….if Immigration Reform doesn’t pass, and more are deported?
Please be detailed as possible, stick to the question, and please provide sources that have been factchecked.
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/14/AR2007101400993.html
When Immigration Goes Up, Prices Go Down
Aviv Nevo, an economist at Northwestern University in Evanston, Ill., said immigrants (legal & illegal) to the United States — and price-conscious consumers in general — have the same effect: “The broad principle is immigrants change the mix of consumers and will likely change the relative prices of different products.”
While sudden increases in immigration could drive up the cost of housing and retail items where production cannot be ramped up quickly, Nevo said merchants quickly realize there is more profit to be made by decreasing prices on everyday items: “You decrease the price by 10 percent but increase the amount you sell by 200 percent.”
As immigrants are pushed away, prices on everything from diapers to dairy items might go up. (Instead of paying more money for social services, residents will pay more money to Exxon.)
Lach found that new immigrants spend much more time comparison-shopping than natives — perhaps because their economic circumstances force them to look for the best deals, or because they have more discretionary time to compare prices, or because they have not yet developed brand loyalties.
Whatever the reason, they force markets to run more efficiently, and thereby make cheaper prices available for all.
The downward effect on prices that Lach found was most evident for everyday items. Ironically, what the research suggests is that poor, new immigrants — the folks who trigger the most concern among anti-immigration activists — might impose the strongest brake on prices because they are hungriest for good deals.
Gene
Regina
yep! your article pretty much covers the consumer part of it, and the lack of workers would also shoot those prices up to the sky. It would cost employers BILLIONS, and how are they going to make up for that? Raising their prices, that’s how!
Study: Illegal worker crackdown would cost employers $1B
Comment by SO SO 143 — August 19, 2010 @ 3:41 am
Lillian
“While sudden increases in immigration could drive up the cost of housing and retail items where production cannot be ramped up quickly…”
Supply follows demand, not the other way around. Prices will reach equilibrium as supply does.
It is interesting that the author of the piece, a journalist, equates this with inflation, because inflation has to do with the money supply, not demand, per se. “Too much money chasing too few goods” is certainly an accurate definition of inflation— as we see with the housing market (as credit dried up, home prices plummeted). The market would certainly adjust if every single immigrant in the country vanished overnight. In fact, prices would drop precipitously until the market could adjust accordingly because the demand would drop because the demand and the amount of money competing for the same goods would drop. Producers would be _forced_ to drop prices due to too much competition, i,e, an overabundance of supply. And we are just looking at the retail side of the equation.
I know one illegal immigrant, for example, who works under the table. You could say that the cost of cleaning homes dropped because she does them cheaper. And the cost is certainly cheaper among the immigrant community because they have less money (yes, even immigrants have other immigrants clean their homes sometimes). However, it costs the state over $24,000 of tax money to educate her three kids. I call that a net drain on the economy by any measure. That is $24,000 that could be more efficiently allocated elsewhere in the economy.
Comment by Rizzo The Cleaner — August 20, 2010 @ 3:47 am
Marian
In the real world price is kept stable by the role of the speculator not the consumer; but don’t listen to me, I’m only a registered Commodity Trading Adviser not a propagandist.
Comment by Trader G — August 23, 2010 @ 4:55 am