Immigration from Haiti is a terrible way to help

A former Bush official argues in the Washington Post that the US should increase immigration from Haiti, in order to help Haiti as immigrants send home remittances. I will try to demonstrate that this policy is extremely inefficient from the point of view of the U.S., and may be directly harmful from the point of view of Haiti.

1. According to the World Bank Haiti in 2008 got $1.3 billion in remittances. Let's assume generously that 80% of remittances come from the U.S (the world bank's own estimate is slightly less than this). Based on the latest American Community Survey there are 786,000 people of Haitian origins in the U.S. This means that each Haitian on average sends home $1,300 per year. This figure will surely go up temporarily due to the earthquake, but presumably go back down again, as happened after the 1994 crisis.

The most reliable estimate of the fiscal impacts of immigration was done by the prestigious National Research Council, NAC (the research arm of the National Academy of Sciences, NAS).

Low skilled immigrants earn less than the average, pay less in taxes and receive more in public services such as health care, public housing, income aid etc. The NAC estimate is that the total net cost of each low-skilled immigrant for the US. State is $120,000 in 2009 dollars. (High skilled immigrants in contrast are a net fiscal benefit for the U.S).

These figures may underestimate the costs. Since this study was made the costs of welfare services to lower income people has further expanded, especially Medicaid and S-CHIP, and may go further yet..

Haitian immigrants should be expected to have on average even lower education levels than the NAC study assumed for the low-skilled. Haiti is the country in the western hemisphere with the lowest education level. According to the U.N 40% of the adult population is illiterate. Even if all Haiti's highly educated population moves, any large scale migration will contain overwhelming low-skilled immigrants. The per capita income of Haitians already in the U.S is only half the American average, Haitians are not (let's hope not yet) an economically successful group.

Generously using the figure for the merely low educated (whereas many Haitian have no education), we are trading of a $120,000 cost for the U.S taxpayer per Haitian immigrant for yearly remittances of $1,300 dollars.

It would be cheaper for the American taxpayer to directly increase aid to Haiti, even put $120 billion in a bank account and give the interest to Haiti, rather than to take in another million Haitian immigrants and bear the inescapable fiscal burden of a low-skilled group.

Even if we absurdly assume each Haitian lives forever and sends remittances home forever, discounted at a 5% interest rate $1,300 per year is worth only $26,000 compared to a cost for the U.S taxpayer of $120,000.

Immigration is an extremely blunt instrument to help Haiti, one which entails several dollars in fiscal costs for the American taxpayer for each dollar that actually reaches Haiti. The rational policy from the point of view of an America trying to help Haiti is aid, not immigration.

2. The immigration policy is questionable also from Haiti's point of view. First of all direct aid is more valuable than the same amount spent on net benefits for immigrants to obtain remittances (remember also that at some point the immigrant group inevitably loses interest in Haiti and stops sending money). Even one million immigrants would only be 5 year of current population growth for Haiti, and would make only a small dent in their overpopulation.

In other more subtle ways emigration could be disastrous for Haiti. Even though most of the emigrants are low-skilled, historical experience indicates that the Haitian elite is more likely to emigrate. The highly educated Haitian emigrants are simply too few to make a noticeable positive impact on the economy of the U.S, but such a huge share of the of Haiti's tiny high-skilled group that they make a sizable negative impact on Haiti.

There are currently 75,000 Haitian immigrants in the U.S. with a college degrees. I would guess the proportions in Canada are similar. According to this study that analyzes the Haiti Living Conditions Survey only 1.36% of adults in Haiti have Tertiary education. This means that that there are already more Haitians with college degrees in the US and Canada than there are left in Haiti!

Do we really believe that this exodus of the educated, of whom Haiti had so few to begin with, has benefited Haiti? Should we encourage this further?

The extreme poverty of Haiti has been discussed recently. I don't have any empirical evidence for this but economic theory predicts that having half the educated population leave for the West may be a part of the puzzle for why Haiti remains so poor.

Proposing generous large scale immigration may make commentators feel good about themselves but careful analysis shows that it makes no sense, either from Americans' or Haiti's point of view.