Welfare Implications of Stricter Immigration Policy

This AE could be used fairly early in a principles of microeconomics course once the basics of equilibrium price and quantity setting and welfare analysis have been established. For a more nuanced class discussion, it could also be used after coverage of elasticity by adding text to the question that has students consider elasticity of supply and demand in their analysis.

Because this exercise has students consider and model a number of different but interconnected markets, discussion within the groups is likely to be lengthy. As such, it is best suited for a single 80 minute class or over two separate periods of a 55 minute class, where the first class meeting is devoted to in-group discussion and deliberation and the second class meeting is devoted to open discussion. This activity is appropriate for both large and small class sizes because the open ended nature of the question and options ensures debate.

Given the sensitive nature of the topic, it is important to provide students with articles (to be read in advance) that present both sides of the debate fairly. Sample articles are presented below. I often have students either take a quiz on the articles or complete some reading questions as a means of ensuring that they have understood the merits of the debate from all perspectives. Finally, I typically remind students before we begin this exercise of the importance of respect and civility in the group and larger class discussions. In my experience, students come with strong opinions about immigration that are the product of their own immediate experience and the perspective of their family members. I am explicit in my opening remarks that one purpose of this activity is to consider and reflect upon the merits of perspectives other than one's own. The purpose of the activity is NOT to defend long held personal opinions, regardless of their merit.

Note that an alternative means of using this problem that may take slightly more time (e.g., two full 55 minute periods) involves having students rank the different groups from least to most negatively affected rather than choosing a single most affected category. This alternative has the benefit of considering more carefully and justifying the impacts of tighter immigration policy on all of the listed groups. If one were to adopt this alternative, the options would become:

Which of the following options best ranks who would be negatively affected by tighter immigration policy, from least to most negatively affected?

A. Consumers, business owners, native skilled workers, native unskilled workers

B. Business owners, native skilled workers, native unskilled workers, consumers

C. Native skilled workers, native unskilled workers, consumers, business owners

D. Native skilled workers, native unskilled workers, business owners, consumers

E. Other order (please provide your own order)

Overview

This activity uses the current immigration debate as a context in which to model supply and demand changes from an exogenous market shock, namely tighter immigration policy, and then identify the welfare implications of the new equilibria resulting from the shock across a range of interconnected markets including labor markets. Students are explicitly prompted to view immigrants as both consumers and producers (the latter, as employees or as entrepreneurs) and then consider the variety of market equilibria changes (P* and Q*) likely to result from tighter immigration regulations. Based upon this information, they then identify who from among the groups of native consumers, business owners, and native workers has the most to lose from tighter immigration policy.

This AE could be used fairly early in a principles of microeconomics course once the basics of equilibrium price and quantity setting and welfare analysis have been established. It could also be used after coverage of elasticity, by adding text to the question that has students consider elasticity of supply and demand in their analysis.

Expected Student Learning Outcomes

Students will be able to use the concepts of supply and demand and consumer and producer surplus to demonstrate a range of possible labor and product market outcomes resulting from reduced immigration.

Information Given to Students

Prefatory remarks:

The US policy on immigration has received a great deal of attention lately as President Trump has adopted a zero tolerance stance for those entering the country illegally and has sought to limit the number of legal immigrants as well. You have read and watched videos (first set of videos) that have given you a context for understanding the way in which the immigration debate is playing out in the media, but the media debate often overlooks economic reality (second set of readings and videos). In this class, you have been given tools that enable you to forecast likely outcomes from immigration that may not be considered immediately by the popular press or by politicians.

Which of the following groups would be most negatively affected by a reduction in the number of immigrants (legal or illegal) allowed into the country? You should be prepared to use supply and demand analysis of product and/or skilled and unskilled labor markets and an understanding of consumer and producer surplus to support your answer.

A. Consumers

B. Business owners

C. Native unskilled workers

D. Native skilled workers

Student Handout for Immigration Activity (Microsoft Word 2007 (.docx) 21kB Jul23 18)
Instructor Guide for Immigration (Microsoft Word 2007 (.docx) 23kB Jul23 18)

Prefatory remarks:

The US policy on immigration has received a great deal of attention lately as President Trump has adopted a zero tolerance stance for those entering the country illegally and has sought to limit the number of legal immigrants as well. You have read and watched videos (first set of videos) that have given you a context for understanding the way in which the immigration debate is playing out in the media, but the media debate often overlooks economic reality (second set of readings and videos). In this class, you have been given tools that enable you to forecast likely outcomes from immigration that may not be considered immediately by the popular press or by politicians.

Debriefing notes, including discussion questions:

In my experience, students focus their immigration perspective around the reductionist "loss of jobs and wages" narrative and do not immediately consider 1) immigrants as consumers who drive demand, 2) immigrants as entrepreneurs who spur innovation, 3) immigrants whose labor provides access to affordable goods and services and minimizes the need for outsourcing and/or mechanization, or 4) immigrants who provide labor that is complementary to skilled native labor.

Through class discussion of this AE, I hope to have students consider:

• Linkages between low wages in labor markets and the subsequent low prices in the goods and services markets associated with those labor markets.
• The complementarity of immigrant labor and native skilled labor.
• The role of immigrants as consumers in many markets (especially housing) whose presence can serve to revitalize communities and their economies.
• Growth in consumer and producer surplus that arises from demand or supply led expansion.
• (Possibly) the role of elasticity of labor demand in a range of labor markets

In order to draw this out, it is generally important to prompt/remind students to speak in specifics rather than in generalities. For example, you may need to remind the students to:

• Identify the specific market they are looking at (what is being exchanged, or what type of labor [skilled or unskilled] is being considered)
• Identify who are the consumers and producers in that market (especially in labor markets, where this becomes confused)
• Identify why and how the immigrant's impact that market
• Identify the ultimate effect of the immigrant impact on equilibrium price and quantity in that market.

Closing remarks:

The media focus on immigrants as competitors to native workers who drive up native unemployment rates presents one side of the immigration debate. However, this "loss of jobs and wages" narrative does not tell the whole story. It is important to consider not only what may be gained but also what is lost by limiting immigration.

In the final 10 minutes of class,

• First, determine which of the question options (A-D) you would select, given what you have learned. This need not be the same as your group choice or what you would have selected before the classroom discussion.
• Then, write one sentence justifying this choice ("I believe _______ would be most negatively affected by a reduction in immigration because...").
• Finally, provide a one sentence statement that summarizes what you feel that you learned through the group exercise and class debate.

Students are asked, at the end of this activity, to identify their own answer to the activity prompt. This need not be what they originally thought or what their team decided. Then they are asked to justify why they made the choice that they did. Finally, they are asked to provide a one sentence statement that summarizes what they learned through the group exercise and class debate. This material is collected from a sample of students and assessed against a rubric [TBD] to determine if the learning outcome has been met.

Contemporary Media (referenced as "first set of videos," above):

House Immigration Debate: State of Play (Phil Mattingly on CNN 6/25/18): This report and short video details the current immigration debate in Congress. https://www.cnn.com/2018/06/25/politics/house-immigration-state-of-play/index.html

Full Interview:Members of Congress Debate US Immigration Policy (Chuck Todd on Meet the Press 7/18/17): This video and transcript presents a debate between two sitting members of Congress on immigration reform.
https://www.nbcnews.com/meet-the-press/video/full-interview-members-of-congress-debate-u-s-immigration-policy-487027779759

Alternative Perspectives (referenced as "second set of readings and videos," above):

How to Make America Greater: More Immigration (Eduardo Porter in NY Times 2/7/17): This article identifies the positive impact of immigrants across a range of markets including the labor markets. https://www.nytimes.com/2017/02/07/business/economy/restricting-immigration-would-make-america-smaller-not-greater.html

What Does Immigration Actually Cost Us? (Thomas B. Edsall in NY Times 9/29/16): This article interprets pro- and anti-immigration perspectives through the lens of a 2016 National Academy of Sciences report. https://www.nytimes.com/2016/09/29/opinion/campaign-stops/what-does-immigration-actually-cost-us.html

Why Silicon Valley Wouldn't Work Without Immigrants (Farhad Manjoo in NY Times 2/8/17): This article describes the positive impact that immigrants have played in the success of Silicon Valley. https://www.nytimes.com/2017/02/08/technology/personaltech/why-silicon-valley-wouldnt-work-without-immigrants.html

The Economic Reality of Tough Immigration Laws (NPR staff on All Things Considered 10/8/11): This video provides commentary and interviews with individuals positively and negatively affected by immigration. It is a very good first introduction to the topic. https://www.npr.org/2011/10/08/141183030/can-the-u-s-economy-really-function-without-undocumented-workers)