Implications of migration

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 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.

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.

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.

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.

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?

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.