Saturday, January 23, 2010

Immigration from Haiti is a terrible way to help

A former Bush official argues in the Washington Post that the US should increase immigration from Haiti, in order to help Haiti as immigrants send home remittances. I will try to demonstrate that this policy is extremely inefficient from the point of view of the U.S., and may be directly harmful from the point of view of Haiti.

1. According to the
World Bank Haiti in 2008 got $1.3 billion in remittances. Let's assume generously that 80% of remittances come from the U.S (the world bank's own estimate is slightly less than this). Based on the latest American Community Survey there are 786,000 people of Haitian origins in the U.S. This means that each Haitian on average sends home $1,300 per year. This figure will surely go up temporarily due to the earthquake, but presumably go back down again, as happened after the 1994 crisis.

The most reliable estimate of the fiscal impacts of immigration was done by the prestigious
National Research Council, NAC (the research arm of the National Academy of Sciences, NAS).

Low skilled immigrants earn less than the average, pay less in taxes and receive more in public services such as health care, public housing, income aid etc. The NAC estimate is that the total net cost of each low-skilled immigrant for the US. State is
$120,000 in 2009 dollars. (High skilled immigrants in contrast are a net fiscal benefit for the U.S).

These figures may underestimate the costs. Since this study was made the costs of welfare services to lower income people has further expanded, especially Medicaid and S-CHIP, and may go further yet..


Haitian immigrants should be expected to have on average even lower education levels than the NAC study assumed for the low-skilled. Haiti is the country in the western hemisphere with the lowest education level. According to the
U.N 40% of the adult population is illiterate. Even if all Haiti's highly educated population moves, any large scale migration will contain overwhelming low-skilled immigrants. The per capita income of Haitians already in the U.S is only half the American average, Haitians are not (let's hope not yet) an economically successful group.

Generously using the figure for the merely low educated (whereas many Haitian have no education),
we are trading of a $120,000 cost for the U.S taxpayer per Haitian immigrant for yearly remittances of $1,300 dollars.

It would be cheaper for the American taxpayer to directly increase aid to Haiti, even put $120 billion in a bank account and give the interest to Haiti, rather than to take in another million Haitian immigrants and bear the inescapable fiscal burden of a low-skilled group.


Even if we absurdly assume each Haitian lives forever and sends remittances home forever, discounted at a 5% interest rate $1,300 per year is worth only
$26,000 compared to a cost for the U.S taxpayer of $120,000.

Immigration is an extremely blunt instrument to help Haiti, one which entails several dollars in fiscal
costs for the American taxpayer for each dollar that actually reaches Haiti. The rational policy from the point of view of an America trying to help Haiti is aid, not immigration.

2. The immigration policy is questionable also from Haiti's point of view. First of all direct aid is more valuable than the same amount spent on net benefits for immigrants to obtain remittances (remember also that at some point the immigrant group inevitably loses interest in Haiti and stops sending money). Even one
million immigrants would only be 5 year of current population growth for Haiti, and would make only a small dent in their overpopulation.

In other more subtle ways emigration could be disastrous for Haiti. Even though most of the emigrants are low-skilled, historical experience indicates that the Haitian elite is more likely to emigrate. The highly educated Haitian emigrants are simply too few to make a noticeable positive impact on the economy of the U.S, but such a huge share of the of Haiti's tiny high-skilled group that they make a sizable negative impact on Haiti.


There are currently 75,000 Haitian immigrants in the U.S. with a college degrees. I would guess the proportions in Canada are similar. According to this
study that analyzes the Haiti Living Conditions Survey only 1.36% of adults in Haiti have Tertiary education. This means that that there are already more Haitians with college degrees in the US and Canada than there are left in Haiti!

Do we really believe that this exodus of the educated, of whom Haiti had so few to begin with, has benefited Haiti?
Should we encourage this further?

The extreme poverty of Haiti has been discussed recently. I don't have any empirical evidence for this but economic theory predicts that having half the educated population leave for the West may be a part of the puzzle for why Haiti remains so poor.


Proposing generous large scale immigration may make commentators feel good about themselves but careful analysis shows that it makes no sense, either from Americans' or Haiti's
point of view.

18 comments:

  1. Doesn't the first point only work if you don't count the actual aid to Haitians? Or rather, you count it on the cost side but not on the "this constitutes actual aid going to Haitians" side? Otherwise it looks like the US spends $120K to get $120K plus $1300 per year of aid -- certainly a better return than simply writing a check.

    Doesn't the second point (taking college educated people away from Haiti is bad for Haiti [except for the part of Haiti that is voluntarily emigrating, I presume you mean]) sort of undermine the first one? If educated Haitians leaving Haiti is bad for those who remain behind, doesn't that imply some benefit for the place where they're going? Voluntary transactions are in general good for both sides. You can make an argument that it's zero sum, but when we think of negative sum policies, the best examples are cases where stuff gets blown up (wars) or voluntary transactions are prohibited (e.g., trade barriers).

    To me, it seems like both of your points hinge pretty critically upon not counting the benefits of immigration to the people doing the migrating.

    ReplyDelete
  2. "doesn't that imply some benefit for the place where they're going"

    No, it does not. Educated Haitians may well be skilled enough to aid Haiti, but not skilled enough to earn above average wages in the United States.

    "Voluntary transactions" have very little to do with this, since we are discussing fiscal impacts to the United States, effects which work through the American welfare state.

    You are right that I did not include the benefit of those who migrate, no one denies that they are better off in America, the discussion is if immigration is an efficient way of helping millions of Haitians that are left behind.

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  3. You should put "not yet" in quotation marks, to clarify. Otherwise a possible (though not very plausible) interpretation is that you are hoping they aren't yet economically successful, as if now was a bad time for that.

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  4. Surely you are not claiming that an immigrant needs to increase average wages to make the host country better off (or at least not worse off)!

    The discussion is if immigration is an efficient way of helping millions of Haitians that are left behind.

    I thought the discussion was what is the most efficient way to help Haitians. If every Haitian but one were to leave and in doing so vastly increased their quality of life, and the single person who stayed was indifferent before and after, would you say the goal had not been accomplished? Of course not. You might as well say that adopting starving orphans is a completely ineffective way to help orphans, since after all, all the benefits go to someone who, ex post, is no longer an orphan!

    ReplyDelete
  5. TGGP:

    I mean the opposite, let's hope it is a question of time before they become successful.

    Ryan:

    As a simple rule of thumb, in a welfare state you need to earn above average to be a benefit. If you earn below average you don't pay enough taxes to cover your costs.

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  6. First, it seems like your complaint here is about the welfare state, not about immigration per se (i.e., your complaint should be "we should allow freer migration without extending the welfare system to new people"). Second, you can't simultaneously complain that the welfare state spends too much on immigrants and also that we don't give enough to non-natives. This seems to be the core of your criticism.

    I think that rule of thumb might work if we're just talking about the state's fiscal situation.

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  7. Ryan:

    The welfare state is a given. Nor will it ever be allocated based on ethnicity. You cannot assume reality away. If at some point the U.S abolishes the welfare state we can have a new discussion.

    "you can't simultaneously complain that the welfare state spends too much on immigrants and also that we don't give enough to non-natives."

    Of course I can. 1 billion in for example Medicaid and public housing for low-income immigrants in California is incomparably less efficient than what 1 billion can buy in medicines, food and clean water in Haiti.

    Low-skill Immigration is an extraordinary inefficient source of aid. Not to mention badly distributed (a few people get tens of thousands of dollars, millions get almost nothing).

    ReplyDelete
  8. Why do you even consider about what happensto Haiti as a nation. Surely we are interested in how Haitians do, not how Haiti does?

    Do you have any proof that the immigration of skilled people to the US is bad for Haitians (of which these skilled people are a part of)?

    ReplyDelete
  9. Tino:"As a simple rule of thumb, in a welfare state you need to earn above average to be a benefit. If you earn below average you don't pay enough taxes to cover your costs."

    Shouldn't this read that in a welfare state you need to earn above average so that you are a benefit to the welfare state, not to the society? The welfare state is not equal to the society.

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  10. Tino,
    We weren't talking about whether immigration of Mexicans to California uses up money that could be spent on Haitians. We were talking about whether immigration of Haitians does. I'm sorry, but that's just bad accounting -- yes, it does use up a billion dollars, but only by actually spending a billion dollars on Haitians.

    You can complain that there might be a better way to spend it, but you very clearly cannot (as is the centerpiece of half of your post) say that an immigrant from Haiti costs $100K in welfare payments over the course of a lifetime but not recognize that such payments must constitute money spent on Haitians.

    ReplyDelete
  11. Ryan,
    You are either extraordinarily obtuse or are trolling. 'You' are the first person to mention Mexicans in this discussion, not Tino.

    As we have clearly seen over the past few weeks, Haiti exists in a Malthusian state, where population growth matches the ability of the domestic economy + aid to provide food. So, unless you forcibly evacuate 75%+ of the entire country (can you imagine the cries of 'imperialism' this would engender from Chavez?), Haiti will return, within a matter of a few decades, to the exact same state: a maxed-out, starving population of the same magnitude. Thus, by helping these million Haitians to emigrate, you've allowed the Malthusian Haiti to produce a million more to replace them that otherwise would never have lived to suffer. Thus, it actually is a sort of negative some game. We are creating as much suffering as we alleviate. Are you seriously advocating that we take in 75+% of the population of Haiti? If so, why not extend the same offer to Zimbabwe, Liberia, and so on?

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  12. rosserw,
    I don't think you've really understood the string. The point of referencing Mexicans wasn't qua Mexicans but as an example. Please try to be either a little more careful or a little more polite.

    Nor do I think you're reading Malthus correctly either, or that it's reasonable to infer that a country is in a permanent Malthusian state when it only recently was experiencing economic growth (no fair claiming you didn't say it was permanent, since your argument makes no sense if you think it's temporary). Supposing you were correct, then your complaint should be against all aid per se, not just migration.

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  13. Tino,

    Just in case you didn't see this.

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    ReplyDelete
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  16. Your argument has so many fallacies and is so pathetic that it does not merit a suitable response. This comment is coming from a Haitian immigrant (came here at 5) who is pursuing a doctoral degree. Many Haitian immigrants talk about how many Americans are born with opportunity and do nothing with it. Stop complaining about folks taking American jobs. These jobs were around before we got here. Why didn’t the Americans scoop these jobs up? Lastly, literacy does not automatically equate success or make resiliency (another fallacy).

    ReplyDelete
    Replies
    1. "Stop complaining about folks taking American jobs. These jobs were around before we got here. Why didn’t the Americans scoop these jobs up?"

      Can you pin point which section of Tino's article you're referring to ?

      Delete

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