Open thread Feb. 17, 2017 Dan Crawford | February 17, 2017 8:29 am Tags: open thread Comments (1) | Digg Facebook Twitter |
I anxiously await Jared Bernstein’s analysis of this:
“First, Eduardo Porter of the NYT wrote a controversial piece about the negative impacts of immigration (not Porter’s view–he’s reporting, not endorsing). I’ll have a lot more to say about the research in the piece, but to put it mildly, I’m unconvinced.
The piece reports on research suggesting the increase in low-skill immigration has put downward pressure on productivity growth, by lowering the skill level of the workforce. This immediately triggered my BS meter, as no one really knows what makes productivity growth go up and down. Given the sharp slowdown in this key variable in recent years–which really is a problem–our ignorance enables people to plug in the thing they don’t like as the cause.
Neither does the pattern of immigrant flows make much sense in this regard, at least from 40,000 feet up. As immigrant flows from the south (of persons with relatively low education levels) accelerated in the 1990s, so did productivity growth. As southern flows sharply decelerated, productivity growth slowed as well.
Where immigration increasingly matters in macro terms is around issues of labor supply. Our aging demographics is one reason for slower labor force growth, which in turn is a main factor in slower output growth. Diminished immigration plays a role in that, as this research note I got just this AM from the Goldman Sachs econ team (no link) shows.
Reduced immigration would result in slower labor force growth and therefore slower growth in potential GDP—the economy’s “speed limit”. In addition, academic studies suggest there could be negative knock-on effects on productivity growth. As a result, we see immigration restrictions as an important source of downside risk to our 1.75% estimate of potential growth…
Given that my BS meter is symmetrical, I’m skeptical of this upside productivity claim as well, but the labor-force-growth part of this sounds right.
The other really troublesome bit of Porter’s reporting comes from this bit of what seemed much more like racism than economics to me and to Ben Spielberg, who tweeted:
‘Let’s be clear: anyone endorsing this particular “proposition” is peddling racism, not economics’
Like I said, more analysis to come on this. I fully admit a BS meter doesn’t take the place of doing the work. But I also submit that my BS meter rarely fails me.”