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It's not, but high-skill immigration would certainly give the economy a boost. This boost to the economy would be good for everybody: lowering unemployment and

by gizmo 14y ago

It's not, but high-skill immigration would certainly give the economy a boost. This boost to the economy would be good for everybody: lowering unemployment and increasing aggregate demand. And technically the US isn't even in a recession right now -- although the economy is still depressed.

yummyfajitas 14y ago
...lowering unemployment and increasing aggregate demand. It's certainly true that importing new employed people will increase the denominator in the unemployment rate will reduce unemployment, but that doesn't help any human. I believe you are making the fallacy of reasoning from a composition change. Amusingly, one of the better explanations of this I've found is at OpenBorders: http://openborders.info/compositional-effects/ http://openborders.info/compositional-effects/
- gizmo 14y ago
  No, those high skilled (and therefore high earning) immigrants use their salary to buy stuff so aggregate demand increases so unemployment decreases. I'm not playing compositional games here.
  - yummyfajitas 14y ago
    They also produce a bunch of stuff, thereby increasing aggregate supply commensurately. Since they are high skilled, they likely increase AS more than AD, since high skilled individuals tend to produce more than they consume.
    - gizmo 14y ago
      Yes, high skilled people produce more than they consume but that's of course a good thing. Look at it from the other way around. What would happen to the economy if 50% of high skilled people moved to a different country? It would be disastrous for the country. So AS and AD go down as a direct consequence of those people leaving, but AD will also go down as a consequence of the resulting recession/depression. Importing high skilled people has the opposite effect. So yes, high skilled workers add to AS and to AD, and the ratio of AS to AD won't change much because of that. But the economy will still get a boost (another increase in AD).
      - yummyfajitas 14y ago
        I'm not a Keynesian, so I don't make arguments about AS/AD except in the context of "here is what the Keynesians believe". Looking at it the other way, if 50% of high skilled people moved to a different country, it would be a disaster. I just don't think it would be a Keynesian disaster. If anything, AD should hold constant while AS dropped, leading to an increase in employment. Note that I'm disputing your reasoning, not your conclusion.

by gizmo 14y ago

yummyfajitas 14y ago

...lowering unemployment and increasing aggregate demand. It's certainly true that importing new employed people will increase the denominator in the unemployment rate will reduce unemployment, but that doesn't help any human. I believe you are making the fallacy of reasoning from a composition change. Amusingly, one of the better explanations of this I've found is at OpenBorders: http://openborders.info/compositional-effects/ http://openborders.info/compositional-effects/

gizmo 14y ago
No, those high skilled (and therefore high earning) immigrants use their salary to buy stuff so aggregate demand increases so unemployment decreases. I'm not playing compositional games here.
- yummyfajitas 14y ago
  They also produce a bunch of stuff, thereby increasing aggregate supply commensurately. Since they are high skilled, they likely increase AS more than AD, since high skilled individuals tend to produce more than they consume.
  - gizmo 14y ago
    Yes, high skilled people produce more than they consume but that's of course a good thing. Look at it from the other way around. What would happen to the economy if 50% of high skilled people moved to a different country? It would be disastrous for the country. So AS and AD go down as a direct consequence of those people leaving, but AD will also go down as a consequence of the resulting recession/depression. Importing high skilled people has the opposite effect. So yes, high skilled workers add to AS and to AD, and the ratio of AS to AD won't change much because of that. But the economy will still get a boost (another increase in AD).
    - yummyfajitas 14y ago
      I'm not a Keynesian, so I don't make arguments about AS/AD except in the context of "here is what the Keynesians believe". Looking at it the other way, if 50% of high skilled people moved to a different country, it would be a disaster. I just don't think it would be a Keynesian disaster. If anything, AD should hold constant while AS dropped, leading to an increase in employment. Note that I'm disputing your reasoning, not your conclusion.