Immigration reform is one of the most divisive issues confronting U.S. policymakers.

The rise in the number of illegal immigrants in the United States over the past ten years—from five to twelve million—has led to concerns about the effects of illegal immigration on wages and public finances, as well as the potential security threats posed by unauthorized entry into the country. In the past year alone, the governors of New Mexico and Arizona have declared a “state of emergency” over illegal immigration, and President Bush signed into law the Secure Fence Act, which authorizes the spending of $1.2 billion for the construction of a seven-hundred-mile fence along the U.S.-Mexico border.

In this Council Special Report, Professor Gordon H. Hanson of the University of California, San Diego approaches immigration through the lens of economics. The results are surprising. By focusing on the economic costs and benefits of legal and illegal immigration, Professor Hanson concludes that stemming illegal immigration would likely lead to a net drain on the U.S. economy—a finding that calls into question many of the proposals to increase funding for border protection. Moreover, Hanson argues that guest worker programs now being considered by Congress fail to account for the economic incentives that drive illegal immigration, which benefits both the undocumented workers who desire to work and live in the United States and employers who want flexible, low-cost labor. Hanson makes the case that unless policymakers design a system of legal immigration that reflects the economic advantages of illegal labor, such programs will not significantly reduce illegal immigration. He concludes with guidelines crucial to any such redesign of U.S. laws and policy. In short, Professor Hanson has written a report that will challenge much of the wisdom (conventional and otherwise) on the economics behind a critical and controversial issue.

Part of the Bernard and Irene Schwartz Series on American Competitiveness.

Read the Economist review.

To submit a letter in response to a Council Special Report for publication on our website, CFR.org, you may send an email to CSReditor@cfr.org. Alternatively, letters may be mailed to us at:

Publications Dept.
Council on Foreign Relations
58 East 68th Street
New York, NY 10065

Letters should include the writer’s name, postal address, and daytime phone number. Letters may be edited for length and clarity, and may be published online. Please do not send attachments. All letters become the property of the Council on Foreign Relations and will not be returned. We regret that, owing to the volume of correspondence, we cannot respond to every letter.

Gordon H. Hanson is the Director of the Center on Pacific Economies and Professor of Economics at University of California, San Diego, where he holds faculty positions in the Graduate School of International Relations and Pacific Studies and the Department of Economics. Professor Hanson is also a Research Associate at the National Bureau of Economic Research and coeditor of the Journal of Development Economics. He obtained his BA in economics from Occidental College in 1986 and his PhD in economics from MIT in 1992. Prior to joining UCSD in 2001, he was on the economics faculty at the University of Michigan (1998–2001) and at the University of Texas (1992–1998). Professor Hanson has published extensively in the top academic venues of the economics discipline. His current research examines the international migration of high-skilled labor, the causes of Mexican migration to the United States, the consequences of immigration on labor-market outcomes for African-Americans, the relationship between business cycles and foreign outsourcing, and international trade in motion pictures. In recent work, he has studied the impact of globalization on wages, the origins of political opposition to immigration, and the implications of China’s growth for the export performance of Mexico and other developing countries. His most recent book is Why Does Immigration Divide America? Public Finance and Political Opposition to Open Borders (Institute for International Economics, 2005).