Restricting immigration to young and skilled immigrants using a point system, as in Canada, Australia, and New Zealand, succeeds in selecting economically desirable immigrants and provides orderly management of population growth. But the point system cannot fix short-term skilled labor shortages in a timely manner nor prevent poor labor market outcomes for immigrants, since domestic employers can undervalue schooling and work experience acquired abroad. Furthermore, the efficacy of a point system can be compromised if unscreened visa categories receive higher priority.
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.
Empirical studies have found that achieving superdiversity—a substantial increase in the scale and scope of minority ethnic and immigrant groups in a region—can provide certain economic benefits, such as higher levels of worker productivity and innovation. Superdiversity can also provide a boost to local demand for goods and services. Other studies have found that these benefits can be compromised by political and populist anxieties about ethnic, religious, and linguistic diversity.
Since the 1990s, South Korea’s population has been aging and its fertility rate has fallen. At the same time, the number of Koreans living abroad has risen considerably. These trends threaten to diminish South Korea’s international and economic stature. To mitigate the negative effects of these new challenges, South Korea has begun to engage the seven million Koreans living abroad, transforming the diaspora into a positive force for long-term development.
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.
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.
by Pia Orrenius
Border enforcement of immigration laws attempts to raise the costs of illegal immigration, while interior enforcement also lowers the benefits. Border and interior enforcement therefore reduce the net benefits of illegal immigration and should lower the probability that an individual will decide to migrate. While some empirical studies find that border and interior enforcement serve as significant deterrents to illegal immigration, immigration enforcement is costly and carries significant unintended consequences, such as an increase in fraudulent and falsified documents and rising border death rates as migrants undertake more dangerous crossings.
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?
To expand the skilled workforce, countries need to attract skilled migrants. One way of doing this is by attracting and retaining international students. Empirical evidence suggests that concerns about brain drain—that is, the emigration of highly qualified workers—are overblown and that student migration can positively affect economic growth in both sending and receiving countries. However, migrants themselves reap most of the gains, through higher earnings. So that in the end, international student mobility can be beneficial for all participants: migrating students and those who remain at home, as well as home and host societies.
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.
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.
by Tim Hatton
Policy toward asylum-seekers has been controversial. Since the late 1990s, the EU has been developing a Common European Asylum System, but without clearly identifying the basis for cooperation. Providing a safe haven for refugees can be seen as a public good and this provides the rationale for policy coordination between governments. But where the volume of applications differs widely across countries, policy harmonization is not sufficient. Burden-sharing measures are needed as well, in order to achieve an optimal distribution of refugees across member states. Such policies are economically desirable and are more politically feasible than is sometimes believed.
Politicians, the media, and the public express concern that many immigrants fail to integrate economically. Research shows that the option to naturalize has considerable economic benefits for eligible immigrants, even in countries with a tradition of restrictive policies. First-generation immigrants who are naturalized have higher earnings and more stable jobs. The gains from citizenship are particularly apparent among immigrants from poorer countries. A key policy question is whether naturalization causes labor market success or is taken up by those immigrants who would anyway be most likely to succeed in the labor market.
by Horst Entorf
As global migration flows increase, so do the number of migrant students in host country schools. Yet migrants’ achievement scores lag well behind those of their native-born schoolmates. Performance gaps are explained largely by differences in migrant parents’ socio-economic background, cultural capital, and language skills. Education policy needs to focus on language teaching, parental involvement, diversity training, and beneficial social interaction between immigrant and native-born populations. With the wealth of many industrialized countries threatened by a lack of qualified labor, education of immigrants should be an important priority.
As migration flows to developed countries have increased in recent decades, so have the number of countries from which migrants arrive. Thus, it is increasingly important to consider what role differences in culture and language play in migration decisions. Recent work shows that culture and language may explain migration patterns to developed countries even better than traditional economic variables, such as income per capita and unemployment rates in destination and origin countries. Differences in culture and language may create barriers that prevent the full realization of the potential economic gains from international mobility.
Many immigrant destination countries face considerable pressure to change their immigration policies. One of the most innovative policies is auctioning the right to immigrate or to hire a foreign worker to the highest bidders. Visa auctions would be more efficient than current ways of allocating visas, could boost the economic contribution of immigration to the destination country, and would increase government revenues. However, visa auctions might weaken the importance of family ties in the migration process and create concerns about fairness and accessibility. No country has yet auctioned visas.
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.
The unequal distribution of refugees across countries could unravel the international refugee protection system or, in the case of the EU, hinder a common policy response to refugee crises. A way to distribute refugees efficiently, while respecting their rights, is to combine two market mechanisms. First, a market for tradable refugee admission quotas that allows refugees to be established wherever it is less costly to do so. Second, a matching system that links refugees to their preferred destinations, and host countries to their preferred types of refugees. The proposal is efficient but has yet to be tested in practice.
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.
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 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.
Millions of people enter (or remain in) countries without permission as they flee violence, war, or economic hardship. Regularization policies that offer residence and work rights have multiple and multi-layered effects on the economy and society, but they always directly affect the labor market opportunities of those who are regularized. Large numbers of undocumented people in many countries, a new political willingness to fight for human and civil rights, and dramatically increasing refugee flows mean continued pressure to enact regularization policies.
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.
Citizenship laws are changing in many countries. Although cross-national differences in the laws regulating access to citizenship are today not as large as they were several decades ago, they are still very apparent. Globally, there is convergence over some citizenship policy dimensions, but there is not a general convergence over “liberal” or “restrictive” approaches to citizenship policy. A growing body of research has put forward various comparative measures of citizenship and migrant integration policies. However, selecting the “right” index is a challenging task, and the underlying dynamics of citizenship laws are not easy to interpret as they differ across countries.