Immigration and Offshoring Aren't Bogeymen

by Pejman Yousefzadeh on October 31, 2010


So points out Tyler Cowen, in an excellent editorial:

We see the job-creating benefits of trade and immigration every day, even if we don’t always recognize them. As other papers by Professor [Giovani] Peri have shown, low-skilled immigrants usually fill gaps in American labor markets and generally enhance domestic business prospects rather than destroy jobs; this occurs because of an important phenomenon, the presence of what are known as “complementary” workers, namely those who add value to the work of others. An immigrant will often take a job as a construction worker, a drywall installer or a taxi driver, for example, while a native-born worker may end up being promoted to supervisor. And as immigrants succeed here, they help the United States develop strong business and social networks with the rest of the world, making it easier for us to do business with India, Brazil and most other countries, again creating more jobs.

For all the talk of the dangers of offshoring, there is a related trend that we might call in-shoring. Dell or Apple computers may be assembled overseas, for example, but those products aid many American businesses at home and allow them to expand here. A cheap call center in India can encourage a company to open up more branches to sell its products in the United States.

Those are further examples of how some laborers can complement others; it’s not all about one group of people taking jobs from another. Job creation and destruction are so intertwined that, over all, the authors find no statistically verifiable connection between offshoring and net creation of American jobs.

We’re all worried about unemployment, but the problem is usually rooted in macroeconomic conditions, not in immigration or offshoring. (According to a Pew study,the number of illegal immigrants from the Caribbean and Latin America fell 22 percent from 2007 to 2009; their departure has not had much effect on the weak United States job market.) Remember, too, that each immigrant consumes products sold here, therefore also helping to create jobs.

The whole thing is worth a read. The continued presence of nativism in our national discourse, is one of the chief threats to the formulation and implementation of sound economic and social policies. We clearly benefit from immigration, and offshoring has never been any threat whatsoever to employment, or to economic growth in general. And yet, the nativists–both on the Right, and on the Left–would have us believe that continued immigration, and offshoring policies are the reasons why we find ourselves in troubled economic times. This is a ridiculous myth, but it is one that has caught on with many.

Something needs to be done to battle back against this false narrative, and to set the story straight. Kudos to Professor Cowen for making an effort to introduce some facts into this debate, but more such efforts are needed. There need to be more academics who are willing to speak out against the propagation of pernicious myths concerning immigration and offshoring, and it would be kind of nice if politicians stopped appealing to latent xenophobia by lying about these issues. I have a lot of hope that we will get more truth-telling from the realm of academia, but regarding the politicians and their prospects of telling the truth, one despairs.

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