My guests for this episode are Alex Nowrasteh and Andrew Forrester of the Cato Institute. Our topic is a working paper they recently published titled How Mass Immigration Affects Countries with Weak Economic Institutions: A Natural Experiment in Jordan. The abstract reads as follows:

Saddam Hussein’s unexpected 1990 invasion of Kuwait forced 300, 000 Kuwaitis of Palestinian descent to flee into Jordan. By 1991, this large exogenous population shock increased Jordan’s population by about 10 percent. Jordanian law allowed these refugees to work, live, and vote in Jordan immediately upon entry. The refugees did not bring social capital that eroded Jordan’s institutions. On the contrary, we find that Jordan’s economic institutions substantially improved in the decade after the refugees arrived. Our empirical methodology employs difference-in-differences and the synthetic control method, both of which indicate that the significant improvement in Jordanian economic institutions would not have happened to the same extent without the influx of refugees. Our case study indicates that the refugee surge was the main mechanism by which Jordan’s economic institutions improved over this time.

Does mass immigration destroy institutions? 1990s Israel as a natural experiment by Benjamin Powell, J.R. Clark and Alex Nowrasteh

Jared Rubin’s interview about political power and economic growth is complementary with this one. Rubin’s theory is that the rising political influence of the bourgeoisie partially caused the economic growth in Northwestern Europe in the early modern period. In Jordan in 1990, the Palestinian minority was particularly urban and bourgeois, so the massive influx of Palestinians increased the political power of the bourgeoisie, thus creating political pressure for increasing economic freedom.

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