One of the most sophisticated arguments against liberalizing immigration is that it would hurt economic growth in developing countries. If skilled, intelligent, or ambitious people leave their home countries and come to the United States then that will deprive their local economies of their skill. This argument is frequently called the “brain drain,” and it ignores some basic economics.
Allowing Skills to Flow to Where They’re Most Productive Benefits Everyone
The term “brain drain” was invented by Europeans who were concerned about scientists leaving their continent and settling in Canada and the United States. Economist Michael Clemens points out that “skills-flow” is a more accurate term to describe this phenomenon than the pejorative “brain drain.” These workers move to areas of the world that offer them better opportunities, and as a result, a greater productive capacity.
Skilled foreigners want to work in the United States for many reasons:
- Wages are higher here because workers are much more productive in the United States than in developing nations. American domestic policies are relatively better than most other countries in the world.
- Private property is more secure and contract rights are better enforced. The buildup of capital over generations has allowed more and better machines to work with people, making them more productive still.
- Security allows people to make longer term investments in themselves and their businesses.
Over time this all leads to more economic growth. Many of the discoveries, innovations, and businesses started by skilled immigrants end up benefitting the citizens of poor nations.
Everyone is Harmed by Condemning High Skills to Poor Countries
Those who are worried about the skills flow agree that the individual worker will be richer but that his fellow countrymen will be slightly poorer as a result of his emigration. But while forcing educated and skilled people to stay in poor countries might have some small positive spillover,there are many countervailing forces that could negate those benefits or actually turn them into net costs.
Many citizens of the developing world get an education because it gives them the ability to work overseas. Removing the ability to work in a developed country simultaneously removes the incentive to earn an education for many. Although some of those educated nurses will stay in their home countries, many fewer of them would be educated without the pull of higher foreign wages.
Smarter and more educated would-be emigrants would likely be better at obtaining special favors from government. Thus, rent-seeking could increase as a result of emigration controls, which would probably hurt growth.
Focusing on drain from the developing nation misses half the picture. For example, teacher quality has declined in the United States as women have more employment opportunities. When women were restricted to work in a few sectors of the economy by social norms or government policies, the very brightest among them tended to be school teachers. No doubt the high quality of educational instruction by these intelligent women helped to boost the quality of education for students. But it did so at an enormous cost – preventing them from seeking more highly paid careers in more lucrative industries.
No serious person could claim that the benefits of American women seeking their careers elsewhere are outweighed by the slight decrease in educational quality when many of the brightest ones left.
Human Capital is the Ultimate Resource
Skilled immigrants who want to work in this better economic environment are not just transferring their output from poor nations to wealthy nations – they are increasing their output dramatically. Furthermore, the best way to deal with poverty left behind in the developing world is to let many more of them immigrate to developed nations.
Additionally, emigrants from the developing world sent back $431.6 billion in remittances in 2015. Developing countries are sending some of their abundant supply of labor to rich nations and then they send vast sums of money back home. In many countries, remittances are greater than the total amount of foreign direct investment or tourism revenue. In fact, they are equal to about 8 percent of the gross domestic products of poor nations. Remittances, in turn, increase human capital formation by boosting the number of people in poor nations who attend school.
Emigration restrictions are guaranteed to injure the would-be emigrants in exchange for a very small positive effect on those who would not emigrate – if there is a positive effect at all. It’s a foolish policy that does more harm to more people than just letting skilled foreigners seek jobs where they are most highly valued.
Allowing skilled foreigners to move where their skills are most in demand at least pulls them out of relative poverty and increases that changes that future innovations and capital will flow toward poor nations that need them the most.