1

The Ineffectiveness of American Immigration Policies

Immigration in the United States has been an extremely contentious issue for the majority of its

history. The United States, perhaps as much or more than any other country, has been shaped by

immigrants. Even in the common vernacular, America is referred to as a “Nation of Immigrants,” and this

holds as true today as much as it ever has: 13% of the American population is foreign born. 1 However,

the current debate is focused on the issue of illegal immigration. That is, immigration which occurs

outside official government channels. As the black market for immigrant labor has grown, so have

concerns of the possible problems associated with such large numbers of people migrating into the

country every year. These concerns, however, are either unfounded or exaggerated; immigration,

empirically speaking, is a net benefit to society. Our current system is woefully ineffective at allowing

Americans to benefit from immigration, and, reciprocally, at allowing foreign individuals to become

Americans. Immigrants contribute their labor in a number of ways, accepting jobs that do not pay well

enough to attract sufficient Americans, jobs that not enough Americans are qualified for, or becoming

entrepreneurs.

In the United States' current system, permanent resident cards, commonly referred to as “green

cards,” are issued each month, subject to an annual limit. 2 For 2013, the annual limit for immigrant visas

was 226,000 for visas sponsored by a relative permanently residing in the US and 158,000 for employer-

sponsored visas.3 Immediate relatives of US citizens are not subject to any cap. 4 In 2012 (according to

preliminary data), this translated to a total of 482,300 immigrant visas issued worldwide, under similar

quotas.5 However, no more than 7% of the total visas issued in any particular category may go to

individuals from any single country.6 As of November 2012, the waiting list for visas constituted 4.4

million individuals.7 The overwhelming majority were for family visas (4.2 million, or 97%). 8 The top
1 A Nation of Immigrants (2013). Pew Research Hispanic Center. p. 2. 40 million immigrants, including 11 million
unauthorized immigrants. For methodology see Jeffrey Passel and D’Vera Cohn (2012).
2 Operation of the Immigrant Numerical Control System (2013). US Department of State.
3 Annual Numerical Limits (2013). US Department of State.
4 Family-based Immigrant Visas (2013). US Department of State.
5 Table I: Immigrant and Nonimmigrant Visas Issued at Foreign Service Posts, Fiscal Years 2008-2012 (2013). US Department
of State.
6 Per Country Limit (2013). US Citizen and Immigration Services.
7 Annual Report of Immigrant Visa Applicants in the Family-sponsored and Employment-based Preferences Registered at the
National Visa Center as of November 1, 2012 (2012). United States Department of State. p. 2
8 Ibid.
 3

country of origin was Mexico (1.3 million, about 30%), 9 however 1.9 million (about 44%) are from Asia. 10

The high numbers from Asia are mainly driven by demand from countries such as the Philippines, India,

China and Vietnam.11

In practice, the system is extremely slow, and waiting lists are generally long, varying by country

due to the per country limit. Depending on the category of visa, employer-sponsored visas for individuals

from India, China, and the Philippines can have waiting periods as long as decades. 12 Family-sponsored

visas can take just as long, especially for residents of Mexico, the Philippines, and the Dominican

Republic, due to the extreme degree which demand for immigrant visas outpaces the supply. 13 For

employer-sponsored visas in particular, the strict per country limits have created bottlenecks in the

system, which cause immigrants from high-demand countries to seek temporary work visas, which have

no per country limit. This is particularly evident in the case of H-1B visas, which are three-year visas that

can be renewed once for high-skilled migrant workers; well over half are given to individuals from India. 14

Of those who do become permanent residents in the US, a majority of them go on to become citizens. 15

Given the how conspicuously the demand exceeds the supply of immigration visas, it is obvious that the

system is not designed to allow especially high numbers of immigrants into the country.

Illegal immigration on a large scale occurs within the United States. The Pew Research Hispanic

Center estimates the current population of unauthorized alien residents to be around 11 million. 16

Approximately 58% of them are from Mexico.17 While the border states, such as California and Texas

have high populations of illegal residents, states like Florida and New York are the destinations for many

of these migrants as well.18 These immigrants play a significant role in the economy, making up a quarter

9 Ibid. p. 3
10 Ibid. p. 11-12
11 Ibid.
12 Stuart Anderson (2012). NFAP Policy Brief – June 2012. p. 3, footnote 8.
13 Annual Report of Immigrant Visa Applicants (2012). p. 4-7.
14 Characteristics of H-1B Specialty Occupation Workers (2012). US Citizenship and Immigration Services. p. 7.
15 Ana Gonzalez-Barrera, Mark Hugo Lopez, Jeffrey Passel, and Paul Taylor (2013). The Path Not Taken. p. 7, 9.
16 A Nation of Immigrants. p. 2
17 Jeffrey Passel and D'Vera Cohn (2011). Unauthorized Immigrant Population: National and State Trends, 2010. p. 2.
18 Ibid. p. 14.
 4

of the nation's agricultural workers,19 and over 5% of the national workforce. 20 These numbers have been

rising steadily from 2000 to 2010, 21 although net migration (legal or otherwise) from Mexico has leveled

off in recent years and possibly reversed as some choose to return home. 22 However, a labor black

market not only exists, but thrives in the United States, composed of around eight million illicit workers

as of 2010.23

Before beginning to analyze the effectiveness of the United States' immigration policy, it is

necessary to define what standard is being used to measure “effectiveness.” For the purposes of this

essay, the goal of immigration policy will be assumed to be “to facilitate the peaceful migration of

individuals to the United States, so that Americans and migrants can engage in mutually beneficial

associations to the fullest, while adequately protecting Americans from any harm such migration may

cause.” This operative definition of the policy's goal may be disputed by some on normative grounds—

nativists, for example, may want to emphasize the last clause at the expense of the first, while

libertarians may do the inverse.

This statement serves the purposes of this analysis well, because it recognizes the possibility of

both costs and benefits relating to immigration. It also defines the nature of the benefits of immigration

as “mutually beneficial association”. There are plenty of other potential benefits, such as being united

with one's family from overseas, but these are harder to measure, and are a lower priority. Likewise, it

also defines the costs as “any harm such migration may cause,” or rather, direct costs associated with

migration. It makes no distinction between different places of origin, and does not include indirect

effects; these may include concerns of immigrants changing (or, “destroying”) present American culture,

which are difficult to attribute to immigration empirically, much less measure.

So what are the concerns about immigration? As previously mentioned, the American system

19 A Nation of Immigrants. p. 4.
20 Passel and Cohn. p. 17.
21 Ibid. p. 17.
22 Jeffrey Passel, D'Vera Cohn, and Ana Gonzalez-Barrera (2012). Net Migration from Mexico Falls to Zero—and Perhaps Less.
p. 6-7.
23 Passel and Cohn. Unauthorized Immigrants. p. 17. Due to the mentioned reduction in net migration, this figure is likely
lower.
 5

makes it difficult for many potential immigrants to become permanent residents. There are several

justifications given for limiting the number of people who may relocate to the United States each year,

most of them worries about the harm caused by large-scale migration. These worries are primarily

focused on low-skill immigration, even though similar economic concepts can be applied to immigrants

of all skill levels. This is likely due to the fact that unlike many other western countries, the United

States' immigration system allows for more family-sponsored immigration, resulting a higher percentage

of the total immigrants having less than a high school education, and a lower percentage with higher

degrees.24 Because more of America's immigrants are lower-skilled than other countries', 25 the natives

are more cognizant of possible problems relating to such immigrants. While many of these worries are

popular among Americans, the empirical evidence shows that they are not very significant or are not

true, and serve as weak justifications at best.

By far the most common worry is the concern that a huge influx of low-skill immigrants will “take

jobs away from Americans.” Putting aside the fact that most immigrants become Americans,26 meaning

that it is in many cases just Americans being replaced by other Americans (which very few people get

upset over), there is a question here that can be answered empirically: what effect do foreign-born

residents have on the employment of native-born residents? The answer is that immigrants do not

negatively impact the employment rate of native-born workers in any significant way. This is because the

economy is able to absorb new workers by creating new jobs. 27 Immigrants do not function any

differently than the increase in women seeking employment in recent decades or natural increases in

population through the birth rate; the civilian labor force grows as more people became available to

work, rather than remaining static.28 In an often-cited survey by Friedberg and Hunt (1994), they reached

the conclusion that that “There is no evidence of economically significant reductions in native

24 Michael Greenstone and Adam Looney (2010). Ten Economic Facts About Immigration. The Hamilton Project, Brookings
Institute. p. 10. Data originally from International Migration Outlook: Annual Report 2007 Edition, Organization for
Economic Cooperation and Development (OECD) (2007), Table II.
25 Ibid. Countries compared were: Australia, Canada, Great Britain, and New Zealand.
26 Ana Gonzalez-Barrera, et al. The Path Not Taken. p. 7, 9.
27 Benjamin Powell, (2010). The Economic Case for Immigration. Library of Economics and Liberty.
28 Ibid.
 6

employment.”29 Any initial reduction that may occur is only in the short run, and disappears in the long

run.30

However, much more research has been devoted to the study of the effect of immigration on

native-born workers' wages. The second concern is that large amounts of immigration could drive wages

down, especially with low-skill workers, who can least afford to take a cut in pay. There is some

economic logic to this concern: all else equal, an increase in the supply of any good—including labor—

will cause the price to fall. However, with immigration, all else does not remain equal. For one, internal

migration occurs, helping offset any wage changes in particular localities; native-born Americans can and

do move to new areas seeking improved employment opportunities in response to changes cause by

immigration.31 Additionally, these new residents purchase goods and services just like everyone else,

increases the wages of those they exchange with. 32 These make determining the actual consequences of

immigration more ambiguous.

On the whole, the negative effects of immigration on the wages of Americans are either low,

non-existent, or positive. Again citing Friedberg and Hunt (1994), increasing the immigrants' share of the

population by 10% (close to the actual 13%) would only yield a 1% drop in wages. 33 The claim that

immigration does not significantly impact wages has not been refuted empirically since their survey was

published, and is supported by many economists. 34 Some, in fact, have found that immigrants may raise

wages slightly, even among Americans who are generally considered to be vulnerable to competition

from immigrants.3536 The group whose wages are most affected by immigration are those who are highly

substitutable with the new immigrants—that is to say, other immigrants. 37 Far from harming the wages

29 Rachel Friedberg & Jennifer Hunt (1994). The Impact of Immigrants on Host Country Wages, Employment and Growth.
Journal of Economic Perspectives No. 9, (2). p. 42.
30 Liesbet Okkerse (2008). How to Measure the Labour Market Effects of Immigration: A Review. Journal of Economic Surveys
22 (1). p. 24
31 George Borjas, (1994). “The Economics of Immigration.” Journal of Economic Literature, Vol. 32 (December 1994). p. 1700
32 Heidi Shierholz (2010). Immigration and Wages. Economic Policy Institute. p. 22.
33 Friedberg & Hunt. p. 42
34 Powell.
35 Shierholz. p. 22
36 Gianmarco Ottaviano & Giovanni Peri (2007). Rethinking the effects of immigration on wages. Hamburg Institute of
International Economics (HWWI) research paper, No. 3-8 (working paper). p. 33.
37 Shierholz. p. 21.
 7

of native-born workers, immigrants increase productivity by allowing Americans to change to

occupations they have a comparative advantage in. This means that native-born Americans switch from

manual-intensive lines of work to communication-intensive ones (due to superior language skills). 38 Even

within their original occupation, native-born Americans are more likely to be promoted to more

supervisory positions in companies that hire more immigrants.39

A third concern that is used to justify restrictions to immigration is the argument that it would be

too expensive for our welfare system to accommodate so many low-income people, many with children,

especially those who do not have an employer ready to sponsor them for a visa. Even Milton Friedman,

who in his day was the standard-bearer for free-market economics, said, “It's just obvious that you can't

have free immigration and a welfare state.” 40 While this may initially make sense to most people on a

heuristic level (immigrants tend to be poorer, and may therefore benefit more from welfare programs),

the empirical evidence tells a different story. Immigrants, on average, take less out of the system than

native-born Americans do.41 This includes programs like Medicaid, despite higher percentages of

immigrants being uninsured.42 There are some limits to how eligible the immigrants are, but for the most

part non-citizen permanent residents are generally eligible for entitlements after five years.43

Moreover, according to a 2007 report from the Congressional Budget Office, it is estimated that

if the nation's 12 million illegal immigrants 44 were provided an accessible path towards legal status, in

addition to an extra 1.8 million new residents that such a policy would inspire to come to America, 45 it

would provide the government with $48 billion in new revenue over a ten year period, while only

incurring $23 billion over the same time.46 This would be primarily through revenue gained from payroll

38 Giovanni Peri, (2009). The Effect of Immigration on Productivity: Evidence from US States. National Bureau of Economic
Research (working paper). p. 20.
39 Shierholz. p. 23
40 Milton Friedman (1998) interviewed by Peter Brimelow. "Milton Friedman Soothsayer." Hoover Digest, 1998 No. 2.
41 Leighton Ku & Brian Bruen (2013). “Poor Immigrants Use Public Benefits at a Lower Rate than Poor Native-Born Citizens.”
Center for Global Liberty and Prosperity, Cato Institute. Economic Development Bulletin, No. 17, March 2013. p. 1
42 Ibid. p. 2-3, figures 1-3.
43 Ibid. p. 1-2.
44 A Nation of Immigrants. p. 1. The population of illegal residents in the US peaked in 2007, at 12 million. The population
has declined by about 1 million residents since.
45 Congressional Budget Office (2007). “Senate Amendment 1150 to S. 1348, the Comprehensive Immigration Reform Act of
2007”. Cost estimate. p. 1, 6-7.
46 Ibid. p. 1, 28-29.
 8

taxes.47 Far from being a burden to the government, such a policy would in fact benefit taxpayers and the

government. $25 billions dollars net spread over 10 years may not be much when budgets are measured

in trillions of dollars, but it does provide 25 billion reasons why immigrants do not burden the

government and taxpayers, illustrating just how far off the mark such concerns are.

From this evidence, it is clear that concerns about low-skilled immigrants causing harm to low-

skilled native-born Americans are exaggerated at best, and completely inaccurate at worst. The effects

of immigration on employment are extremely small. Likewise with the effects on wages. Immigration is

not a simple increase in the supply of low-skill labor, because adding population has offsetting effects.

Concerns of immigrants bankrupting the government due to taking advantage of the American welfare

state without contributing in taxes is simply false. While immigrants do take out of the system, they do

so at a lower rate than the native-born populace.

None of this, however, speaks to the effectiveness of immigration policy in achieving its goals—

only how the costs immigration restrictions are supposed to protect against are not especially harmful.

We must examine how must the immigration restrictions interfere with the benefits of allowing current

US residents to associate with and trade with new residents from abroad. These interferences are

numerous, but all come down to denying current residents what the immigrants are able to offer them—

be it a quality employee, convenient medical care, employment in a business they start, or even just the

extra patronage for selling goods and services to them.

One of the greatest benefits of immigration is their entrepreneurship. Immigrants who come to

America are more enterprising than the general American public, founding companies in great

disproportion to their share of the population. As of 2006, 25% of all publicly traded venture-backed

companies founded between 1990 and 2005 were either founded or co-founded by an immigrant 48

(compared to the 13% of the population which is foreign-born). These companies are primarily

technology-focused, and are ones that affect the daily lives of most Americans, such as Intel, eBay, and

47 Ibid.
48 Stuart Anderson & Michaela Platzer (2006). American Made: The Impact of Immigrant Entrepreneurs and Professionals on
U.S. Competitiveness. National Venture Capital Association. p. 13.
 9

Google, which were founded or co-founded by Hungarian, French, and Russian immigrants respectively. 49

Information on privately owned venture-backed companies is less available, but some surveys indicate

that the rate is higher than the 25% for publicly traded companies.50

When individual immigrant groups are examined, the numbers become even more impressive.

1.8 million Indian-born individuals reside in the United States, according to the Census Bureau, as of

2011.51 They comprise 0.5% of the total US population, 52 yet they founded 5.5% of all venture-backed

public companies,53 eleven times disproportionate to their share of the population. Unfortunately for

the United States, per country limits prevent many Indian-born individuals, as well as from many other

countries from coming to America, any of whom could become the founder of a successful company.

Even more so, since immigrants without an employer or family sponsor cannot obtain a permanent

residence visa without great difficulty, which prohibits migrants who wish to come to America for the

sole purpose of starting a business.

These companies, in addition to affecting the everyday lives of Americans, fill a significant

portion of the economy. In 2005, these companies employed 220,000 in America (400,000 people

worldwide) and generated $130 billion in revenue. 54 Immigrants are not only enterprising, however, but

innovative. From 1990 to 2000, an increase in college graduate immigrants' share of the population of

1.3 percentage points, and a 0.07 point increase for post-graduate educated immigrants, can be linked to

a 12-21% increase in patents filed per capita. 55 Likewise, a 0.45 percentage point increase in the number

of immigrant scientists and engineers resulted in 13-32% rise in patenting per capita. 56 Others have also

found a strong, causal link between the increase in foreign students and degree holders, and increases in

patents filed.57 These benefits are hampered by restrictive immigration policies, since immigrants who

49 Ibid. p. 14.
50 Ibid. p. 17.
51 The Foreign Born from Asia: 2011 (2012). US Census Bureau. p. 2, table 2. This number includes temporary residents, so
the calculation derived from it will be an underestimate of the true number.
52 US population of 315,736,430, as of April 24, 2013 23:56 UTC, from US Census Bureau Population Clock.
53 Stuart Anderson & Michaela Platzer. p. 15. Author's calculation.
54 Ibid. p. 13.
55 Jennifer Hunt & Marjolaine Gauthier-Loiselle (2009). How Much Does Immigration Boost Innovation? Institute for the
Study of Labor (IZA), Bonn, Germany. p. 20.
56 Ibid.
57 Gnanaraj Chellaraj, Keith E. Maskus, and Aaditya Mattoo (2005). The Contribution of Skilled Immigration and International
 10

could potentially create new inventions and other intellectual property are limited in their ability to

come to the US.

The benefits of immigration are not just from high-skilled migrants, but from the low-skilled

migrants as well. Employers hire low-skilled immigrants for a reason. That reason may vary, but it

generally has to do with a shortage of workers, either due to the physical supply, or simply because the

company cannot afford a more attractive wage. Immigration allows the labor supply to match the labor

demand more easily than if the economy were closed. The only way to increase the supply of labor in a

closed country is natural population growth through reproduction. 58 If the economy is growing faster

than new native-born workers are entering the labor force, then immigration is the only way for

employers to find the necessary labor.59 This allows the labor market to better adjust to the economic

situation. If the demand for labor contracts, fewer individuals will choose to migrate, and some may

return to their original country.60 This makes the labor market incredibly efficient, and allows the

economy to grow faster than the birth rate would otherwise allow.

Coming back to the purpose of immigration policy—to facilitate the peaceful migration of

individuals to the United States, so that Americans and migrants can engage in mutually beneficial

associations to the fullest, while adequately protecting Americans from any harm such migration may

cause—a distinct conclusion can be drawn. Government restrictions of immigration are ineffective in

achieving this goal. They unnecessarily inhibit peaceful exchange between native-born Americans and

would-be foreign-born Americans, based on weak or unfounded beliefs about the effects of immigration.

The less immigration that is allowed to occur, the less the United States can benefit from it. This means

a less-robust and dynamic labor market, less innovation and entrepreneurship, and less of whatever

skills, talents, and value the potential immigrants might offer. The justifications for the current

restrictions do not withstand an empirical test, and the system should be reformed to bring United

States immigration policy in line with its proper function.

Graduate Students to U.S. Innovation. World Bank Policy Research Working Paper 3588. p. 24-25
58 Daniel T. Griswold (2002). Willing Workers. Center for Trade Policy Studies, Cato Institute, Trade Policy Analysis No. 19, p. 8.
59 Ibid.
60 Ibid.
 11

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