Implications of migration

  • Taxpayer effects of immigration

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

    James P. Smith, October 2018
    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.
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  • Is high-skilled migration harmful to tax systems’ progressivity?

    Understanding how migration responds to tax changes will aid in setting the progressivity of a tax system

    Decreased transportation costs have led to the transmission of ideas and values across national borders that has helped reduce the barriers to international labor mobility. In this context, high-skilled individuals are more likely to vote with their feet in response to high income taxes. It is thus important to examine the magnitude of tax-driven migration responses in developed countries as well as the possible consequences of income tax competition between nation states. More specifically, how does the potential threat of migration affect a country’s optimal income tax policies?
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  • The effect of emigration on home-country political institutions

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

    Elisabetta Lodigiani, November 2016
    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.
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  • How immigration affects investment and productivity in host and home countries

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

    Volker Grossmann, September 2016
    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.
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  • Where do immigrants retire to?

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

    Augustin De Coulon, September 2016
    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.
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  • Migration and female genital mutilation

    Can migrants help change the social norm?

    Sandrine Mesplé-Somps, August 2016
    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?
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  • Ethnic networks and location choice of immigrants

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

    Sholeh A. Maani, August 2016
    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.
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  • How does migration affect child labor in sending countries?

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

    Mariapia Mendola, August 2016
    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.
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  • Ethnic enclaves and immigrant economic integration

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

    Simone Schüller, August 2016
    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.
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  • Integrating refugees into labor markets

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

    Pieter Bevelander, May 2016
    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.
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