Want to double living standards for the global poor? Simple — just repeal all immigration laws. In every single country. Right now.
Economists will tell you that a major impediment to global economic growth is “low labor mobility” — in other words, the fact that it’s really hard to move between countries, largely due to restrictive immigration laws. In the absence of such laws, the theory goes, people would go to wherever the best work opportunities exist, leading to a more efficient matching of workers and firms, and a big increase in those workers’ living standards.
But how big would that increase be? University of Wisconsin’s John Keenan tries to quantify it in a new paper. He builds a model that assumes that in the absence of restrictions, people will try to maximize income while still feeling some attachment to their native countries, and so some but not all workers will move to where their wages will be highest. He estimates that fully eliminating immigration restrictions worldwide would effectively double the world’s labor supply. This, unsurprisingly, leads to enormous economic growth, such that typical workers in developing countries would see annual wages more than double, from an average of $8,903 today to $19,272 with open borders. That is, the typical worker in the third world would end up making about double the individual poverty line in the United States today. Certain countries have even more astounding results; the typical Nigerian would see gains of $21,940.
But what about workers in rich countries? Wouldn’t their wages fall due to the influx of migrants? In the short-term, yes. Keenan estimates that real wages in rich countries would fall by about 20 percent if everyone moved immediately. But once capital adjusts between countries to account for the new situation, the wage decline goes away and workers in rich countries do just as well as they were doing before. This makes intuitive sense, in that native workers have a massive new population to whom to sell goods and services once migrants from poor countries arrive.
Keenan’s findings are in line with previous estimates. Harvard’s Lant Prichett found that removing immigration barriers would double world GDP, an increase of $65 trillion. Let me repeat — $65 trillion. Of course, that isn’t the only consideration here, but the economic evidence weighs heavily in favor of much more liberal immigration regimes.