Economic Effect of Border Wall

One topic that has been in the news a lot lately is the proposal of a border wall spanning the entire southern border of the United States and Mexico. President Trump has been pushing this proposal throughout his campaign and for most of his presidency. Political views aside, I believe that the wall would poorly affect the United States economy for several reasons.

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First, the cost to build the wall would hurt taxpayers, next the wall would affect trade relations between the two countries. Also, the immigrants coming into the country tend to have a positive effect on the economy, and the wall would most likely have little effect on the number of immigrants coming into the United States. Lastly, there may be several alternatives to address the immigration problem. A big concern in the minds of US citizens is the cost of completing this proposed wall.

The Department of Homeland Security did a study that set the cost at 21.6 billion dollars over three years. A more general estimate of the cost for the wall falls somewhere between eight and 40 billion dollars. There is also some evidence from the past that leads people to believe the wall would be a waste of money. In 2006, the Secure Fence Act added 548 miles of border fence between the United States and Mexico making the total span of existing fence 658 miles, one third of the entire border. This plan had an adverse effect on the economy and did not really address the issue of immigration. Every US citizen paid roughly seven dollars to build the wall. As a result of the well college educated US workers lost about $4.35 in annual income while less educated US workers benefited only 36 cents in annual income.

Researchers at Stanford and Dartmouth found that the Secure Fence Act of 2006 had a negative economic impact on US citizens. Besides that the wall would most likely negatively affect US citizens individually, the wall would hurt our economy as a whole. By building a wall we risk upsetting the United States third largest trading partner at 14% of the Unites States total trade volume. The border wall may result in a more hostile relationship with Mexico and a possible trade war that would negatively affect US consumers. Another negative consequence of building a border wall is that a large number of US jobs depend on our relationship with Mexico. According to a Woodrow Wilson Center study, nearly five million US jobs depend on trade with Mexico. In addition, more than 20% of all US jobs are tied in some way to trade along the border.

The main point of finishing the border wall is to reduce the number of illegal immigrants who come into the United States from Mexico. However, the immigrants are actually having a net positive effect on our economy. The foreign born now account for about 16% of the United States labor force (Chopra). If immigration were halted for some reason like a wall, the number of working age Americans in the coming decades would remain static, but if the number of foreign born entering the country stays constant the number of working age residents would increase by about 30 million in the next 50 years. The prior attempt to hinder immigration into the United States had little effect. The Secure Fence Act of 2006 only decreased the number of undocumented workers by 0.6%. Since in the past, building a border wall had a negative impact on the United States citizens and economy other alternatives might be more beneficial and effective in solving the immigration problem if that is what the end goal is.

Economic theory suggests that immigration will depend on both the cost of migrating and the returns from doing so. The Secure Fence Act was a policy that increased the cost of migrating. While the border wall expansion led to a small change in migration, its direct costs were substantial, and the indirect effects on the US economy were largely negative. Alternative policies that instead change the returns to migrating for example, by improving economic outcomes in Mexico by reducing trade costs may be more effective in reducing migration while also benefiting US workers. Most Mexican workers come to the United States for better wages, an option to reduce migration would be to lower costs of trade between the US and Mexico which would in return increase the wages in Mexico. A third alternative would be an investment in border security instead of an actual wall that would contribute to more US jobs as well. All of this evidence points to the fact that the building up the rest of the border wall would negatively affect the United States economy.

From the high cost to build it and little to no return to US tax payers, and the high probability that the trade relations between Mexico and the United States would deteriorate. The other thing is that the wall would most likely only prevent a small number of immigrants from entering the country. The main discussion point of the wall is how the immigrants are hurting our economy when in reality the have a net positive effect on our economy. If immigration is the main reason for building the wall the United States could dedicate the funds to more realistic and beneficial alternatives to help the issue that may in fact help the economy.

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