America is an exception. Its GDP per capita is much higher than that of any other country with at least 10 million people. US GDP per capita (adjusted PPP) is $85,373, while the next nine countries range from Taiwan at $77,858 to the United Kingdom at $58,880. (All of these are IMF estimates for 2024.) If you prefer nominal GDP measured at current exchange rates, the gap is even greater. The United States again sits at $85,373, while Australia comes in second at $66,589.
Another exception is the United States. We have experienced far more immigration than any other country. How should we think about these two facts?
Opponents of immigration often claim that it impoverishes America by driving down wages. Presumably, this means that if we had experienced less immigration, we would be even richer. Imagine that instead of 330 million people, our population grew to only 110 million, somewhere between Germany and Japan. How rich would we be in this case?
I suppose it’s possible that even though America is much wealthier than any other mid- or large-sized country, and even though we’ve had much more immigration than other countries, immigration has made lower incomes in America. Perhaps with lower levels of immigration we would be even further apart.
But does this seem likely?
David Levey directed me to a recent study of this question, by Alessandro Caiumi and Giovanni Peri. Here is the summary :
In this article, we repeat, extend, and improve the approach used in a series of influential articles written in the 2000s to estimate the impact of changes in the supply of immigrant workers on native wages in the United States. We begin by extending the analysis to include more recent years 2000-2022. Additionally, we are introducing three important improvements. First, we introduce an IV that uses a new skill-based distribution for immigrants and demographic change for natives, which we show passes validity tests and has reasonably strong power . Second, we provide estimates of the impact of immigration on the employment-to-population ratio of natives to test for crowding out at the national level. Third, we analyze the professional valorization of natives in response to immigrants. Using these estimates, we calculate that immigration, thanks to complementarity between native immigrants and the content of immigrants’ university skills, had a positive and significant effect of between +1.7 and +2.6% on the wages of the least educated indigenous workers, over the period 2000-2019 and no significant wage effect on indigenous people with higher education . We also calculate a positive effect on the employment rate for most indigenous workers. Even simulations for the most recent 2019-2022 period suggest small positive effects on non-college native wages and no significant crowding out effects on employment. (emphasis added)
I think this is the key:
complementarity between native immigrants and the content of immigrants’ university skills
Other countries tend to be good at one thing, like building cars or extracting oil from the ground. The diversity of the U.S. population allows us to adapt to changing global trends. When new industries develop, we are usually at the forefront (smart phones, fracking, professional basketball, e-commerce, electric cars, AI, GMO foods, superhero movies, high-speed commerce, etc., etc. We have all kinds of people, capable of filling all kinds of niches.
Opponents of immigration may have in mind a model in which adding labor to a fixed amount of land reduces per capita output. But that’s not how the real world works. It is the American people, not their land, who constitute their greatest resource.
PS. The GDP per capita of very small countries is often distorted by factors such as multinational profits, oil revenues and tax haven status.
