1、IntroductionEconomists assume that voluntary exchange is mutually beneficial. A recent Gallup poll found that 750 million people worldwide would prefer to live in another country, but immigration restrictions enforced by virtually every government prevent them from moving. HYPERLINK l _bookmark0 1 T

2、hus, immigration restrictions prevent many billions of such voluntary exchanges from occurring and produce an annual deadweight loss of tens of trillions of dollars. Global labor misallocation created by immigration barriers is likely the most economically destructive set of laws worldwide.However,

3、there are potentially negative externalities to freer immigration. Most im- migration externalities can be corrected through keyhole reforms to public policies, such as reducing welfare access to immigrants or targeted immigration restrictions against criminals and terrorists, that would capture the

4、 large benefits of free immigration and reduce the ex- ternal costs. However, perhaps the most important externality related to immigration is how immigrants impact institutions that are, at least partially, responsible for the prosperity in destination countries. If freer immigration negatively imp

5、acts these institutions, then perhaps, extensive immigration restrictions are justified on cost-benefit grounds. However, if immigra- tion doesnt negatively impact these institutions, or even positively impacts them, then the cost-benefit case for free immigration becomes even stronger.This chapter

6、will consider whether immigrants reduce the quality of wealth-producing institutions in the countries where they settle HYPERLINK l _bookmark1 2 We take as our starting point the baseline estimates of the global gains from free immigration and estimates of place-specific productivity. Readers of thi

7、s volume will be familiar with Michael Clemens 2011 survey of the literature on the gains from free immigration in an aptly titled article “Economics of Emigration: Trillion- Dollar Bills on the Sidewalk?” HYPERLINK l _bookmark2 3 The methodologies and assumptions in the studies vary, but they all e

8、stimate massive increases in gross world product (GWP) by abolishing immigration restrictions. HYPERLINK l _bookmark3 4 They range from a low of 67 percent to nearly a 150 percent increase in GWP,Esipova, N. and Pugliese, A. and Ray, J., HYPERLINK /poll/245255/750-million-worldwide-migrate.aspx More

9、 Than 750 Million Worldwide Would Migrate If They Could, 2018, HYPERLINK /poll/245255/750-million-worldwide-migrate.aspx /poll/245255/750-million-worldwide-migrate.aspx.Much of this chapter is adapted from our forthcoming Cambridge University Press book Wretched Refuse? The Political Economy of Immi

10、gration and Institutions.Michael A. Clemens, HYPERLINK /10.1257/jep.25.3.83 Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?, Journal of Economic Perspectives 25, no. 3 (September 2011): 83106.Clemens, HYPERLINK l _bookmark2 “Economics and Emigration: Trillion-Dollar Bills on the Sid

11、ewalk?”; B. Hamilton and J. Whalley, HYPERLINK /10.1016/0304-3878(84)90043-9 Efficiency and distributional implications of global restrictions on labour mobility: Calculations and policy impli- HYPERLINK /10.1016/0304-3878(84)90043-9 cations, Journal of Development Economics 14, no. 1 (1984): 6175;

12、J.W. Moses and B. Letnes, HYPERLINK /10.1016/j.worlddev.2004.05.007 The Economic HYPERLINK /10.1016/j.worlddev.2004.05.007 Costs to International Labor Restrictions: Revisiting the Empirical Discussion, World Development 32, no. 10 (2004): 16091626; A. Iregui, HYPERLINK /10.1057/9780230522534_10 Eff

13、iciency Gains from the Elimination of Global Restrictions on Labour Mobility, in Poverty, International Migration and Asylum, ed. G. Borjas and J. Crisp (New York, NY: Palgrave Macmillian,which dwarfs the gains of removing all remaining barriers to trade and capital mobility. HYPERLINK l _bookmark4

14、5 Since the gains estimated in those papers accrue annually, the present value of free immigration is potentially worth over a quadrillion dollars in additional global output. HYPERLINK l _bookmark5 6In another approach that readers of this volume are also likely familiar with, economists Michael Cl

15、emens, Claudio Montenegro, and Lant Pritchett measure the place premium, the extra productivity due to working in the United States, by comparing individual real purchasing power parity (PPP) adjusted wages from 42 poorer countries with individual wages in the United States, controlling for observab

16、le differences in age and education. HYPERLINK l _bookmark6 7 The place premiums they estimate range from a high factor of 16.4 for Yemen to a low of 1.7 for Morocco. The lower-bound place premium for the median country is a factor of 3.95. The lower-bound place premium is a factor of 5.65 for the a

17、verage country weighted by working age population. This translates into a lower-bound estimate of the average real wage (PPP) gain of $13,600 for immigrants from the median country and an average of $13,700 across the 1.5 billion working-age people from these 42 countries.Under either approach above

18、 the estimated gains from free immigration should easily swamp the costs imposed by any negative externalities that could emerge. Even if free immi- gration imposed some negative externalities on the native born, the gains from free immigration would essentially eliminate extreme poverty by massivel

19、y expanding global output. It is hard to imagine such a policy not passing a cost-benefit test if the production functions of destinations countries, which are largely a result of their economic institutions, are not themselves damaged.The new economic case for immigration restrictions posits that i

20、mmigrants could trans- mit the traits responsible for low productivity in their countries of origin to their destination countries and thus lower productivity there. HYPERLINK l _bookmark7 8 If the transmission of these low productivity2005), 21138.; J. Kennan, HYPERLINK /j.red.2012.08.003 Open bord

21、ers, Review of Economic Dynamics 16, no. 2 (2013): L1L13.Clemens, HYPERLINK l _bookmark2 “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?”A more recent paper by Klaus Desmet, David Krisztian Nagy, and Esteban Rossi-Hansberg built an endoge- nous growth model with spatial heterogenei

22、ty, costly trade, local amenities that determine a places desirability, and place-specific productivity levels. In their model, free immigration would increase real world income by a present discounted value of 126 percent, boost global welfare by 306 percent, and result in about 70 percent of the w

23、orlds population emigrating. The two downsides of their paper are that their model goes far in the future, about 600 years, and the increase in the number of immigrants all happens within year one of free im- migration becomes law. Klaus Desmet, David Krisztian Nagy, and Esteban Rossi-Hansberg, HYPE

24、RLINK /10.1086/697084 The Geography of HYPERLINK /10.1086/697084 Development, Journal of Political Economy 126, no. 3 (2018): 903983M.A. Clemens, C.E. Montenegro, and L. Pritchett, HYPERLINK /10.1162/rest_a_00776 The Place Premium: Bounding the Price Equivalent of HYPERLINK /10.1162/rest_a_00776 Mig

25、ration Barriers, The Review of Economics and Statistics 101, no. 2 (May 2019): 201213.M.A. Clemens and L. Pritchett, The new economic case for migration restrictions: An assessment, Journal of Development Economics 138 (2019): 153164; George J. Borjas, HYPERLINK /10.1257/jel.53.4.961 Immigration and

26、 Globalization: A Review HYPERLINK /10.1257/jel.53.4.961 Essay, Journal of Economic Literature 53, no. 4 (December 2015): 96174; G. Jones, HYPERLINK /do-immigrants-import-their-economic-destiny-garrett-jones/ Do immigrants import their HYPERLINK /do-immigrants-import-their-economic-destiny-garrett-j

27、ones/ economic destiny?, 2016, HYPERLINK /do-immigrants-import-their-economic-destiny-garrett-jones/ /do-immigrants-import-their-economic-destiny-garrett-jones/; Louis Putterman and David N. Weil, HYPERLINK /10.1162/qjec.20627 Post-1500 Population Flows and The Long-Run Determinants of Economic HYPE

28、RLINK /10.1162/qjec.20627 traits to richer destination countries occurs then the economic gains from free immigration HYPERLINK /10.1162/qjec.20627 could shrink, disappear, or even turn negative. HYPERLINK /10.1162/qjec.20627 Economist Paul Collier was the first to make the new economic case for imm

29、igration HYPERLINK /10.1162/qjec.20627 restrictions. HYPERLINK l _bookmark9 9 HYPERLINK /10.1162/qjec.20627 He worries that immigrants could import institutions, dysfunctional social models, HYPERLINK /10.1162/qjec.20627 and cultural characteristics that are responsible for the poverty of their home

30、lands. HYPERLINK l _bookmark12 10 HYPERLINK /10.1162/qjec.20627 Collier HYPERLINK /10.1162/qjec.20627 offers anecdotes of these impacts in Great Britain, many of which are centered around the HYPERLINK /10.1162/qjec.20627 culinary fusion between Indian and British cuisine, but provides no evidence o

31、f a deleterious HYPERLINK /10.1162/qjec.20627 effect on economic productivity. HYPERLINK l _bookmark13 11 HYPERLINK /10.1162/qjec.20627 George Borjas added a formal theoretical model to augment HYPERLINK /10.1162/qjec.20627 Colliers argument that showed how immigrant-induced degradation of productiv

32、e institutions HYPERLINK /10.1162/qjec.20627 could significantly undermine the economic gains of free immigration or perhaps even turn HYPERLINK /10.1162/qjec.20627 them negative. HYPERLINK l _bookmark14 12 HYPERLINK /10.1162/qjec.20627 Collier relies on a cultural model of economic development whil

33、e Borjas adds HYPERLINK /10.1162/qjec.20627 the argument that immigrants could degrade the quality of economic institutions by increasing HYPERLINK /10.1162/qjec.20627 the role of the government in the economy and otherwise worsening the quality of economic HYPERLINK /10.1162/qjec.20627 institutions

34、 by making them less inclusive. HYPERLINK l _bookmark15 13 HYPERLINK /10.1162/qjec.20627 We believe that Colliers and Borjas conjectures are the most important challenges to HYPERLINK /10.1162/qjec.20627 the case for free immigration. However, these challenges are essentially empirical conjectures H

35、YPERLINK /10.1162/qjec.20627 that require systematic empirical evidence. A forthcoming book authored by Alex Nowrasteh HYPERLINK /10.1162/qjec.20627 and Benjamin Powell titled Wretched Refuse? The Political Economy of Immigration and In- HYPERLINK /10.1162/qjec.20627 stitutions collected the evidenc

36、e that attempted to empirically assess whether immigration de- HYPERLINK /10.1162/qjec.20627 grades formal or informal institutions in destination countries that affect economic produc- HYPERLINK /10.1162/qjec.20627 tivity. HYPERLINK l _bookmark16 14 HYPERLINK /10.1162/qjec.20627 We direct readers i

37、nterested in the full assessment of this empirical question to that HYPERLINK /10.1162/qjec.20627 work. HYPERLINK /10.1162/qjec.20627 In this chapter we expand our empirical analysis to the impact of immigration on eco- HYPERLINK /10.1162/qjec.20627 nomic institutions and public policy in the United

38、 States. If immigrants carry with them the HYPERLINK /10.1162/qjec.20627 traits responsible for the poor economic institutions in their origin countries then they could HYPERLINK /10.1162/qjec.20627 plausibly transmit those traits to their destination country and undermine economic freedoms HYPERLIN

39、K /10.1162/qjec.20627 there. Examining how immigrants affect state-level policies in the United States helps to an- HYPERLINK /10.1162/qjec.20627 Growth and Inequality, The Quarterly Journal of Economics 125, no. 4 (November 2010): 16271682; P. Collier, HYPERLINK /books?vid=ISBN978-0190231484 Exodus

40、: How Migration Is Changing Our World (New York, NY: Oxford University Press, 2013); G. Borjas, HYPERLINK /books?vid=ISBN9780674049772 Immigration Economics (Cambridge, MA: Harvard University Press, 2014).Collier, HYPERLINK l _bookmark10 Exodus: How Migration Is Changing Our World . HYPERLINK l _boo

41、kmark10 Collier, p. 34. HYPERLINK l _bookmark10 Collier, p. 100.149 Borjas, HYPERLINK l _bookmark11 Immigration Economics; Borjas, HYPERLINK l _bookmark8 “Immigration and Globalization: A Review Essay.”Borjas, HYPERLINK l _bookmark8 “Immigration and Globalization: A Review Essay.”A. Nowrasteh and B.

42、 Powell, Wretched Refuse? The Political Economy of Immigration and Institutions(New York, NY: Cambridge University Press, forthcoming).swer whether such a phenomenon occurs by relying on the differences in state-level economic policies and the radically different immigrant settlement patterns inside

43、 of the United States. Specifically, we will analyze how immigration affects state-level economic state-level spending which is a proxy-measurement for economic freedom. HYPERLINK l _bookmark17 15Immigrations Effect on State-Level Economic InstitutionsEconomist Marco Tabellini investigated how immig

44、rants in the late 19th and early 20th centuries affected municipal tax rates, total city tax revenue, and the government supply of services during the 1910 to 1930 period in the United States. HYPERLINK l _bookmark18 16 He focused on cities and munic- ipalities because they supplied most government

45、goods and services in the early 20th century. Tabellini used a shift-share instrument that uses immigrants past settlement patterns inter- acted with national inflows to predict immigration across U.S. cities. He found that European immigrant populations on the city level, especially if they were fr

46、om Eastern and Southern Europe, resulted in lower municipal tax rates, less tax revenue, and less government supply of services during the 1910 to 1930 period. Specifically, he found that a one-standard devia- tion increase in the immigrant population (about five percentage points) reduced per capit

47、a government spending by 5 percent and property tax rates by 7.5 percent on the city level.In a later working paper, Tabellini and economist Paola Giuliano used the same shift- share instrument to gauge how the long-run effects of European immigrants in the later 19th and early 20th centuries affect

48、ed public support for the Democratic Party and redistribution on the county level during the 2006-2018 period. HYPERLINK l _bookmark19 17 They found that more European immigrants in the past led to more support for the Democratic Party and for redistribution on the country level today. The major wea

49、kness of this second paper is that it does not measure the actual effect on government spending and tax policies because counties do not supply many government services nor do they levy many taxes, in contrast to the early 20th century. Thus, any analysis of how immigrant settlement patterns on the

50、county level in the past affected county-levelJ.C. Hall and R.A. Lawson, HYPERLINK /10.1111/coep.12010 Economic Freedom of the World: An Accounting of the Literature, Contemporary Economic Policy 32, no. 1 (2014): 119; Nathan J. Ashby, HYPERLINK /a/sej/ancoec/v733y2007p677-697.html Economic Freedom

51、and Migration Flows between U.S. HYPERLINK /a/sej/ancoec/v733y2007p677-697.html States, Southern Economic Journal 73, no. 3 (January 2007): 677697, HYPERLINK /a/sej/ancoec/v733y2007p677-697.html /a/sej/ancoec/ HYPERLINK /a/sej/ancoec/v733y2007p677-697.html v733y2007p677-697.html; Nathan J. Ashby, HY

52、PERLINK /10.4284/sej.209 Freedom and International Migration, Southern Economic Journal 77, no. 1 (July 2010): 4962.M. Tabellini, HYPERLINK /10.1093/restud/rdz027 Gifts of the immigrants, woes of the natives: lessons from the age of migration, The Review of Economic Studies 87, no. 1 (January 2020):

53、 454486.Paola Giuliano and Marco Tabellini, HYPERLINK /10.3386/w27238 The Seeds of Ideology: Historical Immigration and Political Preferences HYPERLINK /10.3386/w27238 in the United States, Working Paper, Working Paper Series 27238 (National Bureau of Economic Research, May 2020).spending policies t

54、oday would not be that meaningful. Therefore, we decide to meld the methods employed by Tabellini and Giuliano in their papers to examine how recent waves of immigrants since 1960 affected state-level government spending today.Immigrations Effect on State Government Revenue and Spend- ing: Data and

55、Methods HYPERLINK l _bookmark20 18This section focuses on the relationship between changes in states foreign-born shares of the population and growth in real state-level outlays per capita because it is a major com- ponent of government priorities and correlated with the quality of other economic in

56、stitutions such as private property rights and regulation. HYPERLINK l _bookmark21 19 We rely upon state-level decadal panel data for state budgets and immigrant population shares over the period 1960-2010 for all 50 states and the District of Columbia. Data on state government expenditures come fro

57、m the Government Finance Database (GFD), which compiles government financial data collected by the U.S. Cen- sus Bureau and harmonizes the data for state, county, and local governments. HYPERLINK l _bookmark22 20 We specifically exclude federal grants to the states because those spending decisions a

58、re not made by state gov- ernments and we need to focus on how immigrants in states affect state-level spending and tax decisions only. GFD data include detailed public financial data on revenues and expenditures broken down by type and function. Specifically, we focus on four variables of interest

59、in the GFD dataset:General revenues: State revenues from all sources, including federal grants and any other intergovernmental revenue sources.General revenue from own sources: Revenues from state taxes, fees, returns on state-run insurance schemes, and revenues from state-owned/regulated enterprise

60、s like utilities and liquor stores.Total expenditures: All state expenditures such as wages, capital outlays, construction expenditures, and intergovernmental transfers.Some of this section and the following section is based off of questions posed in this blog post: A. Nowrasteh and A.C. Forrester,