On Immigration, Demography Trumps Demagoguery

Not because America is generous, but because we are greedy.

The US presidential election is two weeks away, and nobody knows who will win. I hope for the best – Kamala Harris. But I plan for the worst – and there are reasons to think the worst may happen. Donald Trump has some advantages going into Election Day. Many of them are tied to immigration.

• Nativist, anti-immigrant reactionaries are ascendant worldwide. This is partly because liberal democracies have been ineffective at policing their borders. But it is mainly because men without four-year college degrees are suffering everywhere. Unhappy working-class men are not always a force for progress. 

• The progressive agenda is stalled, and the political center is moving right. Many preferred progressive policies (on immigration, DEI, energy and climate, crime and policing, the welfare state, universal health care, and labor unions) are losing popularity. This is a topic for another day, but Noah Smith has a good summary.

• The Electoral College favors Trump. I expect Harris to carry the popular vote, but by design, the Electoral College favors smaller, rural states. These tilt towards Trump (especially on immigration). In a close election, this matters. No other democracy does this; we shouldn’t.

• Biden is unpopular. Joe was an excellent president, but age, inflation, and immigration hurt his popularity. He was too damned old, as is Trump. He treated a bad case of inflation with deficit spending. Historians will judge his delayed reaction to a surge of illegal immigration as political malpractice. To be clear, Biden was great. He did more for everyday families than any president in my lifetime, but he is a crap communicator, so he gets little credit.

• Trump outruns his polls. Some of this is “undecided” voters who support Trump’s transgressive tactics but do not want to confess to pollsters that they support him. This might not happen this time, but don’t count on it.

Immigration is a deceptive issue. First, conservatives are obsessed with it and liberals are not. Pew finds that immigration is the second most important issue to Trump supporters after the economy. But it is the least important of the ten issues polled among Harris supporters. This is the largest “salience gap” of any issue Pew surveyed. And Democrats do not care about anything as much as Republicans care about immigration.

By avoiding an issue Republicans care about, Democrats have ceded political ground. Not everyone who cares about immigration and border security will vote for Trump – but many will listen to him when they otherwise would not.

By failing to advance border security, Democrats have allowed Republicans to fuse xenophobia (which does not have majority support) with the dislike of uncontrolled and illegal immigration (which does). Many people who favor immigration (including many immigrants) want secure borders and an orderly immigration process.

The result is that Democrats find themselves in a defensive crouch on immigration. You would never realize that skilled immigration is popular, not only in the US but around the world. 78% of Americans do not agree about many things, but we agree that encouraging the world’s most talented people to move here is an excellent idea. Even two-thirds of those who say we should allow fewer or no immigrants support skilled immigration.

Illegal immigration is a different story. Surging illegal immigration has forced even progressive rich countries to control their borders. Biden knows this. He is on track to deport as many people as Trump did; Obama sent more immigrants home than either Biden or Trump.

Collapsing birth rates and declining support for higher education shapes US immigration policy. Birth rates in rich countries have collapsed around the world.

Developed Country Birth Rates Have Collapsed. 

Source: OECD

We have far fewer kids than in 1970, but we educate them more. Today, 23% of American 25-year-olds have a bachelor’s degree and another 14% have advanced degrees. This share has been flat since 2020, mainly because fewer men are choosing to enroll in college. Gallup finds that since 2015, American confidence in college has fallen sharply.

Like every modern economy, the demand for college graduates in the US is very high, so allowing skilled workers to immigrate is a good idea. Some economists refer to skilled immigration as a free lunch. They recognize that skilled immigrants add much more value than cost.

• They make us richer. Skill and expertise drive innovation, productivity, and entrepreneurship. Our fastest-growing companies depend on talented immigrants. Microsoft’s Satya Nadella, Nvidia’s Jason Huang, and the politically odious Elon Musk have created massive value, wealth, and economic opportunity.

• They pay more in taxes than they consume in public services. Skilled immigrants earn higher wages and pay more in taxes. How much more? The Congressional Budget Office estimates that recent immigrants will add $1.2 trillion in federal revenue over the next decade. This is against an expected cost of $.03 trillion. Immigration is not a free lunch – it’s a trillion-dollar bill on our sidewalk – and we can grab more. 

• They increase the skills of native-born workers. Recent research suggests that skilled immigrants motivate less-educated Americans to seek additional training.

“…immigration, thanks to native-immigrant complementarity and college skill content of immigrants, had a positive and significant effect between +1.7 to +2.6\% on wages of less educated native workers, over the period 2000-2019 and no significant wage effect on college-educated natives.”

• They promote overseas collaboration. Immigrants often maintain ties to their home countries. This builds networks that lubricate international trade, investment, and collaboration. My favorite author on this subject is Berkeley’s AnnaLee Saxenian. She researched the impact of skilled immigrants on technology companies. Her book The New Argonauts documents how immigrants from China, India, and other countries maintain ties back home. Many start and strengthen companies in their native countries as well as in the US.¹

• They make us culturally richer. Skilled immigrants enrich the social fabric of the host country. They foster greater cultural exchange and understanding. The result is not only more interesting restaurants; it is also stronger schools, sports teams, and churches.

Trump claims that skilled immigrants are a poisoned sandwich, not a free lunch. Let's set aside his race-baiting and assertions about crime (immigrants commit much less crime of all sorts than those born here do). Trump plays on popular fears that immigrants force wages down and fail to integrate. Others worry that immigration impoverishes host countries by removing their most talented citizens. None of these concerns are new or completely wrong, but they do not add up to much.

• Skilled immigrants rarely drive down the wages of native born workers. It seems logical that if you add supply to a market, the price goes down. Housing works this way, so why wouldn’t adding immigrants reduce wages? Because skilled immigrants also add a lot of demand, not only as consumers, but as entrepreneurs who create new markets. (Even unskilled immigrants may raise the wages of native born workers if, for example, they enable women to return to work by providing child care.) The Congressional Budget Office concluded that “Economic theory predictions and the bulk of academic research confirms that wages are unaffected by immigration over the long-term and that the economic effects of immigration are mostly positive for natives and for the overall economy.”

• Immigrants integrate. In an era of Trump-fueled anti-immigrant sentiment, can we continue to absorb newcomers from anywhere in the world? Part of this depends on what we mean by “absorb”. We have never converted immigrants to strictly observe local customs and traditions. During the 19th and 20th centuries, when identities turned on religion, immigrants to the U.S. rarely abandoned their faiths. Despite facing discrimination and even violence, particularly against Catholics, immigrants did not convert. Instead, America expanded its identity to encompass new denominations.

  Assimilation means integration — the “e pluribus unum” that blends many cultures into one. Today, American children of all backgrounds know how to use chopsticks or celebrate Chinese New Year. Some cultural purists find this unsettling, while most cosmopolitans celebrate it. Either way, integration is not about immigrants abandoning their ancestral culture.

  Is the US still good at this? We seem to be. Immigrants from Latin America and Asia are integrating faster than people who came from Europe more than a century ago. Immigrants are learning English more quickly (a measure of integration). And they intermarry more. A 2015 Pew analysis found that 17% of newlyweds are couples of a different race or ethnicity – up from 3% in 1967. The tendency to intermarry is strongest among Asian (29%) and Hispanic (27%) newlyweds. Not every country is good at this. Israel bans Jews from marrying Palestinians, who make up 20% of Israel's population.

• Brains don’t drain. What about the cost that “brain drain” imposes on host countries? The trick is not only to measure the cost of a host country's lost talent but to capture the value of immigrants to their country of origin. This includes:

  • Technologies that immigrants transfer back to their home country (“brain gain”). This is not only patented inventions. It includes management, business models, and business process technologies.

  • Business deals that would not have occurred but for immigrants with overseas connections.

  • Increases in American investment dollars directed by immigrants to their country of origin.

  • The impact that immigrants have on people in their home country who become more educated and motivated to follow in their footsteps.

  • Remittances to relatives back home. 

  • Companies started by returning immigrants. The canonical example of “brain circulation” is Morris Chang, who spent 27 years working in the US. He then returned to Taiwan to start the semiconductor giant TSMC.

These are enormous benefits and nobody can count them all up. The loss of high-skilled individuals may reduce the capacity of small, poor countries. But on balance, you’d bet that the benefits of immigration exceed the costs, even to host countries.

The US made it easy to study this question when we encouraged nurses to come here from the Philippines between 2000-2007. This created an opportunity for economists to see what impact immigration had on the pay of nurses who remained at home. Peri and Caiumi found that wages went up in the Philippines. The country opened more nursing schools and workers shifted into nursing from lower-paying jobs.

Just because skilled immigration is a good thing, however, does not mean that the US will put together a smart immigration policy. Even a Trump administration would do well to look hard at Canada and Australia. Both have invitation-only immigration systems. They use a point system to rank immigrants based on critical skills. As a result, immigrants are almost twice as likely to have a college degree as immigrants to the US. As noted in a prior post, Canada and Australia have very high foreign-born populations and a lower populist reaction to immigration.

Canada went to a point system in 1967. The system considers age, education, language skills, and work experience, rather than country of origin. Canada now admits more college graduates than it produces. In some industries, it consistently outcompetes the US in attracting high-quality talent. By some measures, Canada now has the world’s most educated workforce. Countries like Japan and South Korea are taking notice.

Rich countries now compete for talent. Barking anti-immigration fanatics who repel talent make their country poorer. Trump’s anti-immigration demagoguery will fail not because Americans are generous. It will fail because we are greedy. 

1. I am biased. In addition to being an excellent scholar, Saxenian is my highly tolerant wife.