Welcoming the new boy at school

by Harry on December 21, 2016

When I was 13 a new boy called Matthew Arnold arrived at my secondary school. It wasn’t the beginning of the year, just some random autumn day — not even a Monday. 15 minutes before the bell went for school Ms. Bolton brought him to me through the drizzle, told me his name, and told me to look after him and introduce him to people. He wasn’t in my class, and Ms. Bolton had never taught me, so God knows why she asked me to do it — I was not the friendliest, or the most socially adept, kid, by a long shot. He was taller than me, gangly, with big NHS specs, and more socially awkward. Being the new kid could be a cruel experience, as I later discovered myself.

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The economics of open borders

by John Quiggin on December 21, 2016

A colleague recently sent me a paper on the economics of open borders, by John Kennan, which I hadn’t known of before, though it came out in 2013.
Kennan’s conclusion is striking

Liberal immigration policies are politically unpopular. To a large extent, this is because the beneficiaries of these policies are not allowed to vote. It is also true, however, that the enormous benefits associated with open borders have not received much attention in the economics literature.20 Economists are generally enthusiastic about free trade. But if free movement of goods is important, then surely free movement of people is even more important.
One conclusion of this paper is that open borders could yield huge welfare gains: more than $10,000 a year for a randomly selected worker from a less-developed country (including non-migrants). Another is that these gains are associated with a relatively small reduction in the real wage in developed countries, and even this effect disappears as the capital–labor ratio adjusts over time; indeed if immigration restrictions are relaxed gradually, allowing time for investment in physical capital to keep pace, there is no implied reduction in real wages.

So, is Kennan right about the benefits of open borders? And if so, is there a way of transferring some of those benefits to already-resident wage earners who would otherwise lose, or at least not gain, from expanded migration?
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