The International Monetary Fund has a new study available which shows that immigration into the advanced economies (that’s us folks, we who were lucky to be born into functioning economies) makes us all richer. And they’re right to point this out too for they are right. We might even say that their logic proves that Bryan Caplan is right on this point. Comparative advantage and the division and specialisation of labour work within economies as well as across them.
The point is that yes, of course we can do that division and specialisation across borders and then trade internationally. But this is all rather easier, thus more of it happens, if people are within the same economy and thus we’re trading the resultant production domestically. Comparative advantage is the playing out of who does what in this division. It’s essentially Adam Smith and David Ricardo all over again. They were pointing out that this is the process which makes us richer even if done internationally. All that is being said here is that the greater efficiency of such domestic cooperation makes us richer again than international trade will.
As they say:
“Migration, no matter how controversial politically, makes sense economically. A new IMF study shows that, over the longer term, both high- and low-skilled workers who migrate bring benefits to their new home countries by increasing income per person and living standards. High-skilled migrants bring diverse talent and expertise, while low-skilled migrants fill essential occupations for which natives are in short supply and allow natives to be employed at higher-skilled jobs. Moreover, the gains are broadly shared by the population. It may therefore be well-worth shouldering the short-term costs to help integrate these new workers.
From the study itself:
“This note examines the longer-term impact of migration on
the GDP per capita of receiving advanced economies.
By Tim Worstall for Forbes
Read Full Article HERE