“Illegal immigration hurts American workers; burdens American taxpayers; and . . . costs our country billions and billions of dollars each year.”, claims former President Donald Trump, voicing the concerns of a large proportion of the US population. Such opinion was further reciprocated by 44% of UK citizens hoping to see a decrease in immigration, and these sentiments were even expressed with Australia’s One nation party leader, Pauline Hanson, exhibiting her view to “halt further immigration”. Initially, when considered, these concerns may seem reasonable – with limited job, food, and resource supplies but an exponentially increasing population, immigration may present a risk to the “native” public. However, such ideology incorrectly assumes the nature of labour demand is unvarying, and that immigrants may be a necessary or imperfect substitute for the country’s economic activity.
Arguments surrounding the economics of migration traditionally consider the need for immigration along with the potential economic dependency of the migrants. However, these factors are usually considered with the host country’s benefit as most favourable. When considered on a global factor, economists argue that the benefit to the global economy significantly outweighs the slightly negative impact to a single host country, with economists estimating that removal of all barriers to labour mobility would double the world’s GDP. Economists also claim that the dynamic nature, following recent empirical research, of markets and enterprises would allow them to adjust to an increase in workforce, without depressing wages and causing strain on the host country’s taxpayers. Indisputable gain, with minimum strain on host countries of this sort suggests that international immigration policy requires significant reform.
Any meaningful examination of immigration must be grounded in facts, especially considering that this issue is so complex and emotionally influenced. Therefore, economists used empirical research to find reasons for immigration in order to rationally explain the motivation behind over 15% of the global population ready to immigrate to another country if given the opportunity. One of the main reasons of immigration, as suggested by economic theory, is due to wage differences, education and ease of migration access. Immigrating individuals weigh the benefits associated with emigration against the costs and barriers that combat these endeavours, for example social isolation, varied cultural norms, lack of market expertise and more.
Despite the challenges surrounding migration, it can also result in significant productivity gains within the host country. When exploring a perfectly competitive labour market, each worker is paid in proportion to what they produce, meaning migration therefore allows them to seek higher wages by moving to where they are more productive. Economists estimate that this would lead to an additional $130 trillion in global output from more efficient allocation of labour. The increase in world GDP resulting from the migration of even 5% of the world’s poorest into developed nations would be greater than the increase from the full removal of all international barriers to the movement of goods, services, and capital. Yet the question remains.
Why are there still so many restrictions on immigration?
A driving factor of these restrictions is the presumption that immigrants will depress natives’ wages. However, due to language barriers, vocational and technical variances, in many cases, migrant workers have been seen not to be suitable substitutes, eliminating competition between the two. In fact, it has been found that immigrants complement native workers with non-educated natives moving to communication intensive jobs whilst migrants complete labour intensive jobs, and educated natives attain managerial positions whilst educated migrants continue to work as engineers and doctors etc. However, unfortunately these gains have been seen to be unequally distributed, with non-educated natives benefitting the least when separated into skills cells, however, these drawbacks are not limiting as people are still able to get educated and grow into new cells.
Furthermore, in the long-term wage rises alongside productivity will increase for a variety of reasons. High-skilled migrants attract capital investment and stimulates innovation, both of which amplify labour productivity. Low skilled migrants encourage high skilled natives to enter the workforce and, immigrants that are foreign direct investors boost native employment and expand the portfolio of available goods and services.
Additional to concerns about the labour market, developed countries’ natives harbour fear that immigrants cause a burden on native taxpayers. Nonetheless, these concerns can still be unsubstantiated as suggested by evidence. Fiscal impact of immigrants tends to be positive or generally small Empirical studies generally show that high-skilled migrants have a positive fiscal effect while large inflows of humanitarian immigrants have a lower or even negative impact. Furthermore, younger immigrants also tend to have more positive fiscal impacts as they are healthier and can integrate and assimilate into the labour force and the economy, better than old age immigrants.
These benefits, however, are not only limited to the host country, as origin countries too benefit as well. The largest benefit to origin countries comes from remittances; with 14 countries having remittance payments contributing to over 20% of their GDP. One main concern is that high-skilled immigrants will leave the origin country and no longer contribute to its economy – The Brain Drain. However, this theory of the brain drain fails to eventuate as additional to cash payments and investments, emigrants still return expertise to their native country. Moreover, the mere contemplation of emigration incentivises the attainment of greater education and training within the origin country, with eventually all these aspects contributing to more efficient factors of production and an increase in living standards.
Despite the benefits for both the origin and the host countries, developing efficacious and just immigration rules are a complicated normative process however, several more empirical studies done over the last several decades challenge the idea that immigrants, in aggregate, decrease local labour markets or strain government budgets. Alternatively, data suggests that international mobility, raises living standards for natives and immigrants, adding trillions to international GDP. Although immigration is an emotionally fuelled and politically ambivalent issue, further consideration of policy change for future generations must be implemented, based on economically sound empirical research and human decency.