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Assessing Immigration in America - Where Does It Lead?

Authors: Saumya Rajawat, Sean Daniel Lee

Region Head: Saumya Rajawat

Editor: Harsh Didwania


Abstract


Immigration in the United States has been a controversial subject for a long time, but it hasn’t been catapulted to the spotlight in a more jarring manner before 2016, when Donald Trump built his campaign and Presidency around the matter. Today, Joe Biden takes the White House, but the sentiment on immigration remains dividing still. In this article, we take a look at immigration from two perspectives - assessing the impact on a broader, macroeconomic scale, and the economic and political ramifications of emerging interstate movements.


A broad analysis: What does immigration look like for a State?


Firstly, immigration’s impact on quality of work and innovation is overwhelmingly positive. Evidence posits that immigration leads to a better-educated workforce, greater occupational specialization, better matching of skills with jobs, and higher overall economic productivity (Portes, 2019). Partially, this is explained by the grit shown by immigrants crossing the oceans and creating new opportunities in the growing, highly technical industries in the countries they move to. For the countries, this results in a positive influence on real GDP, aggregate demand, investment; more immigrants also increase the ratio of taxpayers to the beneficiaries and reduce the state’s tax burden (Chojnicki et al., 2009).


However, in a debate on immigration, illegal immigrants and immigrants in low-paid sectors share a significant burden, as they are criticized for harming the employment and earning prospects of the local population. Research doubts this argument, as most studies find little long-run effect on Americans’ wages and consider the effect on employment insignificant, and emphasising the economic damage the US economy might suffer without this immigrant force. Removing undocumented immigrants may cut the present GDP by 1.4 percent, and reduce cumulative GDP over 10 years by $4.7 trillion, with exceptional economic and workforce damage to certain industries dependent on the immigrant labour force (Center for American Progress, 2019). Not to mention the increased cost of business that would result from increased border controls between the States and Mexico, to be eventually paid by Americans who would lose the low-price benefits they gain on goods from industries hiring this labour (agriculture, for instance) (‌Fullerton et al., 2004).


Lastly, we conclude the overview on the influence of immigration by looking at the economic experiences of the immigrants themselves. Studies suggest that new immigrants may themselves face poverty due to difficulties in economically assimilating into the labour market, and may be adversely affected by the substitution in the workforce caused by expanding immigration (Dungan et al., 2012). This urges further research into better policies for the selection of immigrants coming into a country, as in regions with large populations of low-income immigrants, the local residents can bear significant net costs due to immigrants’ use of public services, especially education, negating a distribution of positive tax benefits immigration may bring to the State.


A new perspective on immigration: Interstate migration


Between the City of Angels to the Alamo, there are nearly 70 million Americans (U.S Census Bureau, 2019). They account for a massive proportion of the total population and hold great influence on the economy and politics of the United States: Texas accounting for USD1.87 trillion (9.2% of U.S GDP), and California accounting for USD2.7 trillion (14.8% of U.S GDP) (Buchholz, 2021). Election-wise, 38 electoral college votes for Texas and 55 votes for California make up a combined weightage of nearly one-fifth of the total vote. Hence, the financial and political sway they hold is of great interest in our study of migration patterns within the U.S, as shifts in human capital translate to shifts in the demographic make-up of states. These, in turn, rebalance the economic and political scales of the affected states.


The political landscapes of these states are of paramount importance as they weigh heavily on election outcomes. People moving from one place to another do not just bring their hopes and dreams, but their votes and the votes of future generations raised by them as well. Net migration flow is positive for Texas between the two states, with more new residents moving to Texas than vice-versa. And worryingly for the reigning Republican Party, many of these people lean left, with a higher propensity to vote for the Democrats. For instance, the 2018 Senate election in Texas between incumbent Republican Ted Cruz (alleged Zodiac Killer) and the Democrat’s Beto O’Rourke was uncomfortably tight for the Republicans. Texas was once regarded as a deep Red state, but O’Rourke’s margins were 2.6% from Cruz’s. O’Rourke won 62% of the recent movers’ votes, many of them from the urban areas of Texas that interstate migrants move to (Thompson, 2019). Furthermore, the proportion of votes going to the Democrats in Texas have been trending up nearly every Presidential, Senate, and House election (Historical Presidential Election Information by State, 2020). The election numbers are changing with the demographics of Texas, indicative of a gradual but clear reshaping of Texan and America’s politics through interstate migration. If the GOP continues to ignore the more progressive voting power of younger interstate migrants, it may find itself in a difficult position come future elections.


In terms of economy, California may be home for now to the Silicon Valley unicorns and Big Tech, but its synonymity with innovation and business has increasingly come under assault. People and capital are moving to Texas from California due to its more favourable regulations and tax framework (Uzialko, 2019). Hewlett Packard, Oracle, even the ‘memelord’ Elon Musk are all moving to Texas, carrying along their immense human and financial capital (Murphy, 2020). Migration patterns of not just people, but firms as well, should be an indicator for states looking to improve policymaking. The economic costs, seen in the multi-billion dollar shifts in capital with the exodus of these firms and individuals, are far from negligible. California may lose the ability to pay for its accommodative economic policies towards its less affluent but left-leaning portion of its Democratic voter base from a loss of tax revenue. The bill will come eventually, and it might be marked with red.


What Lies Ahead?


Immigration is a prickly issue. This short article merely scratches the surface of this multifaceted and deeply complex phenomenon. We have demonstrated the economic argument in support of international flows, though we see how this is a problem on the domestic side of it for the states in a net negative flow. The politics discussed here only introduces the issue from a macro-perspective, leaving out the socio-cultural changes that immigration has on both the immigrant and the location. These in turn introduce possibilities of ever more complex feedback loops ad infinitum, altering the economic and political landscapes further. Policymakers will need to think outside of the economic and political calculations that influence their bills and take into account the more personal and intimate human side of it. When aggregated, it can add up to a paradigm shift in the nature of a nation. After all, America was founded by immigrants.



References


1. Buchholz, K. (2021, April 12). Infographic: Which States are Contributing the Most to U.S. GDP? Statista Infographics; Statista. https://www.statista.com/chart/9358/us-gdp-by-state-and-region/


2. Center for American Progress. (2019, June 26). Building a more dynamic economy: The benefits of immigration. https://www.americanprogress.org/issues/immigration/reports/2019/06/26/471497/building-dynamic-economy-benefits-immigration/


3. Chojnicki, X., Docquier, F., & Ragot, L. (2009). Should the US have locked heaven’s door? Journal of Population Economics, 24(1), 317-359. https://doi.org/10.1007/s00148-009-0286-z


4. Dungan, P., Fang, T., & Gunderson, M. (2012). Macroeconomic impacts of Canadian immigration: Results from a macro model. British Journal of Industrial Relations, 51(1), 174-195. https://doi.org/10.1111/j.1467-8543.2012.00905.x


5. ‌Historical Presidential Election Information by State. (2020). 270toWin.com. https://www.270towin.com/states/


6. ‌Murphy, K. (2020, December 11). Oracle joins HP and Elon Musk in California-to-Texas move. Politico PRO. https://www.politico.com/states/california/story/2020/12/11/oracle-joins-hp-and-elon-musk-in-california-to-texas-move-9424903


7. Portes, J. (2019, June 5). The economics of migration. SAGE Journals. https://doi.org/10.1177/1536504219854712


8. Thompson, D. (2019, September 17). The Atlantic. The Atlantic; theatlantic. https://www.theatlantic.com/ideas/archive/2019/09/american-migration-patterns-should-terrify-gop/598153/


9. University of Pennsylvania. (2016, June 27). The effects of immigration on the United States’ economy. Penn Wharton Budget Model. https://budgetmodel.wharton.upenn.edu/issues/2016/1/27/the-effects-of-immigration-on-the-united-states-economy


10. US Census Bureau. (2020, October 16). Population. The United States Census Bureau. https://www.census.gov/topics/population.html


11. Uzialko, A. (2019, September 22). How to Run a Business in Texas. Business News Daily; businessnewsdaily.com. https://www.businessnewsdaily.com/8743-doing-business-in-texas.html

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