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DACA and immigration under the Trump agenda

Written By | Sep 14, 2017

WASHINGTON, September 14, 2017 — Among other evidence contradicting Paul Krugman’s cheery claims about illegal immigration is a 2016 study by Gihoon Hong of Pusan National University, South Korea, and John McLaren of the University of Virginia and NBER.

Krugman claims that illegal immigration has no negative impact on wages or the labor market; the Hong and McLaren study focuses on immigration and the supply of labor.  

As conducted, the study did not consider the net effect of adding and subtracting immigrants in exchange for native born workers. The authors state, “the relevant thought experiment is simply adding 1,000 immigrants.”

Of particular interest is their use of Krugman’s 1996 work on the issue of wage deflation as a result of immigration. 

“An important theory paper closely related in spirit to what we do here is Brezis and Krugman (1996), in which manufacturers use labor, capital and local nontraded inputs to produce tradeable output. Non-traded inputs are produced in a monopolistically-competitive industry. Immigration into a town expands the local labor force, initially lowering wages …”

Jeff Sessions could just have easily quoted Krugman when he mentioned the impact of Deferred Action for Childhood Arrivals (DACA) recipients on the U.S. labor force, in his statement announcing the end of the Obama administrations DACA program.

The study shows that adding immigrants to this local economy shifts the labor supply curve to the right. This means that the price of labor at each point along the curve would yield a lower rate of compensation.

The study confirms the conclusion that there will be a reduction in consumer spending due to immigrants’ propensity to remit earnings from the U.S. to family members abroad.

Hong and McLaren discuss evidence from an earlier study: “Olney (2015) shows that when immigrants in a German town send more money back home in the form of remittances, the reduction in local consumer spending has a negative effect on local wages for nonimmigrant workers.”

There is no cure, no silver bullet or act of Congress that can end illegal immigration. Like so many many other issues facing the U.S., this is a geopolitical issue that needs to be carefully monitored and managed by responsible governments around the globe.

In order to improve operations and preserve its longevity, America, like any good business, must create new programs and stronger, more effective iterations of its core principles in order to continue up the path of success. By ending DACA and pushing for comprehensive immigration reform legislation, Congress can begin to go about the business of the people, which is to fix the broken economy and ensure that the laws are adequately maintained and implemented.

One core American principle is diversity. Abolishing DACA is not an end to immigration, nor an act of prejudice against any particular race. It would not be economically feasible to deport all 800,000 Dreamers, and nowhere did Jeff Sessions suggest deportation as being the ultimate solution. The primary solution would be to have everyone entering the country embark on the legal path to citizenship.

As President Obama said in his press conference to announce DACA, the program was supposed to be a temporary measure. The positive impacts of legal immigration can and will help boost the American economy, as Hong and McLaren show, by adding to the demand for local services.

Without immigration we cannot make this country greater. Both Democrats and Republicans can agree to that. The mainstream media tries to polarise the issue, but the fact remains that legal immigrants provide an intrinsic benefit to the broader society. That benefit stretches to include the economic growth potential we all eagerly desire.

Population growth creates jobs because people consume as well as produce: They buy things, they go to movies, they send their children to school, they build houses, they fill their cars with gasoline. When the population declines, stores, schools and hospitals close and jobs are lost. This pattern has been seen over and over again in the United States: growing communities mean more jobs.

But that growth must be organic, and the immigration must be legal.

Kerry Baynes

Kerry Baynes is currently a Msc University West Indies, Financial Economics. As a research assistant for the New Jersey State Senate, he was responsible for research on economic, budget/fiscal issues, and the impact of tax policy. He served as a Media Strategist for Garry Cobb For Congress, in 2014 and Giordano for Assembly, in 2015. Since 2006, he acted as Manager of Alpha Strategy Group, an Urban Media Company. Currently an Associate at World Financial Group (WFG), he works to build and protect wealth for families and individuals from all walks of life.