Word on the Street #326 Immigration and growth
GDP Snapshots Limitations
- GDP snapshots are mostly meaningless due to measurement errors and only capture part of economic activity.
- Longer-term GDP trends correlate with living standards, but short-term data should not be overemphasized.
Hidden Economic Effects of Immigration
- Immigration's economic impact is often invisible to standard aggregated statistics and statistical techniques.
- Much of immigration's influence occurs outside market prices, affecting culture and knowledge vital for innovation.
How Immigration Fuels Economic Growth Beyond the Data
Immigration impacts economic growth in ways that are often invisible in traditional economic statistics. Will Hobbs explains that many effects of immigration, such as cultural enrichment and the expansion of a society's knowledge base, take place outside market prices and are hard to measure in real time.
Research on immigration and deportation shows that deportations tend to reduce job growth and deter entrepreneurship, but the reverse effect of immigration is complex and context-dependent. High-skilled immigrants contribute disproportionately to innovation and new business formation, which boosts the economy significantly.
The mindset and risk-taking nature involved in migration parallels entrepreneurial spirit, introducing new cultural strands essential for innovation. Despite difficulties in precise measurement, migration historically supports economic growth on average over time.