Who Really Causes The Illegal Immigration Problem?

Categories Domestic Affairs, Economics, Politics
illegal immigrants

A very common complaint in radical right wing circles is that illegal immigrants are stealing the jobs of lower wage citizens. If you speak to many Americans in some of the southern states in the USA the word “Mexican” is almost slang for illegal aliens as the Mexicano latino population is so large and many are in the states illegitimately.

It is the view of many that the ones who are getting the jobs illegally are to blame for much unemployment in affected areas. However the economic truth is quite different. The diagram below shows the labour market in the perspective of people living in or around the benefits level especially in welfare states such as Britain.

As you can see, the diagram shows how the benefits culture affects labour markets. The benefits equivalent wage is currently higher than the world of minimum wage. The crossed solid lines represent both the supply and demand of labour and the benefits budget/uptake as they will be in relatively the same position at this level of labour.

Due to the fact that the world wage is lower than the equilibrium (cheap competition from globalisation, outsourcing and immigrants) it cuts the supply line and demand line at different points meaning that the quantity of labour demanded is greater than the amount supplied. This inequality leaves a gap which has to be filled from other sources. The gap is also fuelled by the prevailing benefits level which is able to provide a wage greater than the world wage and hence many people will choose to stay on benefits rather than provide units of labour.

The quantity gap that is created by these two factors can be filled, especially in a small business environment, by illegitimate labour such as illegal immigrants.

This second diagram shows the same labour market from the perspective of an illegitimate worker.
Illegal labour market diagram

As is evident, there are massive gains to made from firms who hire illegal immigrants for low skilled jobs. The minimum wage is marked on the diagram which is what the immigrants would have to be paid if they became full citizens. As they are not full citizens then firms can take advantage of their situation which is represented by the equilibrium being below the minimum wage level. As more immigrants enter the economy the supply of labour consistently shifts outwards disproportionately to the rate at which the demand for labour shifts outwards meaning that the wage rate will not increase as the illegal labour market expands.

This market dissuades illegal immigrants from pursuing citizenship as if they are forced to work at the minimum wage then they will be competing against possibly higher skilled domestic workers who may be preferred at the higher wage rate. Plus, as the supply line shifts outwards the gap between QD and QS at the minimum wage will increase so that there are fewer and fewer jobs available for low skilled immigrants.

So, from this simple economic analysis we can fully attribute the causes of the illegal immigration problem and see why it continues to occur. In my opinion the blame lies mainly with the benefits system and illegal firms. The benefits system keeps people out of work and so forces firms to look elsewhere for work. However firms should be more efficient in areas and be able to raise wage rates to acquire legitimate labour rather than hiring illegitimately.

This does not however mean that we should let more immigrants in as the aim is to discourage the illegal types from fuelling the illegal labour market. We should be happy to accept those who meet the immigration criteria and can thus contribute to the economy but we should also extend these criteria for entry to EU immigrants so that labour markets are not diluted to an equilibrium that is below the minimum wage.

Currently studying Philosophy, Politics and Economics at St Annes College, Oxford University. I have a keen interest in applied economics, food and most types of sport.

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