WASHINGTON – The difference in gas prices may have to do with the fact that Wheaton, Maryland, has many more immigrants who are not yet fully assimilated into the economy than does Bethesda, Maryland, The Washington Post reports. Immigration, economist Saul Lach recently found, plays a powerful role in holding down prices. For every 1 percent increase in the ratio of immigrants to natives, prices go down by about 0.5 percent, according to Lach.

Lach’s thesis – that immigration acts as a brake on inflation – is unusual in that it explores the effect immigrants have on the demand side of an economy, and not just as workers who lower the costs of child care, for example, by increasing the labor pool.

Aviv Nevo, an economist at Northwestern University in Evanston, Illinois, said immigrants to the United States – and price-conscious consumers in general – have the same effect: “The broad principle is immigrants change the mix of consumers and will likely change the relative prices of different products.”

While sudden increases in immigration could drive up the cost of housing and retail items where production cannot be ramped up quickly, Nevo said merchants quickly realize there is more profit to be made by decreasing prices on everyday items: “You decrease the price by 10 percent but increase the amount you sell by 200 percent.”

Immigration is a hot-button issue in Washington and around the country as local groups attempt to crackdown on the number of illegal immigrants in their communities. If Lach’s thesis is correct, however, successful measures might have the opposite effect than the one desired – as immigrants are pushed away, prices on everything from diapers to dairy items might go up.

Lach said in a new paper published in the Journal of Political Economy that immigrants tend to do what Bethesda drivers do not do often enough: They go the extra mile to the cheaper gas station. Lach found that new immigrants spend much more time comparison-shopping than natives – perhaps because their economic circumstances force them to look for the best deals, or because they have more discretionary time to compare prices, or because they have not yet developed brand loyalties.

Whatever the reason, they force markets to run more efficiently, and thereby make cheaper prices available for all. Lach’s study was based on an analysis of 915 products at 1,837 retail stores in 52 cities, after the abrupt influx of 200,000 immigrants to Israel from countries in the former Soviet Union.

“Immigrants are more sensitive to prices and also are more inclined to search for lower prices,” Lach said. “This prompts stores not to increase their prices as often or as steeply…or even to lower their prices in order to capture as many immigrant customers as possible. The population at large should benefit from this downward pressure on prices because stores cannot discriminate between natives and immigrants.”