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The impact of the Chinese Exclusion Act on the economic development of the Western US

Release Date: 2024-12-01
Media: The Centre for Economic Policy Research
Summary: The study on the Chinese Exclusion Act of 1882 examines the economic and labor market impacts of one of the first major immigration restrictions in U.S. history. The Act banned Chinese laborers from immigrating and denied those already in the U.S. citizenship and re-entry rights. While proponents argued that Chinese workers threatened white employment opportunities, businesses warned of economic losses due to the inability to replace Chinese labor.

Analyzing data from 1850 to 1940 across eight Western U.S. states, the study finds that the Act not only reduced the Chinese labor supply but also slowed labor supply growth and income increases among white workers. Manufacturing output and the number of establishments declined, particularly in remote areas, and skilled white workers left regions that had previously relied on skilled Chinese workers, highlighting their complementary roles in the economy.

The findings challenge the zero-sum view that immigration harms native workers by increasing competition. Instead, immigration restrictions disrupted local economies, reduced aggregate growth, and showed that immigrants often complement rather than compete with native workers. Policymakers are advised to adopt nuanced and flexible immigration policies that account for local economic structures and the specific roles immigrants play, avoiding broad bans that risk unintended economic consequences.
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