Immigration Impacts Economic Growth

Source: Economics, Sep 2016

low-skilled immigrants don’t have a major effect on the rest of the economy one way or the other. That means that in the short run, the most important effect of low-skilled immigration is that it helps low-skilled migrants themselves.

over the extremely long run, a good predictor of your nation’s current economic behavior is your nation’s ancestors’ past behavior.

economic development is affected by traits that have been transmitted across generations over the very long run.

W]e strongly confirm…that history of peoples matters more than history of places.

nations with high migration-adjusted SAT scores are vastly richer than nations with lower SAT scores: Countries in the top 10% of migration-adjusted technology (T) in 1500 are typically at least 10 times richer than countries in the bottom 10%.

Economists have long known that some of the strongest statistical predictors of long-run national prosperity have been “percent Confucian” and “percent Buddhist.” A famed paper coauthored by Xavier Sala-i-Martin demonstrated that conclusively.

One study looks at attitudes toward income redistribution, finding that second-generation immigrants to the U.S. are more likely to favor income redistribution policies if they come from a country where the average citizen today also favors more redistribution. In this case, attitudes migrate, so heavy immigration from pro-redistribution cultures will tend to boost a nation’s number of pro-redistribution citizens decades later.

why do low-trust societies generate worse economic performance? One reason is that low-trust individuals demand more government regulation. In “Regulation and Distrust” the authors report:

Using the World Values Survey, we show both in a cross-section of countries, and in a sample of individuals from around the world, that distrust fuels support for government control over the economy.

in low-trust societies, people want someone checking up on untrustworthy businesses and individuals, and a strong government is one way to do just that. Together, this literature suggests that migration from low-trust societies will tend to hurt long-run economic performance, partly because low-trust individuals demand more government regulation.

New Voters = New Policies

giving the vote to women really did change government in a more progressive, expansionist direction:

Suffrage coincided with immediate increases in state government
expenditures and revenue and more liberal voting patterns
for federal representatives, and these effects continued growing
over time as more women took advantage of the franchise…On the basis
of these estimates, granting women the right to vote caused expenditures
to rise immediately by 14 percent…by 21 percent after 25 years, and by 28 percent after 45 years.

How immigrants shape institutions

We now have the key pieces of the puzzle:

  • The Deep Roots literature which shows that in the long run, migration deeply shapes a nation’s level of pro-market institutions, and that a nation’s ancestry-adjusted SAT score (States, Agriculture, Technology) is a good predictor of prosperity.
  • The Attitude Migration literature, which shows that migrants bring a substantial portion of their attitudes toward markets, trust, and social safety nets with them from their home country.
  • The New Voters = New Policies literature, which shows that governments really do change when new voters show up, and that the changes start to show up in just a few years.





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