Professor discusses the economics of immigration

BY Rhonda Schaffler, Correspondent |

New Jersey has long been home to and the gateway for immigrants coming to the U.S. The recent political climate has heightened tensions over our policies around this. Earlier Tuesday Rhonda Schaffler sat down with Rutgers Professor and Former Chief Economist for the Department of Labor Jennifer Hunt to talk about the economics of immigration.

Schaffler: Professor Hunt, thank you so much for being here. We really want to focus on the economics of immigration with the current debate that we’re hearing. We know that 22,000 New Jersey residents could be deported due to changes in DACA. How would that impact our economy here?

Hunt: Well, if you’re talking about actual deportations and you’re talking about New Jersey, it would have an impact at the national level, except for the people concerned who would obviously have a horrible impact. The number of people is not so large compared to the whole country. Obviously some states have more of them, New Jersey has more, so it would actually reduce somewhat the economic growth, the size of the economy. Nevertheless, even New Jersey is a large state, so 22,000 people don’t make a huge dent. So, I think the issue here really is the people themselves are perhaps the principles to establish more generally for immigration, or for even refugees in terms of DACA, rather than their economic impact.

Schaffler: In terms of specific areas of New Jersey, and you’re right to point out that we are, in a way, disproportionately affected based on the number of immigrants that we have here, what industries potentially are vulnerable in New Jersey? We know hundreds of business leaders have actually signed a letter and they want Congress to look at the issue and move quickly. So, what industries potentially would be hurt?

Hunt: Well, it’s actually difficult to know because there’s not good data. Some studies have been done on the national level that are finding that the DACA beneficiaries, especially working in services, but beyond that it’s a bit hard to know. Really the data is just so poor that actually I think those sorts of stories you would get just from talking to individuals would be more informative.

Schaffler: I know you’ve done research on immigration and innovation which is a very interesting topic and that brings us to the H-1B visas — another big part of the immigration story. So, how have immigrants helped propel innovation in our economy?

Hunt: That’s right. I think that’s particularly relevant for New Jersey which has many skilled immigrants. So, what I found in my research is that parts of the country that have particularly strong inflows of immigrants with college education and above, or perhaps immigrants with a science and engineering background, have more patenting than areas with lower inflows of immigration. And patenting is something we tend to measure to try to get at innovation. It’s not a perfect measure. Much innovation is done that is not captured and patented. I think that will be relevant for New Jersey where of course pharmaceuticals, for example, are a big and important industry with many skilled immigrants. Some of those things would be patented, but some fundamental research or development that lies behind that might not actually be patentable. But, nevertheless my research surely has implications for innovation more generally even that doesn’t show up in patents. And so, New Jersey’s growth rate is likely to be economic growth higher than what it would be in the absence of immigrants. Although a lot of the benefits, of course, of the innovation that happens in New Jersey go to the whole of the United States and eventually, in fact, to the whole world.

Schaffler: How do you answer the argument that immigration hurts parts of the economy? Some of the arguments you hear is that immigrants are taking other people’s jobs, they’re draining social services, what have you. What are the numbers? Tell us about that argument.

Hunt: Well, in this National Academies report that came out last year that I was a member of, we address all of those questions as best we can. And we do observe that actually the economy expands with immigration. The growth rate actually increases because of the innovation of the immigrants. But, that doesn’t mean that everyone is better off. If you even look at native born workers as a whole, they may be better off by immigration because what happens is that immigrants and natives specialize in slightly different things, do what they’re best at and make the economy more efficient. But all that turning means that some people are worse off and there’s going to be some sectors that grow more slowly than they would have in the absence of immigration, some that will expand more quickly. And in particular, the one group that we identified that made worse off immigration are high school dropouts born in the U.S. There is in addition to the large fraction of the immigrants to the U.S. who are very skilled as the large fraction that are not at all skilled by U.S. standards and those are the ones that compete to some extent with the least educated natives in the U.S.

Schaffler: Very quickly, based on what we know now and some of the policies being proposed, will the U.S. economy overall be heard with significant changes?

Hunt: The tenor of the discussion at the moment is to reduce immigration and even if it stood more toward skilled immigration on the whole, my feeling is that they will likely be hurting the U.S. economy with the policies that are being proposed.

Schaffler: If we could write policy based on economics and not politics, what would be in your policy?

Hunt: Well, I would not reduce immigration from its current levels. One could even imagine increasing them. A useful thing to know is that the U.S. is only a middle-immigration country, actually, by international standards. So, for example the 14 percent of the population of the U.S. is born abroad, that’s about the same as Germany who’s in the middle of the pack. Australia, it’s 28 percent of the population, is born abroad, so double. And the inflows per capita to Australia are double of what they are to the U.S. So, I think actually that there is a lot of advantages that can be beneficial from immigration. However, one should develop policies aimed at the least skilled, native-born American workers to be improving their education, their training, giving them more opportunities to try to remove them from the competition from the lowest skilled immigrants who are coming.

Schaffler: Professor Hunt, it’s been a pleasure speaking with you. Thank you.

Hunt: Thank you.