Does Immigration Cause Unemployment?

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It’s not uncommon for the zero-sum fallacy to crop up in a discussion on the economics of immigration.  Many individuals assume that immigrants will necessarily “steal” jobs from domestic workers.  That’s exactly what this article about Canadian immigration concludes.  But can immigrants realistically be blamed for increased unemployment rates?  If they do cause joblessness, why don’t we see astronomical rates of unemployment in the country that has seen the most immigration—the United States?

The argument seems straightforward enough—for every immigrant that gets a job, that’s one less job for a domestic worker. However, this fallacy implies that the entire world should see steadily increasing unemployment rates as the population increases.  Of course, this is not at all what we see.  As the world population increases, more and more individuals are integrated into the international division of labor.

Furthermore, the argument only holds if there is a fixed amount of work to be done (economists call this the “lump of labor fallacy”).  In reality, there is always more work to be done because we live in a world of scarcity—people have unlimited wants coupled with limited means.  To understand that there is always more work to be done, consider a simple thought experiment.  The year is an arbitrary construct that we often use to measure the amount of work done (this is often measured through GDP).  But since we know there’s work to be done next year, why couldn’t some of that work simply be done now?  In short, there is not a fixed amount of work to be done within a geographic area.  And immigrants even increase the amount of work to be done because they, like everyone else in the country, are human actors with unlimited ends facing limited means.

Immigration increases societal productivity by allowing further exploitation of the Law of Comparative Advantage.  The linked article argues that immigrants will take the jobs of the least skilled.  Even if this is true, it allows these teenage workers to find employment where they are relatively more productive.   Unfortunately, the real cause of teenage unemployment, minimum wage laws, will often prohibit these workers from finding a job that correlates with their productivity.

Will these workers be forced to take a lower nominal wage?  It’s possible, but the productive capacity of immigrants will increase the real amount of goods, and the result is a higher standard of living for everyone in the country.

Canada and other nations would do well to lay the blame at their own feet for high rates of unemployment among youth.  Minimum wage laws, mandated unemployment benefits, and the boom-bust cycle generated by inflationary policies are to blame for unemployment, and not immigration.

For a short summary of this zero-sum fallacy, please see our Common Economic Fallacies Page.

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7 Responses to Does Immigration Cause Unemployment?

  1. Steve February 7, 2012 at 5:46 pm #

    Great article, but if the title of the piece ended in … in America, is it a fallacy?

  2. libertas February 7, 2012 at 6:15 pm #

    Not sure I exactly follow your question, but immigration (by itself) can’t cause (at least long-lasting) unemployment anywhere–America or elsewhere.

    • Jean January 18, 2016 at 9:56 pm #

      In my opinion if a country already has unemployment it is not a good idea to immigrate people to that country. However, by bringing to a country immigrants and having attitudes that it will create jobs like here in Australia, is all and very good. However, what is overlooked is the % increase in jobs, is only because of increase of population by immigration. But it doesn’t alter the fact many of those that immigrate will not create work and end up looking for work joining the unemployed workforce and cause a greater increasing in unemployment anyway that becomes challenging. The unemployment of country needs to be addressed first, instead of the government seeking the easy way out of taking more people into a country, thinking this will fix it up. Immigration is only one of many reasons that can cause unemployment and other noticeable influences of unemployment going around business have shown me that increase in rent, rates and lack of customers causes employers to run for cover in placing new employees on.

  3. Eva October 7, 2012 at 10:37 pm #

    Most empirical evidence do not support the claim that inflationary policies, minimum wage laws or unemployment benefits cause unemployment. That’s just your biased ideological opinion, not scholarly thinking.


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