Immigration Restriction as Redistributive Taxation: Working Women and the Costs of Protectionism in the Labor Market

In this article, I argue that tax and transfer policies are more efficient than immigration restrictions as instruments for raising the after-tax incomes of the least skilled native workers. Policies to protect these native workers from immigrant competition in the labor market are no better at promoting distributive justice and are likely to impose a greater economic burden on natives in the country of immigration than the tax alternative. These immigration restrictions are especially costly given the disproportionate burden that they place on households with working women, a burden that discourages female participation in the labor force. This burden runs contrary to the teachings of optimal tax theory and introduces excc~­ sive distortions in the labor market because the supply of female labor is more elastic than the supply of male labor. Thus, the best response to concerns about the effect of immigration on the distribution of income among natives is to increase the progressivity of the tax system. * Earle Hepburn Professor of Law, University of Pcnnsylvnnia L.1W School. Copyright @ 2009 by Howard F. Chang. This article is based on a previously published article by Howard F. Chang. TIle DisadvQfIlages of ImmigfCltio" RestriClion as a Policy to ImprOlle Income Djstrib"rimt. 61 SMU L. REV. 23 (2008). Reprinted with permission from the SMU Lnw Review and the Southem Methodist University Dedman School of Law, I would like 10 thank Daniel Griswold, Gilli,ul Hadfield, Jacob Hornberger, Henrik Lando. Matthew Lister. Edward McCaffery. Chris Sanchirico. David Weisbach, symposium participanls at George Mason University. conference panicipants at lhe 2008 meeting of Lhe American Law and Economics Association al Columbia University, and seminar panicipants at the Universily of Chicago, Boston University, and Loyola Marymount University for helpful comments.