Bryan Caplan on Restricting Immigration

This is going to be a critique of “Why Should We Restrict Immigration?”, a paper written by the economist Bryan Caplan that was published in winter 2012 edition of the Cato Journal, which is published by the libertarian think tank the Cato Institute. In the paper, Caplan attempts to show that all the common arguments in favor of restricting immigration are flawed and that restricting immigration is an unjust thing for a country to do. 

Caplan starts the paper off  by saying that denying an individual the right to immigrate will condemn said individual to “dire poverty, die sooner, live under a brutal, corrupt regime, and be cut off from most of the people you want to associate with.” Thus, denying the right to immigrate will make potential immigrants worse off and so at face value restricting immigration seems immoral. If we are going to tell people that they can't enter into a given nation we need reasons that are more important that the welfare of the potential immigrants. And we need to show that these concerns cannot be dealt with in a more humane way than deny potential immigrants the right to immigrate.

It is here that I find my first disagreement with Caplan. I do not believe that we should assume that immigrants benefit from immigration. And because of this I don't think that the default position should be to allow immigrants in and I don't think that we have an obligation to go out of our way to try and fix the problems that immigrants bring with them in a way that doesn't involve restricting immigration.

We can divide well being into two categories: mental well being and non-mental well being. There is empirical evidence relevant to immigration's effects on both of these categories. But before looking at that evidence it is important to note that pro immigration advocates often offer no evidence whatsoever for the claim that immigration benefits immigrants in terms of overall well being. It's normally just accepted as an assumption. Caplan is such an advocate. And yet, we know that part of being human is doing things that are not in our own best interest. Whether it's eating too much, drinking too much, sleeping too little, or whatever, people are constantly doing things that they would be better off not doing. Given this, it is important to conduct an empirical examination of how beneficial different choices and behaviors are. We can't assume that they are beneficial just because people do them. 

Before looking at the direct data on immigration and happiness I am going to discuss two theoretical reasons for which I think it is reasonable to think that immigration might not be as great for immigrants as many assume it to be. 

It seems clear that many immigrants chose to immigrate in-order to obtain better economic standing. Surveys from around the world have found that improvements in their material condition is the first thing people list when asked about how their lives might improve. They think that they will be better off if they have more money. This is an area in which immigrants might plausibly make a mistake: they overestimate the importance of absolute wealth to their well being and in so doing under appreciate other factors, such as their relative wealth and their sense of belonging in their community. 

First, I am going to look at the relationship between absolute income, relative income, and happiness. To be clear, relative income is how much money you make relative to the people around you. If you live in a third world country and make a third world income then you have a pretty average income relative to the people around you. If, on the other hand, you move to a first world country, you could have a significant increase in the total amount of money you are making and still be making less money than the people around you. That is, you can experience an increase in your absolute economic standing and a decrease in your relative economic standing. And if relative income is more important to your mental well being than absolute income is then you could experience a decrease in happiness as a result. 

Some of the most important data on this topic has been documented by economist Richard Easterlin. He has documented that, over the course of the twentieth century, the absolute income of people in the United States more than doubled. Yet, levels of life satisfaction haven't increased in any substantial way. What this suggests is that absolute income effect on life satisfaction isn't very large. Similarly, following the second world war Japan rose from a third world nation to one of the richest nations in the world in about 30 years. Over that period, Japan's GDP per capita increased fivefold and major lifestyle changes were experienced by Japan's inhabitants as they rose from international poverty to affluence. Yet, average reported levels of life satisfaction in Japan remained unchanged. Further still, an analysis of economic growth and life satisfaction in 9 European countries over a 16 year period found no relationship between economic growth and changes in happiness. A similar relationship exists between individuals happiness and changes in their incomes over their lifespan. Several studies have shown that individuals do not typically experience an increase in happiness between the ages of 20 and 40. And yet, their income increases substantially over that same time period. 

In-spite of all this data showing that individuals can experience massive changes in their absolute wealth with no corresponding change in their mental well being, many studies have found that there is a correlation such that the more money people have the happier they are. One way to explain this finding is by positing that the people who end up with the most money are the happiest to begin with and that their income is therefore not the cause of their happiness. There is some good evidence for this position. For instance, in one study researchers interviewed around 15,000 participants at ages 16, 18, and 22, and obtained information on their income at age 29. During the interviews in adolescence and young adulthood they assessed how happy the participants were and preformed a statistical analysis to see if happiness at this earlier period predicted income at age 29. What they found was that not only did happier people go on to make more money than less happy people but that happier siblings grew up to make more money than their less happy siblings. This means that coming from a wealthy family cannot explain why happier young people end up making more money. After all, siblings come from the same family. Thus, the correlation between happiness and income is partially explained by the fact that people that are happier to begin with make more money.

Another important factor in explaining of the association between income and happiness is that individuals may become happier when their relative income increases. Intuitively, this idea has great appeal. People seem to like to do better than their peers. And it resolves the tension between the data compiled by Easterlin and the association between happiness and income. When nations become richer, or when people because richer as they age, no one's relative wealth is changing. In the case of nations, everyone's income has risen. In the case of individuals over the life cycle, their peers, the people they compare themselves to, become both older and wealthier with them. This idea is also supported by some direct evidence. Researchers analyzing data from the world values survey have replicated the finding that there is a relationship between absolute income and happiness. But they also found an even stronger relationship between an individual's happiness and their income relative to the income of others in their country.

Thus, there is good reason to think that relative income matters more to people's mental well-being than absolute income does. And this often under appreciated fact may cause some immigrants to make a miscalculation when deciding to immigrate. 

Changes in belongingness, or the degree to which one feels that they belong in the society they live in. may also cause immigrants to be worse off after immigrating.  There is some evidence to suggest that belongingness might have a larger impact on life satisfaction than money does. For instance, in one study researchers looked at how various variables related to variation in reported levels of happiness across various regions. It found that the single most important variable in explaining regional variation in happiness was how much people felt that they belonged to their local community.  And in fact it found that an increase of 1 point on a four point scale of belongingness, presumably an increase of roughly 25%, predicted an increased in happiness equal to a 114% increase in their household income.  And multiple other studies have found that the presence of strong social relationships is the single best predictor of an individual's happiness.

When people think about why they wouldn't want to leave their home nation they often talk about having to leave their friends and family behind. They also might mention that they might not fit in with the cultural norms of another nation and so would end up feeling alienated. The is, they fear losing their social bonds and ending up feeling like they fundamentally don't belong. And indeed many American immigrants report being discriminated against based on their racial or ethnic background. According to pew research polls, most Hispanic Americans think that discrimination against Latinos is a major problem in both school and work places. Similarly, a majority said that they were not confident that police would treat Hispanics fairly. It's hard to see how a group could feel like they belong when they think that both the populace and the government is discriminating against them because of their ethnicity. Not to mention all the culture, friends, and family, that Hispanics and others leave behind when they immigrate to the US. It doesn't seem implausible to think that such costs could leave immigrants worse off than they would have been had they not immigrated in the first place. 

The prediction that immigrants to the US might suffer from decreased health is easier to explain. American's have bad diets and bad norms about physical activity and immigrants might adopt these or even worse norms once they move here. 

The evidence concerning the effect of immigration on mental well being is inconclusive and somewhat mixed. But in my view the totality of said evidence clearly does not establish that immigration typically has positive effects on the mental well being of immigrants. 

First, there is cross sectional data. Many studies have found that immigrants, both in the US and in Europe, have lower levels of self reported life satisfaction than natives. But these studies cannot adequately control for selection bias nor do they offer the control group that would be necessary to measure the mental effects of immigration. In the case of selection bias, it be that immigrants are unhappy before they immigrated, in fact that might be why they immigrated, and so could be just as happy as before they immigrated, or even slightly happier, while still being less happy than natives. And the need for a control group stems from the fact that these immigrants might have been even unhappier had they stayed in their country of origin. Thus, the data is problematic. 

Interestingly, this relative unhappiness seems to be passed down to the children of immigrants.  A study which looked at immigrants in 13 different European countries found that not only were immigrants less happy than natives but that 2nd generation immigrants were just as unhappy as first generation ones. Thus, the cross sectional data is in line with the view that immigration causes damage to the mental well being of immigrants but is far from conclusive. 

Second, there is data from studies of internal migration or when someone moves from one place to another within a given country. This data can be useful in estimating the effects of international migration to the extent that internal migration mirrors international migration. Two studies, one done in England and one done in Sweden, do support the view that immigration causes an increase in the mental well being of immigrants. Both of these studies used large samples of panel data and assessed migrants life satisfaction before and after they moved. And both found that gains in life satisfaction occurred post move. Another study, done in Thailand, asked recent  internal migrants to Bangkok to compare how satisfied they were with various aspects of their lives before and after moving. This study probably better mirrors mirrors international immigration that the studies done in England and Sweden because of the dramatic variation in standard of living that exists across Thailand.  Bangkok is much richer than most of Thailand, with a GDP per-capita several times that of the national average, and so the migrants are likely moving to a place with a much higher standard of living than the area of Thailand that there are migrating from. This is similar to the change in local standard of living that many immigrants experience when moving to a richer country.  On the other hand, unlike the European studies, this study relied on the migrant's memories to find out  how satisfied they were with life prior to their move. Obviously, this is a much more problematic measure. The study found that, an all the domains measured, a slim majority of these immigrants reported that their situation had neither improved or worsened since migrating. Sizable minorities reported increases and decreases in satisfaction suggesting that there might be a great deal of variance in how immigration affects immigrants.  

And lastly, a study in New Zeal looked at how the mental well being of actual immigrants changed post move, and compared them to a control group that reflected what the immigrant's mental well being would have been had they not moved.  Each year, a predetermined number of people living in the pacific island of Tonga are allowed to immigrate to New Zealand. This allows the immigrants a great opportunity to improve their standard of living since New Zealand's GDP per capita is roughly 7 times that of Tonga. Who from Tonga gets to immigrate to New Zealand is chosen at random via a lottery. In this study, researchers met with immigrants to New Zealand  from Tonga 11 months and 33 months after they immigrated. At each of these meetings they assessed various aspects of these immigrant's mental health and income. They were also able to track these same variables in a sample of potential immigrants in Tonga that were not chosen by the lottery system to immigrate to New Zealand. This study design allowed the researchers to do two things. First, they could track how the immigrant's mental health changed over time, and second they could compare the immigrants mental health to the mental health of those who were left behind in Tonga. Because they were chosen at random, those who won the lottery and those who did not should be basically the same. Comparing the two should therefore tell you how happy the immigrant group would have been if they stayed in Tonga. To make sure that this comparison was valid, researchers measured various variables, such as education, age, ect, of the two groups and found that they were indeed extremely similar. They controlled for the small differences that did exist.

What the researchers found was that immigrants were happy less often than they would have been had they stayed in Tonga. And moreover, they got less happy the longer they stayed in New Zealand. However, the researchers also found that the immigrants improved in other aspects of mental well being. For instance, the immigrants were sad less often than they would have been had they stayed in Tonga. The effects of immigration on income were also found to be mixed. These immigrants experienced a large increase in their total income, but experienced a decrease in their income relative to the average income of the country they were in. Their absolute income increased while their relative income decreased.

In order to evaluate the net effect on these immigrant's well being one would have to assign some weight to each of these measures. Normally, this problem can be sidestepped in happiness research because researchers ask participants how generally satisfied they are with their lives. This allows the participants to weigh these things themselves.  However, in this study no such question was asked. Thus, this study shows that the effects of immigration on people's mental well being are complex, but fails to establish a net effect. 

In light of all this, it seems fair to say that the evidence concerning effects of immigration on mental well being is mixed and highly inconclusive. 

With regards to non-mental health I am going to be looking evidence from American immigrants. Research has found that immigrants to the united states are far healthier than natives are. And this trend is seen across many different measures of health, ranging from cardiovascular disease, to days spent disabled, to infant mortality rate, to life expectancy. But this state of good health does not last for immigrants. The longer they stay in the US the more their health deteriorates. And this worsened health is passed down to their children. For instance, the children of immigrants to the United States have a lower life expectancy than their parents. And this deterioration doesn't reliably stop at nation averages. Hispanic Americans, for instance, have higher levels of heart disease, obesity, disabilities, high blood pressure, ect than the general public does. Thus, immigrants come to the US in much better health than US natives. The longer they stay here the worse their health gets. And, in many respects, their children not only suffer through significantly worse health than their parents, but in fact become more unhealthy than the natives. 

Given these two lines of evidence, it doesn't seem unreasonable to suggest that we don't know that immigration makes immigrants better off and that it might infact make immigrants worse off in many circumstances. Someone would, therefore, be unjustified in promoting immigration because of its positive effects on the well being of immigrants. After all, no matter how hard they may believe it, such a person would not actually know that immigration has a positive effect on immigrants well being to begin with. 

 

Before addressing Caplan's particular arguments about immigration restriction, two points must be made which apply to all of his arguments. The first is that Caplan continually treats immigration as an all or nothing proposition. He analyzes whether immigrants on the whole depress native wages, or whether immigrants as a whole use a lot of welfare, ect.  It seems to not occur to him that there may be a good case for restricting immigration even if immigrants as a whole do no net harm. After all, some subset of immigrants might do harm in these various areas even if immigrants on the whole do not. And so it would make sense to ban this subset of immigrants from immigrating to your country. Just about no one actually advocated banning all immigration. And yet this is the position that Caplan's analysis directly argues against. In so doing it fails to address the vast majority of proposals for immigration restriction actually in existence. 

Secondly, in all of Caplan's arguments he offers what he views as more humane alternatives to immigration restriction for those that are unconvinced by his general arguments. For instance, he suggests that those that fear that immigrants will abuse welfare let them immigrate here but don't let them use welfare, or that those that fear that immigrants will vote in a particularly problematic way allow immigrants to come in but don't allow them to vote.  The problem with all these proposals is the same: it ignores the modern trend towards equality. Over the last few hundred years there has been a continual and largely successful drive to give everyone the same legal rights. It started by expanding legal equality to white males who didn't own property, then to non-whites and women, and more recently to homosexuals. If a large population of immigrants developed in the united states, or any other western nation, which was not allowed to vote or use welfare like everyone els, it would only be a matter of seconds before a social justice campaign was started to give them equal rights. And history strongly suggests that this campaign would be successful. Caplan's alternative solutions are thus useless because none of them would last. 

Caplan counters this complaint in his paper by asking why someone would believe that public opinion would change enough for open borders, with such terms as not allowing immigrants to vote attached, to be accepted but would not believe that public opinion would change enough to allow for these terms to be enforced. That is, if we are already assuming 1 radical change in public opinion why not assume another? 

My response is that the change in public opinion necessary to allow this limited form of open border to occur would consist of the public becoming more egalitarian. After all, allowing the immigrants the same rights of movement as natives makes them more legally equal to natives. That is, there is nothing about the accepting of this deal that would signal a stop in the march to equality that has characterized the last few hundred years of western history. And it is this march that would undermine the deal's terms. Indeed, what Caplan is proposing is just a slow and gradual move towards equality.  While this particular extension of equality is new, the general philosophy behind it is not. A stop in the "progress" towards equality would therefore be a much more radical change than the public becoming more pro-open borders would. With that said I will now turn to Caplan's particular arguments. 

Caplan first addresses the argument that immigration will lead to lower wages for natives. Proponents of this argument state that open borders will drastically increase the supply of labor and so lower its cost. (And the cost of labor is wages.) Caplan contends that this argument is problematic because most immigrants will not be skilled enough to compete with American workers. Most immigrants are very low skill workers. And most Americans at least have a high school degree and so are, in some sense, skilled.  So the very low skill jobs that immigrants take will, by and large, be jobs that Americans wouldn't be doing anyhow. Thus, in general, immigrants don't take American jobs. Caplan cites literature reviews that estimate that the effect that immigration has had on the wages of natives has been small and, as his argument would predict, mostly concentrated on low skilled workers. On top of all this, Caplan explains that these concerns ignore the economic benefits of immigration. For instance, the increase in demand for houses that immigrants will cause will increase local property value which is mostly owned by natives. 

I think that Caplan is wrong about why immigration doesn't lower wages, but I do agree with his conclusion. The evidence suggests that current immigration levels don't lower native wages. The only point of contention that I have with this argument is that the studies that Caplan cites tell us little about what would happen under unrestricted immigration. Both the quantity and quality of immigrants would change and this could cause changes to the way that immigration affects wages.

Caplan also looks at how immigration affects culture. Many fear that immigrants will import not only their bodies but also their third world culture into first world nations. Caplan doesn't think that these fears are justified. Instead, he thinks that immigrants largely assimilate into the native culture or improve it. As a measure of assimilation he looks at language. He cites a pew poll which found that almost all 2nd and 3rd generation American immigrants speak English. Thus, at least linguistically, these immigrants have assimilated. Moreover, the two states which Caplan believes to produce the most American culture, California and New york, are also the two states with the highest share of foreigners.  Caplan also notes that immigrants add to the native culture by bringing food from their nation of origin. And finally, Caplan argues that we can test the effect of immigration on social capital, or how well people are getting along and how strong communities are, by looking at house prices. After all, if the social capital in an area decreases when immigrants move in then less people will want to live there and this will cause housing prices to fall. If, on the other hand, housing prices increase when immigrants move to an area then this suggests that more people want to live there and that there hasn't been a significant decrease in social capital. The later is what actually happens and so Caplan argues that immigration does not significantly harm social capital. 

Caplan's analysis suffers partly because his arguments are uniformly uncompelling, but even more so because of all the data that he ignores. First, his own arguments. Language assimilation is a practical necessity to function in a basic way in society. Because of this, it can't be taken as a good measure of general assimilation. And CA and NY's  being cultural centers of the US is easily questionable. But even if we take that for granted, it is highly plausible that their cultural producing activities, for instance Hollywood in CA, makes these states rich and so causes them to attract immigrants. If this is the case then the finding that there are many immigrants in these states hardly suggests that immigrants don't damage culture. Moreover, conservatives routinely criticize the liberal cultures found in and spread by both of these states. And libertarian often criticize their relatively large amounts of welfare spending that goes on in both those states. In fact, both are regularly placed on lists of the top 10 welfare using states.  Given that both libertarians and conservatives heavily criticize these states cultures as being particularly bad, the fact that they also have high levels of immigration can hardly be taken as proof that immigrants don't damage culture. And as for the food that immigrants bring: you don't need an actual Mexican to make a burrito. 

Caplan's evidence for the claim that immigration leads to increased housing prices and its relation to social capital is less than compelling. It is true that some studies have found that immigration is associated with increased housing prices but others have not. Moreover, the studies that Caplan cites looked at levels of aggregation that might not detect natives moving away in response to decreased social capital that resulted from immigrant inflow. They looked at whole metropolitan areas or provinces and it is easily conceivable that people would move from one neighborhood to another, in response to a decrease in local social capital cause by immigrants, within the same province or metropolitan area. Indeed, it seems intuitive that that is what one would assumed most people would do. And such responses to damaged social capital would be completely missed by Caplan's analysis. And housing prices are affected by a large number of other variables. Of particular relevance here is that immigrants may be harming social capital but increasing housing prices anyhow because they increase the population density of an area. (That is, there are more people, the immigrants, trying to live in the area and so more buyers in the housing market and this pushes up housing prices.) Such an effect could easily mask any effects that diversity has on social capital. And very high quality studies exist on the relationship between social capital and ethnic diversity, which would be an inevitable result of immigration. 

Harvard political scientist Robert Putnam analyzed a set of over 40 regions across the united states and looked at how ethnic diversity related to various measures of social capital. Putnam statistically controlled for age, poverty, crime, and other variables, ruling out many confounding variables which might have caused a misleading association to appear.  After applying all these controls, Putnam found that the more ethnically diverse a region was the lower its level of social capital was. In particular, Putnam found that the more diverse a community was the less trust residents reported having in their neighbors, the less people trusted local government and media, the less people voted, the less people gave to charity, the less people worked on community projects, the fewer friends people had, and the less happy and satisfied with their lives people were. 

Putnam's study isn't the only one to measure how variation in ethnic diversity correlates with social capital, though it is the most methodologically rigorous. Many other studies have found a negative association between ethnic diversity and different measures of social capital which persists after various controls. And these studies have looked at various countries around the world. One exception to this is a study done in Norway. In this study the negative association between ethnic diversity and social capital did not persist after controlling for unemployment. However, this control may be misleading because the decrease in social capital caused by ethnic diversity may cause unemployment. Thus, the researchers may have controlled for the very thing they were looking for. 

There is also experimental evidence for the view that ethnic diversity damages social capital. In one study researchers had participants participate in a game to test this relationship. In each game the first player, the sender, was given some sum of money and then given the ability to send as much of that money as they wanted to the second player, the receiver. Once the money was obtained by the receiver its amount doubled. The receiver then had the option of sending back some of the money to the sender. In half of the games the receiver was allowed to send a note to the sender making a promise about how much money they would send them. It was found that receivers sent significantly less money back if they weren't of the same race as the sender. In fact, 92% of the times that nothing was sent back occurred with racially diverse pairs of players. This experiment corroborates cross sectional data like Putnam's showing that diversity leads to less trustworthiness and generosity. 

Thus, much better data that what Caplan provided shows that ethnic diversity, an obvious consequence of open immigration, greatly harms social capital. 

And then there are all the areas in which open immigration will hurt American culture that Caplan completely failed to address. To make this point clear I am going to concentrate on data on the US Hispanic population. This is for two reasons. First, over the last few decades this has been America's largest immigrant group. And second, I think this group is particularly problematic and that US immigration restriction should focus on restricting Hispanic immigration. With that said, let's take a look at the US Hispanic population. First, we can look at education. According to the Department of Education, Hispanics are several times more likely to drop out than the general population. So they spread an uneducated culture. We also have data on health. According to the Department of Health and Human services, Hispanics are significantly more likely than non Hispanic whites to be overweight and obese. Thus, Hispanics encourage the further spread of obesity in America by helping to normalize it. And then there's marriage. According to the census, Hispanic Americans are more likely than the general population to never marry. And the CDC has found that Hispanics have abnormally high out of wedlock birth rates. So Hispanics contribute to the further breakdown of the family. Crime data is also relevant. Hispanics have much higher violent crime rates than the general population, and are much more likely to join a gang. Differences in national identity also exist. A numbersUSA poll found that most Hispanics thought that the South West of the USA rightfully belongs to Mexico. And most Latino Americans say they identify more strongly with the term “Latino” than “American”. Thus, Latino American's seem especially anti American. Lastly, Latinos are the most likely of any major US population group to use welfare. So not only were Caplan's pieces of evidence weak, but he forgot to mention that Hispanic immigrants will lead to a less educated, fatter, less patriotic, more crime ridden population that has fewer marriages and more of out wedlock births to people living on welfare. On the bright side, we'll have more tacos. 

Caplan next addresses the concern that immigrants will vote in non libertarian ways and so create a more statist society. From a libertarian perspective, such as the one that Caplan and the Cato institute share, this could be a serious problem. But Caplan posits that there are two good reasons for which we should expect this to not be such a big problem after all. First, immigrants have lower voter turnout than natives. This will obviously lessen the impact of immigrant political views. Secondly, immigrants, like all people, have a bias in-favor of that which they are already familiar with and that which they regard as normal. Caplan believes that this will lead to immigrants becoming more libertarian as they become more familiar with the libertarian norms of the societies they immigrate to. Given these two factors, Caplan thinks that the anti-libertarian effects of immigrant voting will be small. 

Rather than continue on Caplan's theoretical line of thought, I think that looking at how immigrants actually vote is the best way to resolve this issue. Once again, I will be concentrating on the US Hispanic population. When looking at particular issues, one can often see that Hispanics are abnormally anti libertarian. For instance, they are more likely than the general public to support gun control measures. But more general statements of political philosophy are more telling. Polls have found that most people say that they don't prefer a big government which provides more services to a small one providing fewer services. Most people say they don't, but the vast majority of Hispanics say they do.  Similarly, the statement that “government should increase the standard of living of the poor and guarantee a job” is supported by Hispanics at about twice the rate that it is in the general population. And these beliefs translate into behavior. Hispanics have been reliably democratic voters for decades. And while their low voter turnout rate and relatively small population size might stop them from having a deciding effect on national elections today, the fact that they have more kids than the general population assures that that won't be the case in the future. In fact, the baby population in the US today already has more minorities than non minorities. And when those kids grow up it is inevitable that the Hispanic population will have sufficient numbers, even with a lower voter turnout rate, to decide elections. And this will happen with current minority population levels. Under the open border policy that Caplan advocates these populations would expand. As a result, minorities would take over American politics even sooner. Caplan's analysis is thus flawed because it remains theoretical without looking at how immigrants actually act and because it is short sighted in that it doesn't note that Hispanic fertility rates already assure them a large political influence in the future even with low voter turnout rates. 

Caplan also looks at the effects of immigration on welfare spending. Many, including some prominent libertarians, have argued that immigration is incompatible with a welfare state because poor, low skilled, immigrants will come over to a first world country and live off of welfare leading to a large increase in welfare spending.  Caplan counters by citing a literature review which presented data from 7 studies on the rate at which immigrants use welfare. The majority of these studies found that immigrants were more likely than natives to use welfare. However, these differences might be considered small. In the US, for example, the studies presented suggested that immigrants were somewhere between 10% and 15% more likely to use welfare than natives. Caplan also cites a study which found that the average immigrant family uses about $5.7K, in 1989 dollars, more than the average native family in welfare over their lifetime. This too might be considered a very small amount, and Caplan notes that it amounts to only a few dollars more per person per month. 

The largest problem with Caplan's analysis is that the summation of many small amounts can end up being a very large amount. His argument amounts to saying that the effect of all immigrants on welfare spending is small because the effect of a single immigrant on welfare spending is small. The estimate that the average immigrant family uses 5.7K more in welfare over their lifetime can be used to illustrate this. According to a 2012 Gallup poll 150 million people worldwide would like to move to the US if they could. Let's say that, under an open borders regime, half of them were able to get here. If such were to happen then we would be looking at about a trillion dollars, in 2013 dollars, of added welfare spending over these immigrants live spans. And that is an estimate of what they would cost on top of the welfare cost of adding 75 million natives. 

 A second problem is that Caplan's analysis is limited to data on first generation immigrants. Data from the current population survey shows that 1st generation, 2nd generation, and 3rd + generation, Hispanic immigrants all use welfare at a greater rate than native's do. So immigration is not only a problem for welfare spending because of the direct welfare use of immigrants but also because of the welfare use of the children and grandchildren of immigrants. That is, immigration makes future native populations more reliant on welfare. Thus, the actual lifetime addition to welfare spending caused by open borders would likely far exceed the previously estimated 1 trillion dollars. Further still, open borders would allow millions of the very poorest people in the world to immigrate to the US. These immigrants would likely be even poorer than current US immigrants and so use even more welfare. This too should increase our estimate of the size of the added welfare spending that will result from immigration. And so we see that, contra Caplan, we can expect immigration to lead to a very substantial increase in welfare spending. 

Caplan later argues that immigrants will in fact lessen the size of the welfare state. To do this he relies on a theory developed in the paper “Why Doesn't The US Have A European-Style Welfare State?”.  In the paper, researchers try to answer the question posed by the title by saying that part of the reason that the US has a smaller welfare state is because it is more racially heterogeneous. The authors posit that racial heterogeneity will lead to a smaller welfare state because people will feel less positively towards the poor if they are of a different ethnic group than them and so will want to give them less welfare.  As Caplan puts it, the paper proposes a tension between diversity and solidarity. 

The paper cites several pieces of empirical evidence to support its claim. First, the paper cites another study which found that white American's support for welfare varied such that the more non-white welfare recipients that lived in their state the lower their support  for welfare was and the more white welfare recipients that lived in their state the higher their support  for welfare was.  The paper also cites previous work by its authors which found that the share of a cities expenditure that is taken up by  social services decreases with its level of ethnic diversity. Finally, this paper demonstrates that both a state's and a country's level of welfare spending is negatively correlated with its level of ethnic diversity. 

There are a few problems with this evidence. For instance, the paper also found that there was no statistically significant association between the percentage of black people in a state and white's support for welfare. This obviously conflicts with the theory being proposed. And the data showing that a city's share of spending on social services decreases as its level of ethnic diversity rises tells us nothing about absolute spending levels. As the authors note, a cities share of spending on crime rises with its level of ethnic diversity. It could be that a total increase in expenditure accompanied by a disproportionate increase in crime fighting led to the finding that the share spent on social services decreased. And the cross sectional data is just that: cross sectional. It doesn't assure us anything about causality. The relationship could be caused by some confounding variable or the direction of causality could be the reverse of what this theory suggests. For instance, it might be that nations with more conservative welfare programs are more likely to let immigrants in, and thus increase ethnic diversity, because there is less of a threat of the immigrants abusing the local welfare system. 

And Caplan's analysis is painfully short sighted. As previously noted, in America Hispanics already have much higher fertility rates than whites do and this is going to lead to them deciding national elections in the not to far off future. And Hispanics support welfare spending more than whites do. Because of this, America's ethnic diversity is going to eventually lead to increased welfare spending even if it does make whites more anti-welfare. 

Finally, it should be noted that this argument runs counter to Caplan's earlier claim that immigration doesn't damage social capital. If immigrants lead to a more alienated public that want to help each other less then they certainly do lead to decreased social capital. 

In conclusion, Caplan fails to demonstrate that immigration has positive effects on immigrants and that it doesn't have negative effects on natives. There is good reason to think that open borders would have a disastrous impact on the America's cultural, political, and economic future. And for that reason, there is good justification for restricting immigration.

Sources:

Caplan's paper:

http://econfaculty.gmu.edu/bcaplan/pdfs/whyimmigration.pdf 

Easterlin's work on income and happiness:

http://ipidumn.pbworks.com/f/EasterlinIncomesandHappiness.pdf 

Analysis of the world values survey:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=724501 

Canadian study on belonging and happiness:

http://www.csls.ca/reports/csls2010-09.pdf 

Social relationships and happiness:

http://books.google.com/books?id=b3_-GXbhVYAC&pg=PA60&lpg=PA60&dq=social+relationships+predictor+happiness&source=bl&ots=0Cumt60rlM&sig=57pQcuufW4LOsHknAX1AFr5S-Vw&hl=en&sa=X&ei=6MPTUuGVMKqysQSbrICgDA&ved=0CCkQ6AEwADgK#v=onepage&q=social%20relationships%20predictor%20happiness&f=false 

Immigrants in the US and in Europe have lower levels of life satisfaction than natives:

https://cream.conference-services.net/resources/952/2371/pdf/MECSC2011_0314_paper.pdf 

Study on New Zealand immigrants:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10676736 

Thailand internal immigration study:

http://www.jstor.org/discover/10.2307/4149565?uid=3739656&uid=2&uid=4&uid=3739256&sid=21103331587203 

Immigrants in 13 European nations:

http://esr.oxfordjournals.org/content/26/2/159.abstract 

Gallup poll on who would immigrate to the US:

http://www.gallup.com/poll/153992/150-million-adults-worldwide-migrate.aspx 

Hispanic welfare use across generations:

http://cis.org/node/3876 

Educational attainment of Hispanics:

https://nces.ed.gov/fastfacts/display.asp?id=16 

Hispanic Obesity rates:

http://minorityhealth.hhs.gov/templates/content.aspx?ID=6459 

Hispanic crime:

http://amren.com/wp-content/uploads/2011/12/Hispanics-Report.pdf 

Hispanics think the southwest belongs to Mexico:

https://www.numbersusa.com/text?ID=1149 

Latinos identify as Latino first:

http://pewhispanic.org/files/reports/15.pdf 

Putnam's work:

http://www.abdn.ac.uk/sociology/notes07/Level4/SO4530/Assigned-Readings/Reading%209%20(new).pdf 

Latino's on gun control:

http://www.as-coa.org/articles/gun-control-debate-grows-latinos-largely-favor-reform 

Hispanic presidential vote:

http://voxxi.com/2012/11/06/number-of-latinos-eligible-to-vote/ 

“Nearly half of Latino voters believed that the government should increase the standard of living of the poor and guarantee a job – almost double the support those concepts received among whites.:

http://news.stanford.edu/news/2012/october/segura-latino-vote-102612.html 

Pew projection of Hispanic population in 2050:

http://www.pewhispanic.org/2008/02/11/us-population-projections-2005-2050/ 

Hispanic voting participation in 2012:

http://www.americanprogress.org/issues/immigration/report/2013/04/03/59040/the-facts-on-immigration-today-3/ 

The Health of US immigrants and US hispanics:

http://journal.cpha.ca/index.php/cjph/article/viewFile/506/506 

http://www.nytimes.com/2013/05/19/health/the-health-toll-of-immigration.html?pagewanted=all&_r=1& 

http://www.heart.org/HEARTORG/Conditions/More/MyHeartandStrokeNews/Hispanics-and-Heart-Disease_UCM_444864_Article.jsp 

Life Satisfaction across the lifespan:

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2990956/ 

http://www.euro.centre.org/data/1207216181_14636.pdf 

People think that more money will make them happier:

http://www-bcf.usc.edu/~easterl/papers/Happiness.pdf 

Early life happiness and future income:

http://www.pnas.org/content/early/2012/11/15/1211437109 

http://fragments-of-truth.blogspot.com/2013/01/happier-children-earn-higher-wages-when.html 

Hispanics perceive discrimination:

http://www.pewhispanic.org/2010/04/29/hispanics-and-arizona%E2%80%99s-new-immigration-law/ 

The probability of immigrants using welfare (table 8):

http://www.hbs.edu/faculty/Publication%20Files/09-013_15702a45-fbc3-44d7-be52-477123ee58d0.pdf 

Hispanic marriage rate:

http://www.healthymarriageinfo.org/research-and-policy/marriage-facts/culture/hispanics-and-latinos/index.aspx 

Hispanic welfare use:

http://amren.com/wp-content/uploads/2011/12/Hispanics-Report.pdf 

Minorities babies> non minority babies:

http://articles.chicagotribune.com/2012-05-17/news/sns-rt-us-usa-births-minoritiesbre84g1kt-20120517_1_minority-babies-whites-immigration 

British and Swedish studies on immigration and life satisfaction:

http://ftp.iza.org/dp6140.pdf

http://www.iza.org/conference_files/SUMS2012/switek_m5576.pdf

States that use the most welfare:
http://www.cnbc.com/id/31910310/page/16
http://www.economicpolicyjournal.com/2013/10/11-states-that-have-more-people-on.html