Implications of migration

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Do migrants take the jobs of native workers?

Migrants rarely take native workers’ jobs, and they boost employment effects in the long term

10.15185/izawol.10 10 Constant, A

by Amelie F. Constant

Neither public opinion nor evidence-based research supports the claim of some politicians and the media that immigrants take the jobs of native-born workers. Public opinion polls in six migrant-destination countries after the 2008–2009 recession show that most people believe that immigrants fill job vacancies and many believe that they create jobs and do not take jobs from native workers. This view is corroborated by evidence-based research showing that immigrants—of all skill levels—do not significantly affect native employment in the short term and boost employment in the long term.

The brain drain from developing countries

The brain drain produces many more losers than winners in developing countries

10.15185/izawol.31 31 Docquier, F

by Frédéric Docquier

The proportion of foreign-born people in rich countries has tripled since 1960, and the emigration of high-skilled people from poor countries has accelerated. Many countries intensify their efforts to attract and retain foreign students, which increases the risk of brain drain in the sending countries. In poor countries, this transfer can change the skill structure of the labor force, cause labor shortages, and affect fiscal policy, but it can also generate remittances and other benefits from expatriates and returnees. Overall, it can be a boon or a curse for developing countries, depending on the country’s characteristics and policy objectives.

Skill-based immigration, economic integration, and economic performance

Benefiting from highly skilled immigrants requires a complementary mix of immigrant selection and economic integration policies

10.15185/izawol.41 41 Aydemir, A

by Abdurrahman B. Aydemir

Studies for major immigrant-receiving countries provide evidence on the comparative economic performance of immigrant classes (skill-, kinship-, and humanitarian-based). Developed countries are increasingly competing for high-skilled immigrants, who perform better in the labor market. However, there are serious challenges to their economic integration, which highlights a need for complementary immigration and integration policies.

Do immigrant workers depress the wages of native workers?

Short-term wage effects of immigrants are close to zero—and in the long term immigrants can boost productivity and wages

10.15185/izawol.42 42 Peri, G

by Giovanni Peri

Politicians, the media, and the public express concern that immigrants depress wages by competing with native workers, but 30 years of empirical research provide little supporting evidence to this claim. Most studies for industrialized countries have found no effect on wages, on average, and only modest effects on wage differentials between more and less educated immigrant and native workers. Native workers’ wages have been insulated by differences in skills, adjustments in local demand and technology, production expansion, and specialization of native workers as immigration rises.

Taxpayer effects of immigration

Reliable estimates of taxpayer effects are essential for complete economic analyses of the costs and benefits of immigration

10.15185/izawol.50 50 Smith, J

by James P. Smith

Taxpayer effects are a central part of the total economic costs and benefits of immigration, but they have not received much study. These effects are the additional or lower taxes paid by native-born households due to the difference between tax revenues paid and benefits received by immigrant households. The effects vary considerably by immigrant attributes and level of government involvement, with costs usually diminishing greatly over the long term as immigrants integrate fully into society.

The welfare magnet hypothesis and the welfare take-up of migrants

Welfare benefits are not a key determinant of migration

10.15185/izawol.37 37 Giulietti, C

by Corrado Giulietti

Contrary to the welfare magnet hypothesis, empirical evidence suggests that immigration decisions are not made on the basis of the relative generosity of the receiving nation’s social benefits. Even when immigrants are found to use welfare more intensively than natives, the gap is mostly attributable to differences in social and demographic characteristics between immigrants and non-immigrants rather than to immigration status per se. Moreover, evidence in some countries suggests that immigrants exhibit less welfare dependency than natives, despite facing a higher risk of poverty.

What determines the net fiscal effects of migration?

Proactive policies result in a better labor market integration

10.15185/izawol.78 78 Hinte, H

by Holger Hinte

Do migration policies affect whether immigrants contribute more to public finances than they receive as transfer payments? Yes. But simply accumulating the annual fiscal transfers to and fiscal contributions by migrants is not sufficient to identify the policy impact and the potential need for reform. What is also required is measuring the present value of taxes contributed and transfers received by individuals over their lifespans. Results underscore the need for, and the economic benefits of, active migration and integration strategies.

The impact of migration on trade

Immigrants are good for trade

10.15185/izawol.82 82 Genç, M

by Murat Genç

International trade and migration are two important dimensions of globalization. Although governments have been very willing to open their borders to trade, they have not been so liberal in their immigration policies. It has been suggested, however, that a causal positive link might exist between immigration and trade. Could governments further increase international trade by also opening their doors to immigrants? If they could, does it matter what type of immigrants are encouraged? And is there a saturation level of immigrants after which this positive impact disappears?

Immigrants and entrepreneurship

Business ownership is higher among immigrants, but promoting self-employment is unlikely to improve outcomes for less skilled immigrants

10.15185/izawol.85 85 Lofstrom, M

by Magnus Lofstrom

Immigrants are widely perceived to be highly entrepreneurial, contributing to economic growth and innovation, and self-employment is often viewed as a means of enhancing labor market integration and success among immigrants. Accordingly, many countries have established special visas and entry requirements to attract immigrant entrepreneurs. Research supports some of these stances, but expectations may be too high. There is no strong evidence that self-employment is an effective tool of upward economic mobility among low-skilled immigrants. More broadly prioritizing high-skilled immigrants may prove to be more successful than focusing on entrepreneurship.

Freedom of movement for workers

Relaxing immigration restrictions could greatly improve the well-being of people in developing countries, with little effect on wages

10.15185/izawol.86 86 Kennan, J

by John Kennan

Most developed countries have foreign aid programs that aim to alleviate poverty and foster economic growth in less developed countries, but with very limited success. A large body of evidence indicates that the root of the economic development problem is cross-country differences in the productivity of labor. If workers are much more productive in one country than in another, the obvious way to help people in less developed countries is to allow them to help themselves by moving to places where they can be more productive. Yet immigration laws severely constrain such movement.

Happiness and the emigration decision

Happy people are an asset to society, and happiness may be a determinant of emigration

10.15185/izawol.96 96 Ivlevs, A

by Artjoms Ivlevs

Happy people are healthier and more creative, productive, and sociable. Because of these positive effects of happiness, it is in the interest of countries to attract and retain happy people. With respect to the decision to migrate, the central question becomes whether people who are happier and more satisfied with their lives are more or less likely to migrate. The evidence so far is mixed. Correlational studies find that prospective migrants are less happy than people who are not intending to migrate, while one study controlling for reverse causality suggests that the desire to migrate increases with life satisfaction.

Do immigrants improve the health of native workers?

Immigration crowds native workers out of risky jobs and into less strenuous work, with consequent benefits to their health

10.15185/izawol.102 102 Giuntella, O

by Osea Giuntella

Public debate on immigration focuses on its effects on wages and employment, yet the discussion typically fails to consider the effects of immigration on working conditions that affect workers’ health. There is growing evidence that immigrants are more likely than natives to work in risky jobs, as they are more inclined to take on physically intensive tasks. Recent studies show that as immigration rises, native workers are pushed into less demanding jobs. Such market adjustments have positive impacts on the health of the native workers.

The good and the bad in remittance flows

Remittances have the potential to lift up developing economies

10.15185/izawol.97 97 Amuedo-Dorantes, C

by Catalina Amuedo-Dorantes

Remittances have risen spectacularly in recent decades, capturing the attention of researchers and policymakers and spurring debate on their pros and cons. Remittances can improve the well-being of family members left behind and boost the economies of receiving countries. They can also create a culture of dependency in the receiving country, lowering labor force participation, promoting conspicuous consumption, and slowing economic growth. A better understanding of their impacts is needed in order to formulate specific policy measures that will enable developing economies to get the greatest benefit from these monetary inflows.

Are immigrants healthier than native residents?

Immigrants tend to be healthier than native residents when they arrive—an advantage that dissipates with time

10.15185/izawol.108 108 Neuman, S

by Shoshana Neuman

In common anti-immigrant rhetoric, concerns are raised that immigrants bring diseases with them to the host country that threaten the health of the resident population. In reality, extensive empirical research over several decades and across multiple regions and host countries has documented that when immigrants arrive in the host country they are healthier than native residents, a phenomenon termed the “healthy immigrant effect.” This initial advantage deteriorates with time spent in the host country, however, and immigrants’ health status converges toward (or below) that of native residents.

Retiree migration and intergenerational conflict

Retiree migration can have economic benefits but can also lead to intergenerational conflict in education spending

10.15185/izawol.118 118 Tosun, M

by Mehmet S. Tosun

With the aging of populations, particularly in more developed countries, retirees are becoming a politically influential group. Government budgets have been feeling the strain on social insurance, health care, and other programs that benefit the elderly. Yet spending on these programs has often come at the expense of other programs such as education, which benefit primarily the younger population. Attracting retirees has been viewed as an important avenue of economic development, with positive impacts on revenue and expenditure. However, it can also have a negative impact on education spending potentially resulting in intergenerational fiscal conflict.

Who benefits from return migration to developing countries?

Despite returnees being a potential resource, not all developing countries benefit from their return

10.15185/izawol.123 123 Wahba, J

by Jackline Wahba

Return migration can have multiple benefits. It allows migrants who have accumulated savings abroad to ease credit constraints at home and set up a business. Also, emigrants from developing countries who have invested in their human capital may earn higher wages when they return. However, whether the home country benefits from return migrants depends on the migrant’s success in accumulating savings and human capital and on the home country’s ability to make use of returnees’ skills and investment. To benefit from returnees, home countries need policies that encourage returnees’ investment and labor market reintegration.

Income of immigrants and their return

Both low- and high-income immigrants stay for a relatively short time

10.15185/izawol.141 141 Bijwaard, G

by Govert E. Bijwaard

The majority of immigrants stay only temporarily in the host country. When many migrations are temporary, it is important to know who leaves and who stays, and why. The key questions for the host country are whether immigrants are net contributors to the welfare system and whether migrants assimilate quickly. The key questions for the home country are whether migrants return and who returns. The host country gains when unsuccessful migrants leave, while the home country may gain when successful migrants leave. Empirical evidence reveals that both low-income-earning and high-income-earning migrants leave the host country quite soon.

Migration and families left behind

Families that stay behind when a member migrates do not clearly benefit

10.15185/izawol.144 144 Démurger, S

by Sylvie Démurger

About a billion people worldwide live and work outside their country of birth or outside their region of birth within their own country. Labor migration is conventionally viewed as economically benefiting the family members who are left behind through remittances. However, splitting up families in this way may also have multiple adverse effects on education, health, labor supply response, and social status for family members who do not migrate. Identifying the causal impact of migration on those who are left behind remains a challenging empirical question with inconclusive evidence.

The use of natural experiments in migration research

Data on rapid, unexpected refugee flows can credibly identify the impact of migration on native workers’ labor market outcomes

10.15185/izawol.191 191 Tumen, S

by Semih Tumen

Estimating the causal effect of immigration on the labor market outcomes of native workers has been a major concern in the literature. Because immigrants decide whether and where to migrate, immigrant populations generally consist of individuals with characteristics that differ from those of a randomly selected sample. One solution is to focus on events such as civil wars and natural catastrophes that generate rapid and unexpected flows of refugees into a country unrelated to their personal characteristics, location, and employment preferences. These “natural experiments” yield estimates that find small negative effects on native workers’ employment but not on wages.

Does corruption promote emigration?

Corruption is a driving force of emigration, especially for high-skilled workers, but also for other workers

10.15185/izawol.192 192 Schneider, F

by Friedrich Schneider

Knowing whether corruption leads to higher emigration rates—and among which groups—is important because most labor emigration is from developing to developed countries. If corruption leads highly-skilled and highly-educated workers to leave developing countries, it can result in a shortage of skilled labor and slower economic growth. In turn, this leads to higher unemployment, lowering the returns to human capital and encouraging further emigration. Corruption also shifts public spending from health and education to sectors with less transparency in spending, disadvantaging lower-skilled workers and encouraging them to emigrate.

Immigrants in the classroom and effects on native children

Having immigrant children in the classroom may sometimes, but not always, harm educational outcomes of native children

10.15185/izawol.194 194 Jensen, P

by Peter Jensen

Many countries are experiencing increasing inflows of immigrant students. This raises concerns that having a large share of students for whom the host country language is not their first language may have detrimental effects on the educational outcomes of native children. However, the evidence is mixed, with some studies finding negative effects, and others finding no effects. Whether higher concentrations of immigrant students have an effect on native students differs across countries according to factors such as organization of the school system and immigrants’ socio-economic background.

Migrant well-being after leaving transition economies

Evidence is mixed on whether quality of life improves for migrants from post-socialist economies

10.15185/izawol.195 195 Nikolova, M

by Milena Nikolova

Most comparative research suggests that immigrants from post-socialist countries earn less than natives, work in jobs for which they are overqualified, and may experience unhappiness compared with natives, other immigrants, and non-migrants. In contrast, one study presents causal evidence which shows that moving from transition economies to live in the West increases the incomes, life satisfaction, and freedom perceptions of those who move. Credibly assessing whether leaving transition economies improves movers’ quality of life remains a challenging empirical question.

Occupational choice of return migrants

Migrant-sending countries can significantly benefit from the type of occupation chosen by return migrants

10.15185/izawol.197 197 Piracha, M

by Matloob Piracha

The occupational choice of return migrants is important to their home country. Return migrants are likely to have acquired human capital while abroad, either through formal training or by working in a more efficient labor market. The employment of these newly acquired skills in the home country can have important economic implications. Examining the choice of return migrants to engage in wage employment, self-
employment, entrepreneurial activity, or to remain out of the labor market makes it possible to ascertain whether the initial migration decision benefited the home country as well as the migrants and their families.

Smart policy toward high-skill emigrants

Many proposed policies on skilled migration do little to improve skill stocks or development outcomes, but promising options exist

10.15185/izawol.203 203 Clemens, M

by Michael A. Clemens

Immigration officials in rich countries are being asked to become overseas development officials, charged with preventing skilled workers from leaving poor countries, where their skills are needed. Some advocates urge restrictions or taxes on the emigration of doctors and engineers from developing countries. Others urge incentives to encourage skilled workers to remain or return home or policies to facilitate their interactions with home countries. Regulations often reflect compassionate and political sentiments without clear evidence that the regulations achieve the desired development goals and avoid pernicious side effects.

Does return migration influence fertility at home?

Migrants encounter different fertility norms while abroad, which they can bring back upon returning home

10.15185/izawol.204 204 Bertoli, S

by Simone Bertoli

Demographic factors in migrant-sending countries can influence international migration flows. But when migrants move across borders, they can also influence the pace of demographic transition in their countries of origin. This is because migrants, who predominantly move on a temporary basis, encounter new fertility norms in their host countries and then bring them back home. These new fertility norms can be higher or lower than those in their country of origin. So the new fertility norms that result from migration flows can either accelerate or slow down a demographic transition in migrant-sending countries.

The value of language skills

A common language facilitates communication and economic efficiency, but linguistic diversity has economic and cultural value too

10.15185/izawol.205 205 Grenier, G

by Gilles Grenier

In today’s globalized world, people are increasingly mobile and often need to communicate across different languages. Learning a new language is an investment in human capital. Migrants must learn the language of their destination country, but even non-migrants must often learn other languages if their work involves communicating with foreigners. Economic studies have shown that fluency in a dominant language is important to economic success and increases economic efficiency. However, maintaining linguistic diversity also has value since language is also an expression of people’s culture.

Impact of remittances on fertility

Remittances are closely linked to household fertility choices with consequences at the community and country level

10.15185/izawol.207 207 Naufal, G

by George S. Naufal

The growth in the number and in the size of remittances and the stability of these monetary transfers have made them a prime target for policymakers. Because remittance flows go directly to households in emigrants’ home countries, one has to wonder about their effects on household decision-making, particularly in relation to the number of children to have. While this is household specific, when considered at the community and country level, there are significant policy implications for remittance-receiving economies. Therefore, it is crucial to more fully understand the relationship between remittance inflows and fertility rates.

Does emigration increase the wages of non-emigrants in sending countries?

Emigration can increase the wages of non-emigrants, but may eventually lead to lower productivity and wage losses

10.15185/izawol.208 208 Elsner, B

by Benjamin Elsner

How migration affects labor markets in receiving countries is well understood, but less is known about how migration affects labor markets in sending countries, particularly 
the wages of workers who do not emigrate. Most studies find that emigration increases wages in the sending country but only for non-emigrants with substitutable skills similar to those of emigrants; non-emigrants with different (complementary) skills lose. These wage reactions are short-term effects, however. If a country loses many highly educated workers, the economy can become less productive altogether, leading to lower wages for everyone in the long term.

Cross-border migration and travel: A virtuous relationship

International migration boosts travel and vice versa, bringing economic benefits but challenging public policy

10.15185/izawol.209 209 Poot, J

by Jacques Poot

The ongoing relationships between emigrants and their families, friends, and business contacts in their home countries can increase outbound and inbound cross-border travel, while cross-border tourism and business and study trips can trigger migration. New communication technologies, such as social media and video chat, only partially substitute for face-to-face meetings. In fact, the greater use of such technologies boosts demand for in-person meetings. Short- and long-term cross-border movements are becoming more complex, creating challenges for measuring immigration and for defining target populations for legislation and public policy.

Consequences of the obesity epidemic for immigrants

When migrants move to countries with high obesity rates, does assimilation lead to labor market penalties and higher health care costs?

10.15185/izawol.210 210 Argys, L

by Laura Argys

Upon arrival in a host country, immigrants often have lower obesity rates (as measured for instance by BMI—body mass index) than their native counterparts do, but these rates converge over time. In light of the worldwide obesity epidemic and the flow of immigrants into host countries with higher obesity rates, it is important to understand the consequences of such assimilation. Policymakers could benefit from a discussion of the impact of immigrant obesity on labor market outcomes and the use of public services. In particular, policies could find ways to improve immigrants’ access to health care for both the prevention and treatment of obesity.

Feminization of migration and trends in remittances

Independent female migrants may be a reliable source of remittances despite the difficulties they encounter in labor markets

10.15185/izawol.220 220 Le Goff, M

by Maelan Le Goff

Migrants’ remittances to developing countries have increased in recent decades, partly due to reduced transactions costs and improved living conditions in host countries. The feminization of international migration represents yet another explanation. Despite the difficulties female migrants encounter in the labor market, their total remittances may be higher and more resilient than those of male migrants, owing to these women’s stronger links to family members left behind and self-insurance motives. Policymakers need to understand how this new and significant upward trend in female migration could affect the economic and social development of home countries.

Legalizing undocumented immigrants

While legalization benefits most undocumented immigrants, deciding how to regularize them is challenging

10.15185/izawol.245 245 Bansak, C

by Cynthia Bansak

Addressing unauthorized immigration is controversial. Countries have adopted a variety of legalization programs, ranging from temporary visa programs to naturalization. Research in the US focused on past amnesty programs finds improved labor market outcomes for newly legalized immigrants. Findings are more mixed for European countries. Studies suggest that regularization of undocumented immigrants can result in increased use of public benefits and reduced formal labor market participation. Despite widespread disagreement, legalization is widely used in practice.

Integrating refugees into labor markets

Economic integration of refugees into their host country is important and benefits both parties

10.15185/izawol.269 269 Bevelander, P

by Pieter Bevelander

For the first time since the Second World War, the total number of refugees amounts to more than 50 million people. Only a minority of these refugees seek asylum, and even fewer resettle in developed countries. At the same time, politicians, the media, and the public are worried about a lack of economic integration. Refugees start at a lower employment and income level, but subsequently “catch up” to the level of family unification migrants. However, both refugees and family migrants do not “catch up” to the economic integration levels of labor migrants. A faster integration process would significantly benefit refugees and their new host countries.

Migration and female genital mutilation

Can migrants help change the social norm?

10.15185/izawol.282 282 Mesplé-Somps, S

by Sandrine Mesplé-Somps

More than 100 million women and girls in the world have had their genitals cut for cultural, religious, or other non-medical reasons. Even though international organizations condemn female genital mutilation (FGM), or cutting, as a violation of human rights, and most nations have banned it, it remains prevalent in many African countries, and is slow to decline. This persistence raises questions about the effectiveness of international and national laws prohibiting the practice as well as the potential role of returning migrants in changing embedded cultural norms. Does migration change migrants’ opinions and attitudes to this custom? If so, do they transfer the new norms to their origin countries?

Ethnic networks and location choice of immigrants

Ethnic capital produced by local concentration of immigrants generates greater economic activity

10.15185/izawol.284 284 Maani, S

by Sholeh A. Maani

Immigrants can initially face significant difficulties integrating into the economy of the host country, due to information gaps about the local labor market, limited language proficiency, and unfamiliarity with the local culture. Settlement in a region where economic and social networks based on familiar cultural or language factors (“ethnic capital”) exist provides an effective strategy for economic integration. As international migration into culturally diverse countries increases, ethnic networks will be important considerations in managing immigration selection, language proficiency requirements, and regional economic policies.

How does migration affect child labor in sending countries?

Emigration from developing countries can change local labor market conditions and children’s work time

10.15185/izawol.286 286 Mendola, M

by Mariapia Mendola

International labor mobility has resulted in sweeping socio-economic changes in many developing countries. When a family member migrates for work and sends back remittances, household income may rise, and with it investment in children’s schooling. Emigration flows may also alter local labor market conditions and wage rates, which can in turn affect children’s labor supply. Whether there is more or less child labor as a result of migration may depend on the skill composition of the migrants and on how family members respond to wage changes.

Ethnic enclaves and immigrant economic integration

High-quality enclave networks encourage labor market success for newly arriving immigrants

10.15185/izawol.287 287 Schüller, S

by Simone Schüller

Immigrants are typically not evenly distributed within host countries; instead they tend to cluster in particular neighborhoods. But does clustering in ethnic enclaves help explain the persistent differences in employment rates and earnings between immigrants and the native population? Empirical studies consistently find that residing in an enclave can increase earnings. While it is still ambiguous whether mainly low-skilled immigrants benefit, or whether employment probabilities are affected, it is clear that effects are driven by enclave “quality” (in terms of income, education, and employment rates) rather than enclave size.

How immigration affects investment and productivity in host and home countries

Immigration may boost foreign direct investment, productivity, and housing investment

10.15185/izawol.292 292 Grossmann, V

by Volker Grossmann

Migration policies need to consider how immigration affects investment behavior and productivity, and how these effects vary with the type of migration. College-educated immigrants may do more to stimulate foreign direct investment and research and development than low-skilled immigrants, and productivity effects would be expected to be highest for immigrants in scientific and engineering fields. By raising the demand for housing, immigration also spurs residential investment. However, residential investment is unlikely to expand enough to prevent housing costs from rising, which has implications for income distribution in society.

Where do immigrants retire to?

Immigrants’ retirement decisions can greatly affect health care and social protection costs

10.15185/izawol.297 297 De Coulon, A

by Augustin De Coulon

As migration rates increase across the world, the choice of whether to retire in the host or home country is becoming a key decision for up to 15% of the world’s population, and this proportion is growing rapidly. Large waves of immigrants who re-settled in the second half of the 20th century are now beginning to retire. Although immigrants’ location choice at retirement is an area that has barely been studied, this decision has crucial implications for health care and social protection expenditures, both in host and origin countries.

The effect of emigration on home-country political institutions

Migrants can have positive political effects on their home countries’ institutions

10.15185/izawol.307 307 Lodigiani, E

by Elisabetta Lodigiani

The number of immigrants from developing countries living in richer, more developed countries has increased substantially during the last decades. At the same time, the quality of institutions in developing countries has also improved. The data thus suggest a close positive correlation between average emigration rates and institutional quality. Recent empirical literature investigates whether international migration can be an important factor for institutional development. Overall, the findings indicate that emigration to institutionally developed countries induces a positive effect on home-country institutions.