National Post (National Edition)
Border wall economics don’t add up: analysis
FEWER WORKERS, LOWER OUTPUT, SAY ECONOMISTS’ MODELING
ATLANTA •As president Donald Trump digs in on the shutdown and insists “we have to build the wall,” three economists are trying to warn him that the benefits from a wall along the southern border do not outweigh the costs.
The economists found that for every 19 cents the government has spent building walls or fences on the border, the economy has declined and low-income U.S. workers have gained only a cent of extra income. Adding more walls, as Trump wants, appears unlikely to change the poor return on investment.
The U.S. border with Mexico is about 2,000 miles (3,218 km) long, and a third of it (700 miles) has a wall or fence. Economists Treb Allen of Dartmouth College and Cauê Dobbin and Melanie Morten of Stanford University modeled what would happen if Trump were able to cover two-thirds of the border (1,300 miles) with some sort of wall.
Their conclusion? It would hurt the U.S. economy because there would be fewer workers and lower output. It would also have a tiny impact on illegal immigration, and U.S. workers wouldn’t be better off.
“Our research shows that building a wall was an ineffective way of reducing migration,” Allen said after presenting the new research paper this weekend at the American Economic Association conference.
“It was expensive to build, and it harmed U.S. workers.”
Expanding the wall would reduce the number of Mexican workers in the United States by 144,000 — about one per cent — the economists found after extensive modelling and data analysis.
Trump has proposed spending at least US$5 billion — about US$15 per American — to extend the wall at the U.s.-mexico border. The economists found that the incomes of lowskilled workers without college degrees would increase by only 58 cents a year, far less than the cost per American to build the wall. Incomes of higher-skilled workers would fall by US$7.60.
“This is a bad investment,” Allen said.
On top of the cost to build the wall, the U.S. economy would lose more than US$4 billion a year, the economists calculated, meaning the country would forfeit nearly US$30,000 in lost economic output for each Mexican migrant the wall stops.
It’s difficult to model the economic impact of a border wall. These researchers were able to do it because of two factors — special migration data they obtained from the Mexican government and the Secure Fence Act of 2006, which triggered the construction of walls and fences along 882 kilometres of the border between 2007 and 2010.
Mexicans living in the United States can apply for a “matrícula consular” ID card from the Mexican Embassy or a consulate. This government ID can be used to open bank accounts or obtain a cellphone.
They are popular with Mexicans living without documentation in the U.S. and are considered the best indication of how many Mexicans are in the country without proper paperwork.
The IDS also list the exact location in Mexico where a person was born, allowing researchers to get a sense of how they probably migrated.
The Secure Fence Act — which Sens. Barack Obama, Hillary Clinton and Chuck Schumer voted for — was a large expansion of barriers and checkpoints at the border that cost US$2.3 billion (or US$7 per person in the United States).
The economists looked at the impact of that expansion on migration, jobs and the U.S. economy by comparing the data in 2006 and 2010. It was tricky because the Great Recession hit during that period, which played a large role in reducing illegal immigration into the U.S. because so few jobs were available, but the economists used a sophisticated model to split out the effects of the downturn from the wall.
The Secure Fence Act resulted in a 0.6-per-cent decline in migration (about 83,000 fewer Mexican workers), the economists found.
Low-skilled U.S. workers without a college degree benefited a “tiny” amount — 36 cents a year in additional income — from having fewer low-skilled Mexican workers to compete with.
“This paltry effect turns out to be the largest positive benefit of the Secure Fence Act, as all other groups of workers were harmed,” the researchers wrote in their paper.
Perhaps not surprisingly, employees with a high school degree or less who live near the border in Arizona and California were the ones who benefited the most from walls and fencing, but even they saw their incomes improve by just over US$7 — about the cost per American to erect the wall.
Workers with college degrees lost US$4.35, Allen, Dobbin and Morten calculated, and the overall economy declined by US$2.5 billion.
“This suggests that for each fewer migrant in the United States as a result of the Secure Fence Act, GDP declined by US$30,000 (in addition to the direct costs of wall construction),” the economists wrote.
Trump insists a bigger wall is necessary not just to stop undocumented immigrants from taking U.S. jobs but for security reasons. He argues that many migrants are criminals and terrorists, which is not backed up by data.