How much is an immigrant's life worth, exactly?

How the dismal science applies to your life.
June 12 2007 2:38 PM

One-Fifth of an American

How much is an immigrant's life worth, exactly?

People waiting at the border. Click image to expand.
People wait in line to cross the U.S.-Mexico border into America

How do you justify a border fence? Why is it OK to consign millions of unskilled Mexicans to lives of desperate poverty? I'm told it's because Americans should care more about their countrymen than about a bunch of foreigners. OK, but how much more? Surely there's some limit; virtually nobody thinks, for example, that Americans should be allowed to hunt Mexicans for sport. So, exactly how much are you willing to hurt a foreigner to help an American? Is a foreigner's well-being worth three-quarters as much as an American's, or half as much, or one-quarter as much?

(I'm grateful to the anonymous proprietor of the YouNotSneaky blog for raising this question, though my analysis is not the same as his.)

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Let's do the math: When we admit an unskilled Mexican immigrant, his wage typically rises from about $2 an hour to $9 an hour—call it a $7-per-hour gain. To justify keeping him out, we'll have to weigh that gain against the harm he does to Americans.

Right away, our calculation runs into a problem, because on balance immigrants don't harm Americans; virtually all economists agree that immigration makes us richer, not poorer. Every immigrant is a potential trading partner, a potential employee, and a potential customer. He bids down wages, but that's a two-edged sword: It's bad for his fellow workers, but it's good for employers and good for consumers.

In the very short run, most of the gains go to employers, and a substantial fraction of those gains probably go to people named Walton. In the somewhat longer run, all that excess profit gets competed away and shows up in the form of lower prices for consumer goods. At that point, even the workers who took pay cuts can come out ahead: If your wage falls by 10 percent while prices fall by 20 percent, you're a winner.

But let's ignore all that. In order to make the best possible anti-immigrant case, let's ignore all the benefits of immigration and focus strictly on the costs to American workers, i.e., falling wages.

Since we're talking about a single immigrant, wages fall infinitesimally—but you've got to multiply that infinitesimal drop by millions of American workers. A high- end estimate is that 100 million Americans experience wage drops of about $.00000003 per hour. Multiply that out and you have a $3 per hour loss. (Note to econ-geeks: I assumed a wage rate of $10 an hour and an elasticity of wages with respect to labor of 0.3.) This estimate comes from the labor-economics literature, and it really applies only in the very short run, because in the long run, falling wages attract new businesses, which partly bid wages right back up again. But let's ignore all that, too, and assume a worst-case scenario, where the short-run effects are somehow never ameliorated.

Bottom line: When the immigrant crosses the border, Americans lose $3, and the immigrant gains $7. To oppose that, you'd have to count an immigrant as less than three-sevenths of an American.

But wait! It's worse than that. The $7 gain went to a $2-an-hour immigrant. The $3 loss came from $10-an-hour Americans. And we usually think of a dollar as more valuable in the hands of the desperately poor. The most conservative standard assumption is that the value of an extra dollar is inversely proportional to your income, so an extra dollar is worth five times as much to a $2-an-hour Mexican as it is to a $10-an-hour American. The immigrant's second dollar is worth a little less, and the third a little less than that.

Accounting for all that, it turns out that the immigrant's $7 gain is worth about five times the American's $3 loss. In other words, to justify keeping the immigrant out, you'd have to say he's worth less than one-fifth of an American citizen.

By contrast, there was a time when the U.S. Constitution counted a black slave as three-fifths of a full-fledged citizen. Alabama Gov. Bob Riley has recently apologized for the ravages of slavery. How long till politicians apologize for the ravages of our restrictive immigration policies?

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