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A Proposal for Immigration Policy - Borjas Chapter 11
Midterm #2
Undergraduate 4

Additional Economics Flashcards




What is the main question made by the author in this reading?

What type of immgration policy should the US adopt in order to maximize the economic well-being of natives?

- What type of immigrant should be admitted?

- How many should be admitted?

What are the 7 immigration trends and economic facts that one should consider before answering that main question?

1. The lower skills immigrant waves


2. the lower earning of immigrants upon arrival and during much of their migration spell


3. The changing national mix of immigrants


4. The negative impacts of low-skilled immigrants on low-skilled natives

5. The high rates of welfare use.

6. The fact that the IS is not large –the largest impact of immigration refers to its impact on wealth/income redistribution.

7. The negative impact that enclaves can have on the assimilation of immigrants


What type of immigration should we favor in order to maximize natives’ well-being according to the author?  Why?  Explain.


High-skilled immigration should be favored.  It maximizes:

1.Efficiency, i.e. Maximize per capita income high-skilled immigrants have positive production externalities on natives, e.g. learning of other skills.
2.Equity, i.e. Reducing income/wealth inequality high-skilled immigrants pay a higher share of taxes, lowering the burden on low-skilled natives. 
oHigh-skilled natives benefit from low-skilled immigration,
oWhereas low-skilled natives benefit from high-skilled immigration.
How can we ensure that we receive that type of immigrants?
The “point system”
Cite the cons and pros of a point system discussed in the reading
Bureaucrats determine who enters based on some arbitrary rules.

Reduces the predominance of immigrants from developing nations.

It can negatively impact industries dependent on low-skilled immigrant labor, e.g. agriculture.
It would increase high-skilled immigration.
It could be adapted to address:
- Economic conditions, industry needs, or lack of immigrant diversity by
limiting the no. of immigrants that can enter from any given nation.  
Why is it hard to decide how many immigrants should be admitted?  What is the balance problem/concern that Borjas discusses
§Need to balance:
Positive impacts via production externalities and income redistribution, with
Negative impact on high-skilled natives’ wages and education.

 Which types of entry should we rethink according to Borjas?

1.Illegal Immigrants:
oLarge incentives to come to the U.S.:
Large earnings differentials with their countries of origin.
A black market that facilitates their entry.
American employers who demand their labor.
Poor border enforcement during many years.

oTo reduce them, they should:
Increase penalties on employers who knowingly hire them.
Increase the penalties on illegal immigrants. 
Create a national identification system.
oHigh rates of welfare use and dependence.

oWho should be considered a refugee?
Based on politics, economic need, persecution due to race, religion, nationality?  E.g. Cuba vs. Haiti.
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