these people contribute nothing to the American economy?
How many “highly skilled” people do you believe cater your table when you dine out or make your room at the hotels you stay in?
How come a 1.2 billion-strong America would be a smaller economy than today?
I am curious about your model.
Low-skilled illegal immigrants are not a drag to the American economy*. For that look into*: tariffs, unions, corporate taxes, minimum wage, zoning and building codes, rent control, energy efficiency mandates …
* List loosely based on Cochrane’s list of political recommendations to Kamala Harris to lower costs and promote growth in the US. His recommendation on the immigration topic are particularly interesting.
https://www.grumpy-economist.com/p/opportunity-and-lower-costs
Prioritize economic immigration. If you want to come to the US, have a clean record, $10,000 in the bank, foreswear social services for a few years, come on in. Want to “lower costs” for health care, child care, elder care? Let them come. Legalize the 10 million who are here, working, paying taxes, staying out of trouble.
Monte
Aug 25 2024 at 8:29pm
If you pay close attention to what I wrote, you’ll see that it was in reference to the innovation study. The patents in question are filed exclusively from highly-skilled and educated legal immigrants, typically in specialized fields contributing to advancements in science and technology.
Low-skilled illegal immigrants may contribute to tax revenues through consumption and payroll taxes, but they also place demands on public services and benefits, which can create financial burdens for local governments. There’s also some evidence indicating low-skilled immigrants exert downward pressure on wages in certain sectors. I’m not sure anyone can say, conclusively, that their contributions vs costs are a net positive.
I’m good with this. Let the vetting begin – before legalization.
Jose Pablo
Aug 25 2024 at 10:58pm
There’s also some evidence indicating low-skilled immigrants exert downward pressure on wages in certain sectors.
If this is true, it has to mean lower prices to the customers of “certain sectors”, which is good, isn’t it?
Let the vetting begin – before legalization.
I have no problem with the vetting part but certainly find it the textbook definition of hypocrisy and, frankly, an hilarious obsession. When applied to immigrants it is basically like saying: to enter the US you have to pass a test that 1/3 of Americans (the number of Americans with a criminal record) would not pass, including a former (or, God forbid, future) President of the US!
If Trump were an immigrant the vetting wouldn’t let him in. You can only agree with such a procedure!
It would be interesting to also apply this sacrosanctum vetting obsession to people traveling from one state to another. After all, why should Floridians suffer the terrible consequences of allowing in Californians with a criminal record … or the other way around? … unacceptable!
Monte
Aug 26 2024 at 1:43am
There’s a huge difference between Americans who have a legal right to travel within their borders vs illegal immigrants who don’t. You obviously have little regard for national sovereignty. Cool, that’s your prerogative. I think it’s important for a country to maintain it’s territorial integrity and protect it’s citizens from invasion, no matter how despicable you might find some of those citizens to be.
Jose Pablo
Aug 26 2024 at 8:04am
There’s a huge difference between Americans who have a legal right to travel within their borders vs illegal immigrants who don’t.
No Monte, is not huge, it is just a law. And laws are arbitrary,just pure human design. Subjected to the mistakes and flaws we humans are so prone to. The legal/illegal distinction is totally irrelevant in a normative discussion about immigration (which is the kind of discussion that makes sense to have). We discuss what “immigration” should be. Not what it is. In this regard how legalities are right now adds very little to the discussion.
Regarding the legal / illegal issue you seem to be obsessed with, Caplan has, again, a very interesting take on this topic. But, remember, the legal/illegal issue is a completely different discussion that has no more to do with immigration than it has with helping slaves to escape the plantation or helping Jews to escape the Nazi camps. In human history, the legal framework has been known for containing extremely cruel and highly immoral rules.
https://www.betonit.ai/p/six_theses_on_ehtml?utm_campaign=email-half-post&r=1gbsup&utm_source=substack&utm_medium=email
Monte
Aug 26 2024 at 11:42am
There are a bevy of practical reasons why any normative discussion about the implementation of an open borders policy must necessarily take the laws governing it into consideration. Implementing such a policy wholesale without due consideration for our country’s laws and institutions would be foolish.
And I’m having trouble equating current immigration law to the historical injustices of slavery and the Holocaust.
Jose Pablo
Aug 26 2024 at 2:13pm
historical injustices
they were not “injustices” they were legal. And doing the right thing was legal.
The Montes of that time could very well have argued that the implementation of laws that freed slaves or made helping Jews to escape legal, should be implemented with “due consideration for our country’s laws and institutions” (and, in fact, they did).
No. They shouldn’t then and they should not now.
Normative discussion: what the right immigration policy should be? This discussion has multiple angles. In this post, the discussion is whether a policy of (more) open borders makes or doesn’t make economic sense (moral considerations are even more relevant than the economic ones, but not the subject of this discussion).
Whether immigration is now legal or not is irrelevant to discussing whether (more) open borders make or don’t make economic sense.
Monte
Aug 26 2024 at 2:50pm
That wouldn’t have been my argument at all. I would have countered that “due consideration” in these instances doesn’t apply on humanitarian grounds alone (and, in fact, many did at the time).
You can’t argue that current immigration law is creating a humanitarian crisis. Quite the opposite. Lack of immigration enforcement has caused a crisis. The practical and legal frameworks must be considered. You cannot equate the moral implications of immigration law to the past institution of slavery or the Holocaust.
Thanks for the discussion and I give you the last word.
Jose Pablo
Aug 24 2024 at 11:23pm
If the problem is ILLEGAL immigration then the solution couldn’t be easier. Make all immigration LEGAL. Problem solved!
Monte
Aug 24 2024 at 11:32pm
Alright! OPEN BORDERS, EVERYONE!!! What could possibly go wrong that hasn’t already?
Jose Pablo
Aug 25 2024 at 10:14am
Nothing Monte.
Well, wait, open borders make America what America is right now (including Trump and baseball). So maybe yes, you are right after all, open borders are not a great idea.
You got me here.
Monte
Aug 25 2024 at 8:51pm
I’d rather have Trump and baseball than Harris, who’s tenure as VP has been totally unremarkable and filled with bizarre, almost kindergarten-level word salads.
Jose Pablo
Aug 25 2024 at 10:59am
“extreme costs for health care, education, and the justice system. Estimates were in the range of $125 billion”
That is a clear example of the cloudy reasoning so prevalent in the immigration debate. Even taking the 125 billion for granted, how is that an “extreme” cost? Government spending in the US is 9.8 trillion (2023 federal, state, and local governments). 125 billion represents less than 1.3% of this spending. How is that extreme?
Defense expenditure is 10 times more. What is the adjective for “10 times extreme”?, “uber-extreme”? Maybe the most interesting part of the immigration debate is the great opportunity it provides to promote innovation in American English.
And I agree that public expenditure on education is a huge waste of money that only serves to allow graduates in history, philosophy, English, Critical Thinking, and the like, to make a living babysitting kids. Apart from that, is just an unsurmountable barrier that protects the kids of the wealthy and middle class from poor kids’ competition in the job market. Caplan has also a very interesting take on this.
But this has nothing to do with the immigration debate. As far as economic growth is concerned it is much more sensible to spend money on immigrants than on education.
Mactoul
Aug 23 2024 at 12:18am
Plenty choose but few are chosen. It is commonplace among pro-immigration writers that impossibly high barriers to legal immigration are created by American government. So, the actual selection is taking place, not at the origin of immigration but at the American consulate (where it is much easier to get visa when you have a STEM degree vs no degree or an Arts degree),
Jon Murphy
Aug 23 2024 at 6:56am
True but extend that same logic:
If the barriers are reduced, there are still more immigrants coming, which means innovation.
Floccina
Aug 24 2024 at 8:52pm
I’m for much more immigration but isn’t their argument more along the lines of, someone else would have been in the position to make those inventions and would have.
Comments are closed.