Immigration, Economic Freedom, and Ideology

Abstract

Concerns about immigration and its impact on the institutions of the countries that welcome immigrants are not new. In the United States, we find such concerns in the correspondences and writings of Benjamin Franklin, Thomas Jefferson, and Alexander Hamilton. Recently, in response to a literature questioning efficiency of current immigration restrictions, Borjas (2015) speculates that immigrants coming from countries with poor institutions could reduce substantially the institutional quality in the United States to a point where it could negate all economic gains associated with immigration in terms of GDP and income. In this paper, we review the results of our research attempting to measure the impact of immigrants on the American states’ institutions. We use Fraser Institute’s Economic Freedom of North America index and the NOMINATE measure of state government ideology and citizen ideology developed by Berry et al. (2010) as proxies for the quality of the economic institutions of the US states. Our results don’t confirm Borjas’s concerns. Most relationships, positive or negative, between foreign born and the measures of institutional quality we used are neither statistically significant nor economically significant.

Keywords: Economic freedom, Immigration, Institutions, State government

JEL Classification: F22, H70, O43