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Myth 4: Economic migrants are a drain on rich world economies


There’s a special opprobrium reserved for those who move to a wealthier country to work and try to improve their lot. They are ‘undeserving’, unlike refugees fleeing violence who can gain a certain grudging acceptance if they have been victimized enough (although usually accompanied with cries of ‘but we have our own problems’ and ‘we can’t cope’).

In the Netherlands, where I live, economic migrants are often referred to pejoratively as gelukszoekers or chancers. One literal translation of the word – ‘happiness seekers’ – is supremely ironic considering the disgust with which it is deployed. A recent poll of 2,000 people found 75 per cent agreeing that there should be fewer immigrants in this category as opposed to a much smaller 26 per cent who wanted fewer war refugees.1

In the public mind, inflamed by the rhetoric of both mainstream media and politicians seeking to distract the electorate from the ravages of austerity, economic migrants are perceived as guzzling public services when not stealing jobs and lowering wages.

But looked at more soberly, in the light of research, such imagined impacts are wide of the mark.

Economic migrants are perceived as guzzling public services when not stealing jobs and lowering wages

On average across the 34 wealthy nations of the OECD, immigrant households made a net annual contribution of €2,500 ($2,800) each – that’s how much more they contributed in taxes than they received in public provision.2

In a 2014 study, researchers at University College London found that non-European immigrants to Britain (the most maligned group) were less likely to be on state benefits than natives and had contributed a net £5 billion in taxes between 2000 and 2011.3 Rather than draining public services, they were providing a much needed infusion that would benefit the rest of the population. As for social housing, new migrants made up less than two per cent of users.4 That battle lies elsewhere – in a government that sells off social housing while doing nothing to ease housing shortages in an overheated property market that benefits only the well-to-do.

The evident truth is that migration follows a demand for labour. And while politicians may talk tough, immigration policies have actually become somewhat less restrictive for high-skilled migrants and, sometimes, even for low-wage earners.5 Meanwhile, a double standard persists – when individuals from wealthy countries set off to more lucrative jobs in foreign lands this is viewed as entirely normal or ‘following a dream’.

Economic migrants tend to be young, enterprising and often bring skills that are in demand in recipient countries. They can ease pressures on an ageing workforce, pay into the pension pot and bring a dynamism to the economy. Over the longer term, as they themselves age, this positive impact evens out. Nonetheless, in Britain, the Office for Budget Responsibility predicted that if the country were to follow a high net-migration trajectory, government debt could be halved over 50 years through the input of working migrants.

A curious extreme is worth noting. Libertarian economists – the kind who worship market forces and demand the removal of all trade barriers – are avid advocates of mass economic migration, believing that this influx of labour would make world GDP shoot sky high.6 They see the imposition of immigration restrictions as a missed opportunity equivalent to leaving trillion-dollar bills lying on the sidewalk. Of course, the scale of immigration that would be required to achieve the ‘results’ suggested by their models would depopulate the Global South and is not going to happen.

Meanwhile, back in the real world and sticking to the evidence at hand, the more pressing issues are whether economic migrants take jobs and depress wages. Studies in this area show that if anyone is crowded out of the jobs market it tends to be the most recent former migrants. Where migrants have depressed wages in lower-income groups, it is on a very small scale and is usually temporary – one survey of OECD countries found it to be in the region of 0.12 per cent for a one-per-cent increase in immigrants.4

And there are studies that demonstrate the opposite. One study by economists Mette Foged and Giovanni Peri covered every single worker in Denmark from 1991 to 2008 and tracked how they responded to immigration, including large influxes of refugees from Somalia and Afghanistan. People who lived in communities which received the migrants saw their wages grow more rapidly than communities without migrants.7

The battle against low wages is also elsewhere – to be waged against political policies that favour the rich and create job insecurity. The ILO proposes that the way to strengthen growth and employment is to address inequality (the declining labour income share), minimum wages, collective labour bargaining and better social protections.

According to migration economist Michael Clemens: ‘Low-skill immigrants end up both taking jobs and creating jobs. The balance has been positive even in places where politicians and activists say that it must be negative. Communicating that fact will be a permanent challenge, because the ways that immigrants fill jobs are direct and visible; the ways they create jobs are indirect and invisible.’8

Finally, a splash of cold water. Whereas migration can bring positive economic results in the short term, in the long term the fiscal impact of migration over the last 50 years to the wealthy OECD countries has been, on average, close to zero – rarely going beyond 0.5 per cent of GDP either in the positive or negative direction.2 Migrants over this longer time frame can no longer be distinguished from other citizens. So why all the fuss and bother?

  1. I&O Research poll published in De Volkskrant, 15 August 2015..

  2. OECD, International Migration Outlook 2013.

  3. As reported in Debora MacKenzie, ‘Refugees welcome: the numbers add up’, New Scientist, 12 September 2015.

  4. nef, Why the cap won’t fit: Global migration realities 2010-2050, 2010.

  5. Hein de Haas, ‘Human migration: Myths, hysteria and facts’, 24 July 2014, nin.tl/migration-myths

  6. The website Open Borders: The Case offers a good collection of the arguments: openborders.info

  7. Immigrants and native workers: New analysis using longitudinal employer-employee data, 27 February 2014, nin.tl/immigrant-native-workers

  8. Interview on vice.com, 29 April 2015.

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