What are the gains to illegal immigration?
Not the gains the U.S., I wish to know how much the migrants are better off.
Typically a rural Mexican goes from earning two dollars a day to ten dollars an hour. Over a year’s time this could amount to a difference of about $25,000. Multiplied by many millions of immigrants, this is a considerable sum.
But other economic arguments point to lower numbers. First, it costs about $1500 to cross the border illegally. (N.B.: That’s not $1500 a year, that is $1500 for the entire crossing, which may keep you in the U.S. for years.) After all, life in Mexico is more fun and keeps you closer to your family. The illegal migrants I have known have mixed feelings about life in the U.S. and many have returned to Mexico.
So is that the value of a marginal crossing?
The $1500 figure does not measure the option value of crossing. You might not pay $1500 to cross now, but the ability to cross in general is worth more. But even an option value of 10x use value only gets us up to $15,000.
Consider another argument. Transactions costs aside, in equilibrium the average returns to being a rural Mexican in Mexico should equal the average returns to being a rural Mexican illegally in Texas. If not, migration will bring about equalization. Those average returns cannot differ by more than $1500 per person, no?
A further question is where — rural Mexico or El Paso — you find greater economic congestion. To me the answer is not obvious, but this could lower the social value of illegal Mexicans in Texas. If another Mexican crosses, the greatest costs are imposed on the Mexicans already present in the U.S..
Could it be that the greatest gains are reaped by those back home who get the remittances?
How about infra-marginal values? Some pay $1500 to cross but value the experience at much more. Still, if we are considering marginal shifts in border policy, the $1500 figure still seems relevant.
Might credit constraints matter? The difference between willingness to pay and willingness to be paid?
How about the next generation? Perhaps we should use a very low social discount rate to evaluate these future benefits. If you will be born in El Paso in 2019, you are not, in the meantime, sitting around feeling costs of impatience. And since you will not have grown accustomed to life in Mexico, you are much better off in the United States.
I conclude that we do not have a very good handle on this question.