Griswold on Immigration and the Welfare State

Bryan Caplan.


Dan Griswold's "Immigration and the Welfare State" was my favorite in the Cato Journal immigration symposium.  Highlights:

False stereotypes notwithstanding, immigrants have an awesome work ethic:

The typical foreign-born adult resident of the United States today is more likely to participate in the work force than the typical native-born American. According to the U.S. Department of Labor (2011), the labor-force participation rate of the foreign-born in 2010 was 67.9 percent, compared to the native-born rate of 64.1 percent. The gap was especially high among men. The labor-force participation rate of foreign-born men in 2010 was 80.1 percent, a full 10 percentage points higher than the rate among native-born men.

Labor-force participation rates were highest of all among unauthorized male immigrants in the United States. According to estimates by Jeffrey Passell (2006) of the Pew Hispanic Center, 94 percent of illegal immigrant men were in the labor force in the mid-2000s.

Immigrants display reverse welfare magnetism:

The 10 states with the largest percentage increase in foreign-born population between 2000 and 2009 spent far less on public assistance per capita in 2009 compared to the 10 states with the slowest-growing foreign-born populations--$35 vs. $166 (see Table 1). In the 10 states with the lowest per capita spending on public assistance, the immigrant population grew 31 percent between 2000 and 2009; in the 10 states with the highest per capita spending on public assistance, the foreign-born population grew 13 percent (U.S.
Census 2011, NASBO 2010: 33).

What about illegals?

Undocumented immigrants are even more likely to self-select states with below-average social spending. Between 2000 and 2009, the number of unauthorized immigrants in the low-spending states grew by a net 855,000, or 35 percent. In the high-spending states, the population grew by 385,000, or 11 percent (U.S. Census 2011; NASBO 2010: 33; Passel and Cohn 2011). One possible reason why unauthorized immigrants are even less drawn to high-welfare-spending states is that, unlike immigrants who have been naturalized, they are not eligible for any of the standard welfare programs.

The paper goes on to cover the net multigenerational fiscal effects of immigration, with extra sections on educational spending, health spending, and Social Security.  Though the net fiscal effect seems positive, there's a clear federal-state conflict:

The 1997 National Research Council study determined that the typical immigrant and descendants represent an $80,000 fiscal gain to the government in terms of net present value. But that gain divides into a positive $105,000 fiscal impact for the federal government and a negative $25,000 impact on the state and local level (NRC 1997: 337).

While the net fiscal effects of illegal immigration in Texas were modestly negative, the net economic effect for Texas was strongly positive:

[U]nauthorized immigrants in fiscal year 2005 paid a total of $2.09 billion in taxes at the state and local level, while consuming $2.60 billion in services (Strayhorn 2006: 20). Education was the main expenditure on the state level, and health care on the local level. Thus the net fiscal cost for state and local taxpayers in Texas from illegal immigration that year was $504 million.

The fiscal cost, however, was more than offset by the boost to the size of the Texas economy, another finding consistent with other state studies. The Texas comptroller used a general equilibrium model known as the Regional Economic Model Inc... The model found that the resulting drop in the state's labor force would cause wages of remaining workers to rise slightly--by less than 1 percent. But the higher wages caused by a tightening labor market would make producers in the state less competitive, resulting in a modest decline in the value of the state's exports. The state's economy would shrink by 2.1 percent or $17.7 billion (Strayhorn 2006: 17)

Griswold's not apologizing for the welfare state.  But libertarians who see the welfare state as an argument for restricting immigration are straining out a gnat and swallowing a camel.