Evan Soltas: In 2006, you and Kirk Johnson wrote a report for Heritage and found substantial long-run economic benefits to immigration, as well as real fiscal gains for the government. Where did those come from?Tim Kane: From a fiscal perspective, the studies we have seen over the years point to real gains. The demographics of a low birth rate severely exacerbate the fiscal situation of programs like Social Security. It’s a problem we see in European countries. But in the U.S., immigration allows us not to face the same burden. That keeps entitlement programs healthier than they would otherwise would be — something that is really desirable given the other trouble facing these programs.But the big gains come on the economic side. Having more people in the labor force brings more economic activity, at the basic level, but it also enhances productivity and specialization. This is where the benefits become really significant. For example, imagine having to tie down Einstein with some work in whatever low-skilled function. Is having more low-skilled immigrants going to hurt Einstein? Is it going to hurt economic output? There’s a real case for more low-skilled immigration, not just high-skilled, that comes from this perspective on the division of labor. Increased specialization generates higher productivity levels across the board. I think it’s a mistake to differentiate between skill levels — to say we’ll let high-skilled immigrants in, but not low-skilled ones.There’s another big source of gains not in the Heritage report, but which I’ve found in my more recent work. What we somehow forget, as a nation of immigrants, is that immigrants tend to be far more entrepreneurial than natives. . .Soltas: What are the major differences in methodology between your 2006 report and Heritage’s most recent, done by Robert Rector and Jason Richwine?Kane: The biggest problem that I had with the Rector-Richwine study is that it didn’t do a very good comparison of the status quo to the prospective changes in an actual reform. It made some incredible assumptions to ratchet up the cost. One example was how they answer the question, “How much health care do immigrants use?” The Heritage assumption was zero under the current policy. It’s only in a later footnote that they point out that this assumption is wrong, and that this really skews their cost analysis.Another example is that the report assumes that under the current system, immigrants return to their home country at age 55, so they don’t put any costs on the government, but that they will stay en masse if “amnesty,” as Heritage calls it, passes.The second issue here is that this report abandons a lot of the normal ways conservatives analyze policy. Most important, that’s a dynamic evaluation of economic benefits. The Heritage report is not consistent with that conservative approach. It’s an isolationist report written from a static approach.Soltas: How should we understand that inconsistency of Heritage using a dynamic approach for ideas like tax reform and then not applying it to immigration reform?Kane: I think what gets lost in this discussion is that Heritage is a big-tent organization. For example, you have the Center for Data Analysis inside the Institution itself, where they specialize in just this sort of thing. This report wasn’t written by CDA. I think it’s a credit to Heritage that they allow for a diversity of voices, and at the end of the day, it’s one bad report from an organization that produces a lot of research. I don’t think this should be seen as a black eye for the whole organization.
July 2, 2013 at 11:45 AM EDT