key topic

How does migration policy affect the labor market?

Migration policy deals with issues of national and international mobility, such as supply and demand of workers, naturalization and citizenship, and the treatment and integration of refugees and other migrant categories (e.g. economic and family migrants).

Migration’s impact on the native labor force, whether their health, access to jobs, or their wages, is a major concern among politicians, policymakers, and the public, and is a key factor in shaping migration policy. Research shows that immigration and emigration have both positive and negative implications for the native workforce as well as for family left behind and the workforce in sending countries, and that these often differ sharply from public perceptions and media coverage.

For new academic research on this topic, see IZA's discussion papers on migration policy.

  • Temporary migration entails benefits, but also costs, for sending and receiving countries

    There are important trade-offs between temporary and permanent migration

    Many migrants do not stay in their host countries permanently. On average, 15% of migrants leave their host country in a given year, many of whom will return to their home countries. Temporary migration benefits sending countries through remittances, investment, and skills accumulation. Receiving countries benefit via increases in their prime-working age populations while facing fewer social security obligations. These fiscal benefits must be balanced against lower incentives to integrate and invest in host country specific skills for temporary migrants.
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  • How to attract international students? Updated

    Studying abroad benefits the students, the host country, and those remaining at home

    Arnaud Chevalier, May 2022
    In knowledge-based economies, attracting and retaining international students can help expand the skilled workforce. Empirical evidence suggests that open migration policies and labor markets, whereby students can remain in the host country post-study, as well as good quality higher education institutions are crucial for successfully attracting international students. Student migration can positively affect economic growth in both sending and receiving countries, even though migrants themselves reap most of the gains, mainly through higher earnings.
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  • The labor market impact of Covid-19 on immigrants

    Job loss from Covid-19 was greater among immigrants than the native-born in most developed countries

    Hugh Cassidy, February 2022
    The labor market disruptions due to the Covid-19 pandemic and lockdowns impacted immigrant workers more severely than native-born workers in the US, Canada, Australia, and most EU countries. Immigrant workers in most of these countries were more vulnerable to the pandemic since they were more likely to be employed in jobs that are not as easy to perform remotely. The labor market recovery for both groups in the US was rapid, and by Fall 2020, the employment gaps between immigrant and native-born workers, both for men and women, had returned to pre-pandemic levels.
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  • Refugee children’s earnings in adulthood

    Refugee status and country of origin shape the economic outcomes of newcomer children later in life

    The number of refugees has increased worldwide, and about half of them are children and youth. These refugee children arrive in resettlement countries with a unique set of challenges caused by, for instance, extreme stress and trauma that call for specific policies to address their needs. Yet, the long-term effect of refugee status on newcomer children's economic trajectories varies by country of origin, signaling the need for effective resettlement support and initiatives to tackle broader systemic barriers for newcomer children, beyond refugees. Such findings challenge the commonly held notion of refugees as a distinctive, relatively homogeneous group with similar trajectories.
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  • Can market mechanisms solve the refugee crisis? Updated

    The combination of tradable quotas and matching would benefit host countries as well as refugees

    Ever since the major inflow of refugees (the “refugee crisis”) in 2015 and 2016, there has been heated debate about the appropriate distribution of refugees in the EU. Current policies revolve around mandatory quotas, which disregard the preferences of EU members and refugees alike. This problem can be addressed with two market mechanisms. First, tradable quotas minimize the cost of asylum provision for host countries. Second, a matching system gives refugees more discretion over where they are sheltered. While this proposal is theoretically appealing, it has yet to be tested in practice.
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  • Do guest worker programs give firms too much power?

    Guest worker programs requiring employer sponsorship can expand global opportunity—and grant employers market power

    Peter Norlander, June 2021
    Guest worker programs allow migrants to work abroad legally, and offer benefits to workers, firms, and nations. Guest workers are typically authorized to work only in specific labor markets, and are sponsored by, and must work for, a specific firm, making it difficult for guest workers to switch employers. Critics argue that the programs harm host country citizens and permanent residents (“existing workers”), and allow employers to exploit and abuse vulnerable foreign-born workers. Labor market institutions, competitive pressures, and firm strategy contribute to the effects of migration that occur through guest worker programs.
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