Using Harrod’s Dynamic Model to Guide a Dialectic Analysis of Immigration
Abstract
Economists often analyse the many different economic effects of immigration as separate and discrete phenomena. Such studies cannot provide an accurate account of the full effects of immigration, however. Immigrants are complex social beings who work, consume, save, invest, innovate, form families, and interact socially with many other people; immigrants have widespread effects throughout the source and destination economies. Also, the causes and consequences of immigration play out over long periods of time within ever-evolving macroeconomic, social, and natural systems. In short, in place of the static Neoclassical models commonly used, immigration economists should rely on frameworks that capture immigration’s key dynamic macroeconomic and social processes. This paper presents an analytical framework derived from a dialectic interpretation of Harrod’s (1939, 1948) full macroeconomic model to examine immigration’s effects. Our dialectical interpretation of Harrod generates conclusions that match empirical findings in the multi-disciplinary literature on immigration, and it clearly shows that in a modern open economy immigration policy must be integrated with other macroeconomic policy tools if traditional objectives such as stability and growth are to be consistently met. In sum, Harrod still provides a useful framework for contemporary economic analysis.
This paper offers an original contribution by connecting the issue of immigration to a dynamic Harrodian framework, emphasizing the importance of feedback effects, long-run structural change, and policy coordination. The argument is ambitious and important. The critique of partial-equilibrium models, illustrated through the Mariel Boatlift literature, is persuasive, and the idea that immigration simultaneously shifts the warranted and natural growth paths, and so cannot be treated apart from demand management, is very useful way to think about this phenomenon. Reviving the Harrod model for this purpose is very welcome but I think the paper would be considerably stronger if it clarified a bit more the meaning of dialectical analysis, justified more explicitly the choice of Harrod relative to other post-Keynesian approaches or frameworks, and provided a more nuanced treatment of migration-induced divergence.
Here below are some further details of these 3 points.
1. The meaning of dialectical analysis. Section 3 draws on Marx and Ollman, Veblen and Bourdieu, but these traditions are not interchangeable, and the paper does not say which sense it adopts. By Section 4, ‘dialectic’ seems to mean feedback, disequilibrium dynamics and shifting constraints, which some readers may call perhaps path-dependent dynamics. The distinctively dialectical elements (internal contradiction, negation, qualitative transformation) are not clearly identified in the Harrodian model. I suggest the authors define the term operationally, say what the central ‘contradiction’ is, and show what the dialectical reading adds beyond a dynamic-systems reading. A short table mapping dialectical concepts in the Harrod model (Ga, Gw, Gn) would help, otherwise the claim should be a bit softened.
2. Why Harrod? The case for Harrod model rests perhaps on his being dynamic, Keynesian and having three growth paths. But other post-Keynesian frameworks share these features and bear directly on the questions being asked by the paper. For example, the Kaldorian cumulative causation and Thirlwall-type balance-of-payments-constrained growth models speak to divergence between countries. Also Kaleckian/Steindlian models and the Sraffian supermultiplier address the knife-edge problem by letting capacity adjust to autonomous demand. The paper cites Trezzini (2021), who argues that Harrodian instability is an unhelpful concept, but does not engage fully with it. The authors should explain what Harrod offers that these alternatives do not, and acknowledge what is lost: fixed coefficients, no distributional or price dynamics, no external constraint. Perhaps footnote 8 on endogenous saving and capital-output ratios should be brought up in the main text.
3. Migration-induced divergence. The conclusion that immigration will ‘under most plausible circumstances’ widen income gaps is stronger than the analysis supports. The paper itself identifies offsetting channels (skill-acquisition incentives, diaspora networks, remittances, return migration), yet Figures 4 and 5 show essentially one configuration. A more nuanced treatment would state the conditions under which divergence, convergence or mixed outcomes occur. It would for example distinguish by migrant skill level and by type of source country, and say something about magnitudes and timing. The ‘center-periphery’ labels in the figures are not discussed in the text and should be.
Some further, minor points:
In section 5.1 it says immigration can lower Gn (p.19) but then says investment ‘would raise Gn’ (p.19) so one of these appears to be a slip.
Section 6 repeats the Canada/US points paragraph, and parts of the summary, almost verbatim (p. 24 and p26).
Minor reference issues:
Borjas 1992, 2002 and 2022 are cited in the text but not listed.
Hunt & Gauthier-Loiselle is 2011 in the text but 2010 in the references.
Krinsky is 2019 in the text and 2021 in the references.
With these few revisions I think the paper will make a stronger contribution to the debates around immigration and macroeconomic policies.