Immigration policy has become a hot-button issue in both Europe and the US, with questions concerning optimal policy as well as the welfare state dominating discussions. This column revisits the idea of the immigration surplus, exploring a number of possible scenarios in terms of how policymakers should address the challenge. Correctly configuring fiscal policy so as to capture the benefits of both high- and low-skill immigrant (and native) workers is at the heart of optimal policy design and may help to address the swelling anti-immigrant sentiment that continues to exist in many countries today. 

In a televised address aired in 1977, Milton Friedman discussed the differences in US attitudes toward immigration before and after the advent of the welfare state:

The American writer Kurt Vonnegut began his career in the public relations division of General Electric. One day, he saw a new milling machine operated by a punch-card computer outperform the company’s best machinists. This experience inspired his novel Player Piano. It describes a world where children take a test that determines their fate. Those who pass become engineers and design robots used in production while those who fail have no jobs and are supported by the government. Are we converging to this dystopian world? How should public policy respond to the impact of automation on the demand for labour? 
These questions have been debated ever since 19th century textile workers in the UK smashed the machines that replaced them. As the pace of automation quickens and affects a