Immigration Key to Growth, Controlling Inflation

Rana Foroohar, Financial Times, Apr. 16, 2023

"Immigration is back, in the US at least. Over the past two and a half years, immigration into the American labour market has increased by 4mn workers, and the working age immigrant population has now finally reached its pre-pandemic trend level. This is likely to be a central factor in strong employment growth, particularly in leisure and hospitality. It is also part of the story on increasing workforce participation, as well as being good news for the fight against inflation. As Apollo’s chief economist Torsten Sløk put it in a recent note to clients, “immigration is a key reason that the US labour market is gradually moving from very overheated to less overheated. The fact that immigration is now moving to levels above 2019 is going to be very positive for the labour market, and for the Fed’s inflation challenge.”  Aside from pulling more women into the workforce, increasing immigration is the only quick way to bolster the labour force in any nation. Birth rates are on the decline in most rich countries, and robots and job-displacing AI software come with their own economic and political disruptions. ...  Immigrants are more likely to be self-employed and start new businesses than native born Americans. They are the heart of the ever-evolving American dream. ... [M]igrants are risk takers — they go where growth is, fostering business expansion and alleviating bottlenecks to investment. This has the tendency to reduce income disparities across regions, which is something the US desperately needs. One 2020 paper by the Dallas Fed found that much of the fluidity in the US labour market today is down to immigrant flows rather than the movement of native workers. Indeed, the Dallas Fed’s research points to the fact that the future of American growth exceptionalism (relative to Europe and other rich countries) may be largely down to the future of immigration."