What would happen if many more migrants and refugees were allowed into the country? To answer that, we need only to examine previous migration waves. As several studies have shown, the 1980 Mariel boatlift that brought 125,000 Cuban refugees to Miami did not negatively affect locals’ job prospects, even though the U.S. economy was weak at the time. Massive refugee inflows have benefited other countries as well. The mass immigration of Russian Jews to Israel in the early 1990s, for example, led to an economic boom that helped cement the country’s “startup nation” brand.
Similarly, the flow of two million Venezuelan refugees to Colombia since 2015 had essentially no effect on domestic unemployment or wages, but did help the country have one of the fastest post-COVID recoveries in Latin America and beyond. Crucially, Colombia granted Venezuelan émigrés full access to the job market, health-care system, and education. A recent study has shown that granting legal status to Venezuelans has increased immigrant entrepreneurship in Colombia by a factor of 10.
To put things in perspective, the U.S. population is six times that of Colombia, and its GDP is 26 times larger. The U.S. certainly has the capacity to absorb more refugees and immigrants if it wanted to. But it seems that American voters want a dynamic economy with fewer immigrants and low interest rates. That item, however, does not seem to be on the menu. Instead, the U.S. must decide between a dynamic economy with lower interest rates and more foreigners, or a stagnant economy with high interest rates and fewer migrants. Americans need to know that xenophobia is an expensive choice.
Ricardo Hausmann, a former minister of planning of Venezuela and former chief economist at the Inter-American Development Bank, is a professor at Harvard's John F. Kennedy School of Government and Director of the Harvard Growth Lab.