Economic of Immigration - Research Paper Example

Gordon (2005) examined the economic aspects of welfare benefits associated with legal immigration that enable us to know the parties who gain or lose. Due to the adverse effects of immigration like depression of wages for low skilled workers and imposition of strains on economies there have been limitations to the number of immigrants allowed to cross boarders. Mexican government for example established the general origins proportion system which is an allotment scheme that awarded travel VISAs on basis of national origin and economic contribution. This paper will examine economic of immigration in respect to United States and Mexico. Education levels among the citizens in the two neighboring countries are quite distinct in that the US government appreciates the value of technical training and therefore puts a great deal more emphasis on educating its citizens. Acquisition of technical knowledge imparts the adequate skills to the masses in the USA while low level of education and hence lack of high-end skills for immigrants from Mexico enables Americans to keep top level jobs. Implementation of different trade policies and immigration programs between the US and the Mexican government led to greater influx of immigrants into the USA. This was due to availability of low income opportunities in the USA that the lowly skilled immigrants from Mexico took up in order to sustain themselves. Therefore, the failures of such programs for example Immigration Reform and Control Act (IRCA) should be heeded in conniving proper frameworks that allow for the dynamic participation of legal immigrant workers in the US economy failure to which there would be a larger population of illegitimate immigration with adverse effects to the economy. The economics of immigration in Mexico is of interest because Mexico borders an economic superpower-USA. This it means that immigrants from Mexico affect many different sectors of a world class economy. Immigration has social, demographic, economic effects some of which are good while others detrimental. Most legal immigrants are not subject to a great deal of public scrutiny and suspicion because of the belief that they are rightfully there while the illegal ones are subject to both police and public scrutiny because of the belief that they affect the economy and society negatively. In order to enhance economic welfare the US government tries to reduce the number of illegal immigrants from Mexico by converting them to legal immigrants or by not allowing them near the border. This is because even though they contribute by purchasing goods and services, paying of taxes and provision of labor, they incur are maintained at huge costs like seeking healthcare and education thereby negatively affecting the economy. In Mexico the immigration policy requires that immigration of individuals with skills that are limited in supply and those whose tax contributions and net cost of public services received are large should be well monitored. It implies that those who contribute positively to economic growth are the ones who should be granted the legal admission. Also admission of immigrants in limited occupations leads to increased aggregate income as a result of high labor demand and mobility across borders e.g. for international trade. Cortes (2005) states that continuing high levels of immigration weaken the enforcement of labor market regulations by the USA as a result of the influx of Mexican immigrants. This is because the inflows of aliens relax the commitment of employers in USA and create a population of workers who are not adequately equipped with the necessary skills. This is as a result of lower education levels thereby earning less as compared to the highly educated and well paid Americans resulting into lower tax payments and thus increased poverty levels. The Mexican Immigrants Act offers subsidy to those businesses that employ lowly skilled workers since they contribute a small portion of the aggregate income. Wayne (2001) states that illegal immigrants have cost billions of tax funded dollars in terms of medical services and dozens of hospitals have as a result closed down due to bankruptcy and tough rules of the federally mandated programs. It results into a net drain in the economy because the cost of maintaining immigrants is much more than the benefits. The corporate firms reap huge benefits from cheap labor while the tax payers remit all the service costs including infrastructural, educational and health costs. For example, the annual cost of immigration has been estimated to be between $65 and $90 and the annual fiscal drain to be between $166 and $226 (all per native household). In addition, immigrants living in the US send home more than $8 billion thus resulting into lack of enough money for circulation as a result of transfer of wealth beyond borders. The failure of North American Free Trade Agreement (NAFTA); which was put in place to do among other things control the levels of immigration between Mexico and America led to the influx of Mexicans to the USA. The importation of highly subsidized USA corn and other agri-business products forced farmers in Mexico to quit agriculture thus making them poorer. They therefore moved across borders to the USA to seek off-farm employment in order to sustain their families back home. Also NAFTA exposed Mexico’s agricultural sector to the forces of globalization and competition thereby most farmers never benefited from greater market access. Therefore, if the technical inefficiencies of NAFTA are done away with, there will be improved productivity and high living standards for many Mexicans in the agricultural sector. Some of the inefficiencies that need to be done away with include prevalence of small scale producers, lack of infrastructure and above all inadequate credit supply. As a result of the negative economic impact of immigration, both the USA and the Mexican governments should implement tougher policies. The Mexican government for example should discourage highly subsidized imports from the USA. This can be achieved if this government invests a great deal in both agricultural and education sectors. Its citizens can therefore be well equipped with the necessary skills so that they can invest in a greater degree of farming as well as industrialization and hence be self sufficient. Better still the governments should try to avoid complications that would change the situation from bad to worse. For example, the US government takes long to provide immigrants with a path to citizenship. Immigration affects the financial status of countries neighboring each other for example there is rather more rapid transfer of funds between countries. Mexico’s per capita income is almost a third that of the USA. Proper implementation of NAFTA could also lead to expansion of competition in sea ports, railroads, telecommunications, electricity distribution and natural gas production and airports. As a result of increased infrastructural advancements in Mexico its share of imports from the US and Canada has reduced and this means that it has improved in regards to being self-sufficient. The US government is restricting Mexicans from crossing over from Mexico because of the negative impacts on its economy for example the average wage decline. Immigrants are known to utilize more of the services than they pay in taxes. They also bring in drugs that affect many people’s lives mostly those in the urban areas making them vulnerable to drug-abuse related sicknesses. Drug addicts usually spend little time in income generating activities. As a result, the Immigration Reform and Control Act (IRCA) was put in place and the USA congress voted to increase enforcement of immigration related programs. This discourages the creation of a system for continued legal inflow of low skilled workers. Works Cited Wayne A. “Death at the Border: Efficacy and Unintended Consequences of U.S. Immigration Control Policy.” Population and Development Review, Vol. 27, No. 4 (December 2001), 661–85. Cortes, Patricia. “The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data.” Mimeo, MIT, November 2005. Hanson, Gordon H. Why Does Immigration Divide America? Public Finance and Political Opposition to Open Borders. Washington, DC: Institute for International Economics, 2005. Hanson, Gordon H. “Illegal Migration from Mexico to the United States.” Journal of Economic Literature, Vol. 44, No. 4 (December 2006), 869–924. Read More