We Wanted Workers: Unraveling the Immigration Narrative by noted migration economist George Borjas is an excellent entry to the economics of migration and the problems with technocratic approaches to public policy.
Lorenzo from Oz is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Complexities
In We Wanted Workers, Borjas documents considerable differences in the economic implications of workers from different countries (Pp72ff), including that the US attracts high-skill workers from countries that have flat income patterns and low-skill workers from countries with highly unequal incomes (Pp79ff). The former tend to come from countries with congruent social equilibria to Western democracies while the latter, less so. Borjas also makes short shrift of many “shortages” arguments—coming as they do from folk who benefit from cheaper access to skills and labour and who want to avoid paying for training and higher wages.
Nor do “discrimination” arguments for wildly differing outcomes between immigrant groups fare any better. These are clearly driven by different levels of skills and cultural convergence—or not—remembering that shared/congruent signals and expectations make interactions easier (Pp80ff).
Net employment gain, November 2019 to March 2025, 4.5m.
Net employment gain, October 2019 to April 2025, 0.5m.
Chapter 5 (Pp88-109) looks at the evidence about economic assimilation in the US. Economic assimilation can be measured relatively easily—do immigrants equal or exceed the average level of income of the locally born? The evidence is that immigrants to the US who arrived after 1920 or before 1980—that is, during and immediately after the long 1924-1965 “immigration pause”—assimilated much more quickly than those who arrived in the high immigration periods.
Smaller groups of immigrants mean far less ethnic enclaves, and ethnic enclaves inhibit assimilation: a the-scale-of-migration-matters effect. Most of the effect on whether economic assimilation happened—and how quickly—seems, however, to have been broader factors.
Lower levels of overall immigration means less downward pressure on wages and less of all the other costs of immigration—notably, congestion costs and coordination difficulties from culturally variant expectations. That the level of immigration clearly affected the rate of economic assimilation—so the benefits that the immigrants received from migration—with lower rates of immigration meaning less downward pressure on marginal benefits, and less upward pressure on marginal costs, again highlights what nonsense the open border models are.
Chapter 6 (Pp110-125) looks at the evidence about the interaction of culture—in the form of national origin—and economic assimilation. The evidence suggests it takes around a century for full economic assimilation, but that itself is contingent on circumstances. One could argue that—in some ways—the Scots-Irish/Borderers have never fully economically assimilated, even after three or more centuries: see Hillbilly Elegy by one J.D.Vance or various social indicators.
One of the great strength of Borjas’s approach and analysis is the history—and the evidence it provides—is taken to be primary, with the tools of Economics being used to analyse it, to make the patterns clearer. He does not start with Theory as the selector and assessor of evidence. He writes with some bemusement how folk take seriously estimates of scale of effects based on models that wave away a lot of relevant complexities.
Chapter 7 (Pp126-152) covers labour market impacts. Borjas disposes nicely of the regular claims that immigrants “do work that natives will not do”. This is often quite true: natives will not to that work at the offered wage. Locals will often have a higher wage threshold than do immigrants.
Indeed, Borjas’s point can be extended. Natives will often have a range of higher thresholds than immigrants—not only wages, but also level of crowding, level of local connections, and so on.1 Which is precisely why employers want to use immigrants while local workers are much less keen on immigration. During the later C19th and first half of the C20th, much effort was put into separating out “Temperate Zone” migration (i.e. from Europe) from “Tropical Zone” migration (i.e. from Asia) precisely because the two flows of migrants had very different thresholds, along with other cultural differences.
The justifications for such separation were often made in racial—indeed racist—terms, but that was mostly an “and also” rhetoric for more basic motivations. The same point applies to Muslim and Christian writers often justifying slavery by denigration of enslaved race(s) while the motivations for enslaving people were more basic self-interest.
There are two areas of economics where various economists regularly put in considerable effort to “prove” that normal patterns of supply and demand do not apply. One is monetary economics and the other is labour and migration economics. In both cases, such efforts should be regarded with great suspicion. This is especially so when such conclusions are based on assumption-heavy models.
Borjas takes us through the mechanisms—some quite intellectually scandalous—used to “prove” that the normal patterns of supply and demand do not apply to labour markets when immigrants are involved. They do, especially when immigrants are substitutes for resident workers. Everyone who cites immigration as moderating post-pandemic wage pressures in the US is admitting that immigration suppresses wages.
Borjas sets out how, if the locals and immigrants are complements—basically, comparative advantage can be mobilised—then yes, immigration can raise the incomes of both. The arrival of low-skill immigrant workers regularly raises the incomes of high-skill locals. Since high-skill means high human capital, this is an example of the general pattern of making labour more plentiful relative to capital raises the incomes of capital by increasing its scarcity value: especially if it also increases its productivity. Unsurprisingly, those with lots of human capital tend to be in favour of immigration—especially of low-skill immigrants. As we Homo sapiens are very good at rationalising and moralising our self-interest—including being as self-deceptive as required—such folk can be both morally self-righteous and cognitively arrogant in arguing for what is in their interests.
If, however, the locals and immigrants are substitutes—that is, one can replace the other in a standard ratio—then they are competing, and the normal patterns of supply and demand apply. That is, increased supply of immigrants will reduce—or at the very least suppress, as wages are “sticky” (hard to cut)—the wages of locals competing with them. The more “segmented” the labour markets are—i.e., the less able or willing folk are to shift to other places or occupations—the more that will be so.
Part of the argument for immigration is that immigrants increase demand for goods and services produced by—and so demand for the labour of—local workers in their country of arrival. They do, less the remittances back to relatives in their country of origin. Remittances overwhelmingly do not generate demand for goods and services produced by resident labour in migration-receiving countries. Add to the fact that they suppress wages,2 drive up rents, dilute local social capital, complicate social coordination—for example, in providing infrastructure3—increase congestion costs and fiscal burdens, there is no way that local workers are other than substantial losers from low-skill immigration.
Chapter 8 (Pp153-170) covers economic benefits, including the awkward reality that the economic benefits of immigration come from income and wealth shifts, raising the income and wealth of immigrants, owners of capital and of land at the expense of resident workers, with distributional effects dwarfing the net economic benefit (the “immigration surplus”). Borjas discusses some nice case studies of immigrant supply shocks, pointing out that it is easy to hide supply shocks—that is, normal supply-and-demand effects—caused by immigrants by aggregating the affected locals into a larger group.
Chapter 9 (Pp171-191) covers fiscal impact. This is an area where more recent European scholarship has found that immigrants from outside the EU—particularly Greater Middle East (Morocco to Pakistan) immigrants—have had a strongly adverse fiscal impact. This—along with stresses on their social order—is why Sweden is now paying immigrants to go away.
Borjas points out that welfare states redistribute income from higher to lower income earners, so it is obvious that high-skill immigrants help fund welfare states while low-skill immigrants will be a drain on the fisc: as repeated studies have since found.
Milton Friedman stated that:
It’s just obvious you can’t free immigration and a welfare state. (P.172)
The problem is worse than Milton Friedman states, as—due to how welfare states operate—many of the unaccountable classes (those whose income does not depend on performance, but are instead paid for turning up) actively benefit from increased social dysfunction, because that expands the ambit and operation of the welfare state.
Show me the incentive and I'll show you the outcome.
If public health gets paid more the sicker the population gets, it will be—as it has proved to be across the Western world—an utterly unreliable manager of our collective metabolic health. If the welfare state apparat gets bigger the more social pathologies there are—as it does—then it will be an utterly unreliable manager of social pathologies.
You pay organisations to do what makes their income goes up, because that is how the incentives will operate, even if some self-deception is then required. It takes very strong, systematic, accountability pressures to counteract those effects and, given that so much of what the welfare state does is judged by intentions rather that outcomes, those accountability pressures are proving, again and again, not to be strong enough. Not least, this is because key decision-makers (Ministers or Secretaries) are surrounded by bureaucrats claiming to be their agents and parading themselves as the solution to whatever policy issue is currently salient.
If one wonders why so much of the immigration policies in Western Europe, the UK, the US—and increasingly Canada—are so dysfunctional, that the welfare state apparat, and the supporting NGO economy, literally profits from social dysfunction is much of the reason. This is even more so if corporate interests push in the same direction. This is obviously a factor in immigration policy, but is also the case in public health where Big Pharma, Big Food and public health have congruent—and socially perverse—interests. Big Food has an interest in fostering food (specifically carb) addiction by gaming our taste buds; Big Pharma in drugs that treat continuing symptoms rather than provide cures; and public health has an interest in increased expenditure on health, which goes up the more metabolically unhealthy the population is. The collapse in metabolic health from our industrially processed food culture, which is also implicated in rising mental ill-health, is thus hardly surprising.
Remember, we Homo sapiens are excellent at rationalising and moralising our self-interest—that is an evolutionary consequence of being a self-conscious normative species. This includes achieving whatever level of self-deception is required, given that our conscious cognition is such a small part of our overall cognition.
A major takeaway about the use of scholarship in the debate over migration is summarised by Borjas:
As we have seen, sometimes the data are tortured a bit too much to trust the conclusions, and sometimes the conclusion is actually built in by the assumptions. (P.175).
He then takes us through what a large difference it makes it you look at data by household or by individuals (Pp177-80). Immigrant households are higher users of welfare, but that comes from the fact that they are low-skill rather than that they are immigrants (p.181). The evidence is quite clear that the immigration that actually happens in the US imposes a net fiscal burden on native households in the short-term (p.184). Given that Europe has more extensive welfare states, that is even more true there.
Estimating long-term fiscal impacts are much harder, for obvious lack-of-information, have-to-rely-on-assumptions, reasons. The reality is we do not know the long-term fiscal impacts, with any results being profoundly affected by what assumptions one chooses. (The lack of a robust Theory of long-term economic growth makes the problem worse.) As Borjas points out (p.189), Congressional Budget Office estimates are often wildly wrong, even across mere months, let alone decades. Indeed, official economic predictions by Treasuries and Central Banks across the West are notoriously unreliable. As other Economic analysis points out, we cannot predict the pattern of new information; a generalisation of philosopher Sir Karl Popper’s point about the inability to predict the future progress of science.
The net economic surplus to locals from immigration has to be balanced against the net fiscal costs. Our best estimates, Borjas concludes, is that, in the US, that is probably a wash: that there is no net benefit from immigration as the US has been practising it. So, immigration “turns out to be just another government redistribution program” (p.191).
As he points out, merely considering net effects conceals that there are major distributional effects, which local workers generally do not benefit from. The economic redistribution goes to immigrants, firms and owners of land; the fiscal redistribution to immigrants and the welfare state apparat—both public sector and non-profit sector.
Chapter 10 (Pp192-210) poses the question Who Are You Rooting For? Borjas highlights three themes of the book: that the “immigrants as workers” narrative is simply wrong, immigrants are people with all the complexities that involves; that the effects of immigration are very particular to time and place—to which immigrants in what circumstances; and that “it is wise to be sceptical of expert opinion in politically contentious topics like immigration” (p.193).
Borjas helpfully summarises the main points of this book (Pp194-7). Who migrates, and why varies from place to place and across time. Assimilation is not inevitable. The Elllis-Island era melting pot took about a century to do its job. Immigrants affect the job opportunities of natives. “Immigrant participation in the workforce redistributes wealth from those who compete with immigrants to those who use immigrants” (p.196). The welfare state creates the possibility that the net economic gains from immigration might disappear by drains on the fisc. The net effect of immigration in the US is likely a wash, but this “conceals a substantial redistribution of wealth from workers to firms” (p.197).
The big conclusion Borjas reaches, however, is that:
… the claim that mathematical modeling and data analysis can somehow lead to a scientific determination of social policy is sheer nonsense. (P.198)
Technocratic “expertise” cannot replace normative judgement, even without all the factual and analytical uncertainties involved. Indeed, the claim to do so seeks to smuggle in the preferences of the “experts” over those of the general citizenry. As Borjas states, what history and economics can tell us is very simple: if we want to maximise the benefit of immigration to the natives, then we should only admit high-skill immigrants (p.201).
It is, of course, precisely because people want to accrue various benefits at the expense of local workers that so much effort is put into suppressing, distorting and manipulating debate over immigration, with striking levels of moral and cognitive abuse. In particular, that is why the pro-immigration voices so studiously refuse to engage seriously with dissident scholarship, or inconvenient experiences and concerns, while using moral and cognitive abuse as the excuse to so refuse.
Borjas makes several telling points, including the simple question:
Would we even be bothering to debate immigration if everybody in the United States had actually become much wealthier after we had welcomed over 40 million immigrants? (P.203)
He concludes by discussing various policy options while pointing out that, not only is the immigration benefits everyone narrative demonstrably false, there are a lot of hard questions surrounding migration.
Fairly clearly, much of the appeal of the “immigration benefits everyone” claim is that it is so simplifying. But it is a false simplification, whose costs have been rising.
Whatever we might call the claim that immigration benefits all groups, over all ranges, without problems of rising marginal costs, or falling marginal benefits, for anyone, it is not Economic, in the sense of examining choices under constraints.
Corrosion and revival
The use of habits of speech, manners and consumption to differentiate the elite from the masses—a pattern very much in play in the public discourse over immigration policy—has a long, long history. Even shifting the same to stay ahead of their spread to the lower orders has a long history: one can see it in Heian Japan or ancien regime France.
What is new is the use of actively anti-social ideas as markers of status: something that comes out of contemporary academe. Elite contempt for the connections of the lower orders—to their past, to each other—is both expressed and empowered by mass migration.
What French political economist Thomas Piketty describes as the struggle between the Brahmin Left and the Merchant Right is very much a struggle between the unaccountable (those who are paid to turn up) and accountable (those whose income depends on their performance) classes. As the members of both elites are Anywheres—people whose identity comes from achieved markers of status and whose networks are not locality-based—who benefit from mass immigration, this generates a division between the Merchant Right and their potential working class allies that works to the benefit of the unaccountable classes Brahmin Left. The epitome of this was the UK Tories throwing away their massive electoral mandate on the altar of high immigration (and Net Zero).
On the other hand, the push of the unaccountable classes Brahmin Left to insert themselves into every possible resource flow—and to control discourse to maximise the success of that insertion—very much puts them at odds with the Merchant Right. Corporate addiction to cheap imported labour will have to be overcome if the unaccountable classes’ corrosive perversion of institutions is to be halted and reversed.
No, you can’t trust the economists (nor the media, nor the bureaucrats)
The scholarly/social scientific pretensions among economists on immigration are ludicrously thin. George Borjas, one of the top immigration economists—he wrote a textbook on the subject—is mostly ignored, apart from critiquing his analysis of the Mariel boatlift. Economic historian Robert Fogel wrote a monograph on immigration, slavery and the American Civil War, on how mass migration broke the American Republic along its fault-line of slavery, which was republished after he won a Nobel memorial: he has been entirely ignored.
The way Theory is used to fudge, mislead or override the evidence overwhelmingly favours the pro-immigration narrative. There is a persistent refusal to engage with critical scholarship or commentary.
Can an academic discipline seriously decline? Yes. Disciplines which were once mainstays of universities have either vanished or shrunk to pale shadows of their former selves.
This is the unaccountable classes—which includes academics, bureaucrats, and the NGO advocacy economy—lining up with the other owners of capital to systematically attack the economic interests of resident workers, and do so in ways that are often morally or cognitively abusive. So much of national populism on both sides of the Atlantic is the politics of pushback against this systematic abuse.
It has become normal for the “approved narratives only” mainstream media to engage in this cultural, moral and social abuse. Even elite folk can end up being quite systematically misinformed—but with views congenial to them reinforced—by the generally accurate, but often untruthful, because highly selective, narratives of mainstream media. This includes, most notoriously, the outright gaslighting of the world on the origins of Covid organised by the CCP, and separately by Anthony Fauci, Francis Collins and (likely) Peter Daszak, all actively aided by mainstream media as part of their anti-Trump obsession. Followed, of course, by the gaslighting of Americans about the cognitive decline of President Biden and the previous gaslighting of Americans about patterns of police violence.
The separation of the signaling value of beliefs from the consequences of beliefs—interacting with bureaucratization—continues to wreak havoc on policy outcomes and institutional health. Part of this dynamic is that people who rely on mainstream media end up in a different informational universe from those who do not.
On immigration, mainstream economists overwhelmingly join in pushing congenial narratives, on the pretence that they represent “the ethics and science” of immigration. Not only is this not true, the opposite is the case. Yet again, when folk evoke “The Science”, interrogate-the-evidence-and-models scepticism is in order.
As the editor of First Things, R.R.Reno observes of the world Western elites now preside over:
1:16:18: What kind of society have we created where the number one desire of ordinary people is to be protected? We’ve created a society where they're under assault all the time: economically, culturally, morally. They feel like everything is being torn apart: they have no home, they have no trustworthy place, they have no role.
The false patina of settled analytical competence mainstream economists parade on immigration is a large part of this systematic, alienating attack.
In a moment of violent agreement, I’d say this is instead (in the mildest of most useful pedantries I assure you) “precise-but-inaccurate” untruthfulness.
They choose a nice cluster of observations, but (intentionally?) miss the larger constellation that reveals an accurate/truthful center— all with inevitable lack of precision, because we’re talking messy systems of common-sense and morality, not physics.
References
Scott Atran, ‘“Devoted Actor” versus “Rational Actor” Models for Understanding World Conflict,’ Briefing to the National Security Council, White House, Washington, DC, September 14, 2006. https://core.ac.uk/download/pdf/6801978.pdf
George J. Borjas, We Wanted Workers: Unraveling the Immigration Narrative, W.W.Norton, 2016.
Bryan Caplan and Zach Weinersmith, Open Borders: The Science and Ethics of Migration, First Second, 2019.
Michael A. Clemens, ‘Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?,’ Journal of Economic Perspectives, Volume 25, Number 3, Summer 2011, 83–106. https://www.aeaweb.org/articles?id=10.1257/jep.25.3.83
Roger Eatwell and Matthew Goodwin, National Populism: The Revolt Against Liberal Democracy, Pelican, 2018.
Robert William Fogel, Without Consent or Contract: The Rise and Fall of American Slavery, W.W.Norton, [1989], 1994.
Amory Gethin, Clara Mart´inez-Toledana, Thomas Piketty, ‘Brahmin Left Versus Merchant Right: Changing Political Cleavages In 21 Western Democracies, 1948–2020,’ The Quarterly Journal Of Economics, Vol. 137, 2022, Issue 1, 1-48. https://academic.oup.com/qje/article/137/1/1/6383014
David Goodhart, The Road to Somewhere: The New Tribes Shaping British Politics, Penguin, 2017.
M.F. Hansen, M.L. Schultz-Nielsen,& T. Tranæs, ‘The fiscal impact of immigration to welfare states of the Scandinavian type,’ Journal of Population Economics30, 925–952 (2017), https://link.springer.com/article/10.1007/s00148-017-0636-1
Adam McKeown, ‘Global Migration and Regionalization, 1840-1940,’ UC Santa Cruz, Mapping Global Inequalities Conference, 2007-11-27. https://escholarship.org/uc/item/4t49t5zq
Tommaso Nannicini, Andrea Stella, Guido Tabellini, and Ugo Troiano, ‘Social Capital and Political Accountability,’ American Economic Journal: Economic Policy, 2013, 5 (2): 222–50. https://www.aeaweb.org/articles?id=10.1257/pol.5.2.222
Jordan E. Theriault, Liane Young, Lisa Feldman Barrett, ‘The sense of should: A biologically-based framework for modeling social pressure’, Physics of Life Reviews, Volume 36, March 2021, 100-136. https://pubmed.ncbi.nlm.nih.gov/32008953/
Robert Trivers, The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life, Basic Books, [2011], 2013.
J. D. Vance, Hillbilly Elegy: A Memoir of a Family and Culture in Crisis, HarperCollins, 2016.
Zhiling Wang, ‘The incompatibility of local economic prosperity and migrants’ social integration: evidence from the Netherlands,’ The Annals of Regional Science, (2020) 64:57–78. https://repub.eur.nl/pub/121612
The notion of the sacred—something against which trade-offs are not accepted—is a form of threshold. This can obviously vary dramatically between cultures.
Some of the suppression of wages is from straight labour supply competition. Some is more indirect, from suppressing the Baumol Effect—the tendency of increased productivity to raise wages all down the productivity scale as labour competition “pulls up” wages. A continual flood of low-skill workers suppresses the effect at the low end of the productivity scale. Both the US and UK experienced pandemic surges in low skill wages, due to the COVID pandemic response halting migration. Despite having an equivalent or higher rate of migration than either, Australia experienced no equivalent effect from its migration pause, as it mostly has high-skill migrants, so does not suppress the Baumol Effect.
Regulation to restrict the use of land for housing drives up both rents and taxes on such land. This thereby raises the cost of providing infrastructure (including resident resistance) and reduces the increased tax advantages from doing so. This without the coordination problems that cultural diversity generates.
Brilliant and eloquently written, as expected. Sadly only a handful of people have what it takes to see how things really are and then to accept the reality, and those will always be opressed by the majority. Hence in recent years reading astute pieces only makes my misanthropy worse, the more rational and clear the thinking and better the writing, the worse my misanthropy gets after reading... As they say in Germany, Jeder für sich und Gott gegen alle...
Relevant to the end of the post, yesterday was one of the most telling days in the US. The military parade - 250 years anniversary of the US Army - which I watched - dignified. And the No Kings protests happening in every city - hysterical and 'mostly peaceful' - a lefty euphemism where the big crowds provide a stage and a cover for extremists to act out on everyone's involved behalf and their approval, and result in the righteous indignation about inevitable police 'overreaction'. Thus, flaming the next hysteria even higher.
Which shines the light on the reality of the left's intransigence. If conservatives tried to do something like that during Biden reign, the progressives would be screaming of fascism and Nazis, and white supremacy, and it would be investigated by FBI and police, and organizers and participants would be prosecuted. As happened for the smallest things like people resisting their children trans indoctrination - where speaking at the parent's school meetings was classified as terrorism. Conservatives are an order or even three orders of magnitude less prone to such protests in any case. They don't have the utopia and imaginary grievances on someone-else's-behalf - and female style aggression - to follow and perpetuate, but lives to live. But now it is Freedom to Protest Mostly Peacefully and scream "fascists, Nazis, Kings, oligarchs, racists, stolen lands, Palestine, Mahmoud Khalil" and all of that. And it is guaranteed when they come back to power, they will not show tolerance that is granted to them. They never do.
Brilliant and eloquently written, as expected. Sadly only a handful of people have what it takes to see how things really are and then to accept the reality, and those will always be opressed by the majority. Hence in recent years reading astute pieces only makes my misanthropy worse, the more rational and clear the thinking and better the writing, the worse my misanthropy gets after reading... As they say in Germany, Jeder für sich und Gott gegen alle...
Great continuation on the subject, Lorenzo.
Relevant to the end of the post, yesterday was one of the most telling days in the US. The military parade - 250 years anniversary of the US Army - which I watched - dignified. And the No Kings protests happening in every city - hysterical and 'mostly peaceful' - a lefty euphemism where the big crowds provide a stage and a cover for extremists to act out on everyone's involved behalf and their approval, and result in the righteous indignation about inevitable police 'overreaction'. Thus, flaming the next hysteria even higher.
Which shines the light on the reality of the left's intransigence. If conservatives tried to do something like that during Biden reign, the progressives would be screaming of fascism and Nazis, and white supremacy, and it would be investigated by FBI and police, and organizers and participants would be prosecuted. As happened for the smallest things like people resisting their children trans indoctrination - where speaking at the parent's school meetings was classified as terrorism. Conservatives are an order or even three orders of magnitude less prone to such protests in any case. They don't have the utopia and imaginary grievances on someone-else's-behalf - and female style aggression - to follow and perpetuate, but lives to live. But now it is Freedom to Protest Mostly Peacefully and scream "fascists, Nazis, Kings, oligarchs, racists, stolen lands, Palestine, Mahmoud Khalil" and all of that. And it is guaranteed when they come back to power, they will not show tolerance that is granted to them. They never do.