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The TiL Rundown is where we analyze current and future trends in society, technology, inovation and culture: a column tailored for those of you seeking to be constantly ahead of time.

Immigration: the Good, the Bad & the Economics

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Migration — a topic that has dominated conversations, shaped political preferences, and chalked a stark divide in society. But between the familiar accusations regarding the stealing of jobs against impassioned pleas to appeal to moral conscience, where do the facts lie? What is the true economic impact of migrants? 

Over the past few decades, immigration has become a significantly divisive topic. It is a topic that has transcended discussions behind closed political chambers and made its way into the mainstream. Immigration is often cited as one of the main concerns of voters heading to the polls and the importance of this issue in shaping voters’ political beliefs cannot be underestimated. 

Unfortunately, however, as with all other issues that tend to make or break political beliefs, immigration is an issue that has become rife with rhetoric and misinformation. According to a survey conducted by Eurobarometer in 2018, 38% of EU citizens see immigration as more of a problem than an opportunity while nearly 40% believed that they were taking jobs away from the native population. This is especially true when it comes to the economic impact of immigrants, with the familiar phrase of “stealing our jobs” coming to mind. On the contrary, however, a vast majority of the research conducted on immigration points to a different reality. So, what is immigration’s impact? How does the average immigrant affect the economy? Will they really steal your job?

Historical overview 

The trends of migration in Europe have changed significantly over the past century or so. While there was an overwhelming trend of people immigrating from Europe to the Americas in the earlier part of the century, there was a marked shift towards increased migration from abroad post-WWII. In the first half of the 20th century, around 3 million people from beyond Europe immigrated to the continent while in the second half, almost 25 million immigrants from abroad moved to Europe. Today, all EU countries have a sizeable immigrant population with Italy, Germany, Spain, and France comprising nearly 70% of the EU’s immigrant population coming from non-EU countries. What happened to propel this change?

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Source: International Migration Outlook 2021

Researchers tend to divide the post-war period into three periods based on patterns of immigration: the immediate post-war period, the period following the oil crisis of 1974, and the period from the 1990s onwards. The immediate post-war period saw the demise of Europe’s empires, which saw many people immigrate to the former colonial powers, particularly the UK, France, the Netherlands, and Belgium. In addition, countries like Germany, Austria, Switzerland, the Netherlands, and Belgium recruited many workers from Turkey and Morocco via guest worker schemes as a response to labor force shortages following the war years. Although these programs were generally meant to be temporary, many workers stayed back. In this first period, immigration tended to be viewed favorably, as a mechanism for encouraging economic growth and filling shortages.

In the 1970s, however, European countries began to impose harsher restrictions on immigration and the main source of immigration shifted to family reunification. This was propelled by the oil crisis of 1973-4, which convinced many European nations that unbridled economic growth was not the answer. Immigration policies grew significantly stricter and even advanced towards wha is now termed the ‘migration stop’. At the same time, asylum applications were rising rapidly owing to various conflicts around the world. From the early 1970s to the end of the 20th century, asylum applications in the EU, at that time 15 member states, rose from a mere 15,000 to 300,000 every year. 

Finally, in the period from the 1990s to today, we see immigration in the EU evolve into an entirely different issue — governments are making concentrated efforts to keep out the bulk of immigrants while attracting only the highest-skilled ones. This has been helped, in part, by the rise in anti-immigrant rhetoric and the politicization of the immigrant issue, especially in the years following the 2008 crisis. But do these claims bear fruit? 

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Immigrants & the economy

The net fiscal impact of immigrants, the difference between the taxes and contributions they pay to the system, and the costs of the benefits they receive, have been studied by various researchers across many countries. According to the International Migration Outlook 2021, which studied various EU countries from 2006 to 2018, the net fiscal impact of immigrants was positive for all countries examined. Essentially, the research found that immigrants contribute more to the economy than they receive in benefits, debunking the claim that immigrants are a burden on the welfare state.

Source: International Migration Outlook 2021

Of course, however, the contribution of immigrants to the economy depends largely on the age demographics to which they belong. While immigrants of working age tend to contribute three times more to the system than the system provides to them, the same cannot be said for older immigrants, who require greater expenditure on public health and pensions. Fortunately enough, the same study found that immigrants in the EU are overrepresented in the group of prime-aged individuals, the group with the highest fiscal contribution. Between 2002 and 2012, immigrants represented 70% of the increase in the workforce in Europe.

Meanwhile, immigrants also represent a boon for trade: according to 48 studies conducted between 1994 and 2010, an increase in the immigrant population of 10% increased bilateral trade by an estimated average of 1.5%. Although difficult to understand why precisely this occurs, it can be at least partially attributed to the links that immigrants have with their home countries, which facilitates trade flows between the host and home country. 

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Conclusion

When appealing to facts, there remains little to be said on the topic of immigrants and their impact on the economy. As was believed in the post-war period of immigration into Europe, immigrants can represent a valuable asset to the labor market, especially now at a time in Europe when populations are aging and the birth rate is sorely lagging behind. 

Regardless of one’s political preferences, immigration is one issue (among many) that can and should be decided based on the mountain of facts and data available and not merely party preferences.

Sources

https://link.springer.com/chapter/10.1007/978-3-319-21674-4_3

https://www.oecd-ilibrary.org/sites/4ccb6899-en/index.html?itemId=/content/component/4ccb6899-en

https://wol.iza.org/articles/impact-of-migration-on-trade/long

Author profile

I'm a third-year student in the BIG program from Lahore, Pakistan. I enjoy learning about and discussing politics, history, and religion, and particularly the interactions between the three.

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