Performance of migrants

Evidence suggests that immigrants face an initial decline in their occupational status when they enter the host country labor market but that their position improves as they acquire more country-specific human, cultural, and occupational capital. High-skilled immigrants from countries that are economically, linguistically, and culturally different from the host country experience the greatest decline and the steepest subsequent increase in their occupational status. In the context of sharp international competition to attract high-skilled immigrants, this adjustment pattern is contradictory and discourages potential high-skilled migrants.

According to economic theory, a minimum wage reduces the number of low-wage jobs and increases the number of available workers, allowing greater hiring selectivity. More competition for a smaller number of low-wage jobs will disadvantage immigrants if employers perceive them as less skilled than native-born workers—and vice versa. Studies indicate that a higher minimum wage does not hurt immigrants, but there is no consensus on whether immigrants benefit at the expense of natives. Studies also reach disparate conclusions on whether higher minimum wages attract or repel immigrants.

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.

Over recent decades, Western countries have admitted many immigrants from non-traditional regions (e.g. Philippines, India, China), which has coincided with poor economic integration. Language proficiency is an important determinant of economic integration; in addition to being a component of human capital, it plays a key role in facilitating the transmission of other components of human capital. Examining the strengths and weaknesses of objective and subjective measures of language proficiency is crucial for good integration policy, as is understanding the relationship between these measures and earnings, a key indicator of economic integration.

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.

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 low- and middle-income 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.

Discrimination is a complex, multi-factor phenomenon. Evidence shows widespread discrimination on various grounds, including ethnic origin, sexual orientation, gender identity, religion or beliefs, disability, being over 55 years old, or being a woman. Combating discrimination requires combining the strengths of a range of anti-discrimination policies while also addressing their weaknesses. In particular, policymakers should thoroughly address prejudice (taste-based discrimination), stereotypes (statistical discrimination), cognitive biases, and attention-based discrimination.

Immigrants tend to live in clusters within host countries. Does clustering in ethnic enclaves explain the persistent differences in skill, 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 ambiguous whether employment probabilities are also affected or whether earnings benefits accrue to all immigrants, irrespective of their skill levels, it is clear that effects are driven by enclave “quality” (in terms of income, education, and employment) rather than enclave size.