If the United States had to choose between letting in an Indian computer scientist or a nanny from Mexico, it might seem like a no-brainer. But, according to a new study by Harvard economists Michael Kremer and Stanley Watt, it’s not so obvious. They found that unskilled immigrants, contrary to the conventional wisdom, can actually reduce wage inequality and make a country richer.

Kremer explains his findings by pointing out that domestic workers can increase a country’s supply of highly skilled workers by allowing well-educated parents (generally mothers) to remain in the workforce. Household help is actually far more liberating to parents than day care, he argues, because nannies let them work the long hours required by many high-powered, high-paying jobs.

The findings aren’t limited to the United States. According to the study, countries can boost their gross domestic product by as much as 1.2 percent by allowing foreign household workers to make up 7 percent of their labor force—just as Hong Kong (6.8 percent) and Singapore (7 percent) do. Not surprisingly, these economies have seen even higher rates of workforce participation among women between the ages of 25 and 34 than the United States, where foreign household workers account for only 0.3 percent of the country’s workforce.

Not everyone, however, is convinced. Steven Camarota, director of research at the Center for Immigration Studies in Washington, D.C., disputes Kremer’s conclusions, arguing that importing more household help will be a “double-whammy” that drives down wages for poor Americans and further burdens taxpayer-funded social services. He also notes survey data that suggest that “people want the...