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.