The Economics of Immigration and Roxham Road, Part 1: Theoretical Underpinnings
Immigration can benefit everyone in traditional immigrant countries like Canada, the U.S. and Australia.
In recent years, there has been a debate in Canada about allowing asylum seekers to cross the U.S. border into Canada at unofficial crossings such as Roxham Road in Quebec. The debate goes back to the Safe Third Country Agreement, in effect since December 2004, under which the governments of Canada and the U.S. each declare the other country safe for refugees, so they do not accept refugee claimants crossing the borders between the two countries.
However, this rule only applies at official border crossings, so asylum seekers have used unofficial border crossings such as Roxham Road to avoid being turned away. Recently, however, Prime Minister Justin Trudeau and President Joe Biden came to an agreement to apply the rules at all border crossings as of March 25, 2023, with certain exceptions. But as reported for CBC News by Verity Stevenson and Kwabena Oduro:
Immigration experts and advocates have condemned the new rules, saying it will push people to go underground, take dangerous risks and put pressure on front-line responders to surveil and rescue migrants attempting to cross along Canada's nearly 9,000-km long border. Two men have died in recent months attempting to cross the Canadian border into the U.S.
Therefore, I will be focusing my attention over the coming weeks on issues around immigration generally, and the Roxham Road controversy specifically. But first, it is important that I explain the basic economic theory behind immigration to show why economists are generally in favour of it, and why it can benefit everyone in countries like Canada that accept new immigrants.
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The Basic Economic Theory of Immigration
The basic theory assumes (for simplicity) a two-country world where the demand for labour is identical across countries, so they only differ in how much labour workers supply. Furthermore, we also assume no trade in goods or services — again to keep things simple while also leading to reliable predictions we can use.
This is also a long-run model, which is an important fact to remember as it means all transition costs of immigration have been incurred. So it does not imply we should allow completely open borders — we still need to worry about helping immigrants assimilate into Canadian society as seamlessly as possible in the short run.
Furthermore, we do recognize it is not realistic to assume people can move freely around the world, even if all governments have completely open borders, for such reasons as language barriers, cultural differences, and family ties in their countries of origin. However, this model is still valuable as a starting point for discussing immigration, as it helps us to understand how it will affect each country generally — for example, the direction in which real wages will change and which countries can expect either immigration or emigration.