A peculiar argument has emerged that even if immigrants depressed real wages this would raise profits, investment and perhaps eventually real wages in the long run. If this were so then countries with lowest wages, e.g., Ethiopia, would be enjoying an economic boom. Even if wages were depressed, which would only be in low-wage labor intensive industries, and profits did emerge, the effect would be to attract competitors who would compete away the profits with more labor intensive techniques. This means that productivity in the industry would actually fall even as output and employment expanded. The reason is simple.
Capital goods come out of savings.
There is no reason to assume that a fall in real wages in one particular industry will expand the pool of savings even though it expands, either directly or indirectly, the demand for labour. If a country is enjoying genuine growth aggregate profits must exceed aggregate losses, meaning the demand for labour is growing as real wages and productivity rise. In this case, 'cheap' immigrant labour would have to be either largely specific or quarantined if its price is to be kept low. But capital would still have to be competed for and it would be this competition that would lead to more labor intensive techniques being used to employ these immigrants. One argument for a larger population is that it leads to economies of scale.