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Keeping Immigrants Out of the US May Be A Trillion-Dollar Mistake (Quartz)

May 23, 2019

From the article:

"There’s a mystery at the heart of the current global economy.

'A guy hammering a nail into a board, literally doing the same physical act, the same task, the same occupation to build the same structure, is worth in economic terms 10 times as much in one country than in another country,' says Michael Clemens, a senior fellow at the Center for Global Development.

Clemens and two co-authors call this a 'place premium'—a disparity that can be attributed simply to working in the United States and nothing else. Their experiment suggests that America’s strenuous efforts to limit immigration could be causing trillions of dollars in lost earnings.

Clemens, along with Lant Pritchett at Oxford University and Claudio Montenegro at the World Bank, have spent a dozen years assembling a database to compare workers in 42 developing countries, migrants from those countries to the United States, and American workers themselves, in a paper published this month in the Review of Economics and Statistics.

One quotable figure: They found that immigrants from the average country in their sample earned a 'place premium' of more than four times the wages of their counterparts at home, equal to an increase of $13,600 or more in purchasing-power adjusted dollars.

If it makes sense that workers in the United States are paid better than those in poorer countries, well, 'it’s one of those strange papers,' Clemens admits. 'That’s the most obvious fact in the world, why would you spend years and years documenting it?'

There are several reasons. One is to understand the global cost of decisions to bar migrants from advanced economies, a policy trend championed in Donald Trump’s White House and by nationalist movements around the world. Another is to get at the basic question of economics—what makes a nation wealthy?

The paper, Clemens says, refutes the idea that poorer countries suffer from a deficit in human capital—'that there is some inherent cultural or genetic component to those differences.'"

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Director of Migration, Displacement, and Humanitarian Policy and Senior Fellow