Border wall came at high cost, low benefit for U.S. workers

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The Secure Fence Act of 2006, which built a partial wall across the US-Mexico border, had a negative economic impact on US citizens—and only minimally reduced unauthorized Mexican migration, researchers report.

A new working paper examines the effects of the act, which added 548 miles of border fence between the two countries from 2007 to 2010. At a cost of $2.3 billion, the expansion raised total fencing to 658 miles, one-third of the entire US-Mexico border.

Researchers embarked on the study in the summer of 2016 after seeing a need for more empirical evidence on the effects of the border wall amid ongoing debates over immigration.

“Overall, we find that the additional fencing had a very small effect on migration and an overall negative effect on the economy,” says Melanie Morten, an assistant professor of economics and faculty fellow at the Stanford Institute for Economic Policy Research (SIEPR).

“The wall was expensive to US taxpayers—they paid roughly $7 per person—but saw little to no economic benefits as a result. Some even saw their welfare fall,” Morten says.

Large costs, small benefits

The wall did not significantly curtail migration, the researchers say. Using data from Mexican consulates on the flow of adult Mexican citizens who migrated between 2006 and 2010, the researchers estimated that the wall expansion reduced the total number of Mexican-born workers coming into the United States by only 0.6 percent, roughly 83,000 people.

Further analysis showed that the expansion of the wall largely harmed American workers. College-educated US workers lost an equivalent of $4.35 in annual income, while less-educated US workers benefited on average by only 36 cents. Taken together, “the costs far outweigh the benefits, even for low-skilled workers in the US,” Morten says.

“Our analysis incorporated both the direct impact of the border wall expansion on the cost of migrating as well as the complex ways in which the expansion indirectly impacted workers throughout the economy,” says Treb Allen, who was a visiting fellow at SIEPR during the 2015-16 academic year and is an associate professor of economics and globalization at Dartmouth College. “Given the costs of constructing the wall were so large, it is striking that the benefit was so small.”

Continued migration

Most Mexican-born migrants still opted to come to the US even though the additional border barriers altered their migration paths and made the journey more difficult, the study shows.

“If the goal of policy is to reduce migration, it’s important to examine what leads people to migrate in the first place,” Morten says. “Mexican citizens tended to migrate to attain higher wages. The wall did not change that.”

Lowering the costs of trade between the US and Mexico, which should, in turn, increase wages in Mexico, would be a potential example of an alternative policy to reduce migration, she says.

Researchers tested this concept by simulating a 25 percent reduction in trade costs between Mexico and the United States. Their analysis suggests that trade policy would be more effective in reducing migration than the border wall and that it would benefit workers in both countries.

Instead of facing an economic loss as they did with the wall, college-educated US workers would see an equivalent economic boost of $80.59 in annual income, while less-educated US workers would see their economic gain rise, on average, by $58.67 in annual income, the researchers say.

Economic theory suggests that migration depends on both the costs of migrating and returns from doing so, the researchers write in their executive summary. Policies that improve economic outcomes in Mexico, such as reducing trade costs, “may be more effective in reducing migration while also benefiting US workers,” the researchers conclude.

Source: May Wong for Stanford University