Reihan: Shifting the Immigration Equation

The great egalitarian objection to mass immigration, and more specifically the low-skill influx, is that it increases wage dispersion. How? There are a lot of ways in which low-skill and high-skill workers are complementary: a low-skill writer like yours truly can delight and entertain high-skill mathematicians, giving them the inner strength they need to finish proving a particularly vexing theorem. But if there are only a handful of low-skill writers, our services will soon become quite dear, and those high-skill mathematicians will be weeping, unproductively, over their keyboards. That's when a boatload of Indian writers suddenly show up, wittier and far faster than me, to drive down the price of my services. Suddenly theorems are being proved left and right! So the mathematicians see their pay packets skyrocket!

But wait: what if we also brought in a ton of Indian mathematicians? That would subject high-skill natives to the same pressures faced by low-skill natives. And it would, to my mind, almost certainly be a good thing. As this very erudite and very mysterious Free Exchange blogger points out, Alan Greenspan agrees. Good for him!

Taking this to the real world for a moment, there is an added advantage: agglomeration economies are a powerful thing, and concentrating the best minds in the world in a particular region almost certainly accelerates the pace of innovation. As for the "brain drain" from the poor world to the rich world, the "brain drain" is increasingly the "brain circulation," with valuable human capital flowing back, sparking new agglomerations and new innovations.