Reviewing the literature on the impact of immigrants on the economy, I’ve been impressed by the unanimity on the empirical question of whether immigrants increase unemployment or reduce wages in the receiving country:
“The main findings can be summarised as follows: Most studies suggest that immigration confers small net gains in terms of per capita output … Past immigration has had no obvious impact on native unemployment. It might even have been beneficial for the economy and for native employment to the extent that it acts as a source of flexibility.
Although much attention has been paid to the potential adverse effects of immigration on the labour market, migration may in fact confer a number of economic benefits to the host country. For the economy overall, it is harder still to determine with precision whether immigration induces net benefits or costs. A few studies, however, have attempted to do so and these typically find aggregate net benefits for the native population.” Immigration and Economic Consequences
“Our results indicate no detrimental effect of immigration. We find no support for the hypothesis that the absence of displacement effects is due to a response of native migration patterns.” Employment Effects of Immigration to Germany: An Analysis Based on Local Labor Markets
“Despite the popular belief that immigrants have a large adverse impact on the wages and employment opportunities of the native-born population, the literature on this question does not provide much support for this conclusion. Economic theory is equivocal, and empirical estimates in a variety of settings arid using a variety of approaches have shown that the effect of immigration on the labor market outcomes of natives is small. There is no evidence of economically significant reductions in native employment.” The Impact of Immigrantson Host Country Wages, Employment and Growth
“Using regression analysis, Addison and Worswick found that “there is no evidence that immigration has negatively impacted on the wages of young or low-skilled natives.” Furthermore, Addison’s study found that immigration did not increase unemployment among native workers. Rather, immigration decreased unemployment.” The impact of immigration on the earnings of natives: Evidence from Australian micro data.
These results are interesting only because the myth that immigrants ‘take jobs’ is so widespread. It is a peculiar myth – why would new people reduce the pool of productive jobs available? All countries have doubled their populations many times over due to childbirth and they never run out of productive work to do because there is no limited pool of work to be divided up. In Australia, huge population growth in the post war period corresponded with reliably low unemployment rates. Wherever people are willing to work for income, others are willing to invest and the legal system assists them in finding one another productive activities can be found.
Why then is the belief that immigrants deplete jobs so common that even a pro-immigration party in Australia would reduce its intake during a non-existent recession, despite immigrants actually acting as a free economic stimulus and creating jobs? The only good explanation I can see is anti-foreign bias. Humans are naturally tribal creatures and struggle to believe that economic interaction with foreigners can be beneficial to both parties. How else could people simultaneously believe that foreigners exhaust the pool of jobs but their own children don’t?
Given that immigration from dysfunctional to high functional countries may be the single cheapest way to improve the welfare of the world’s poor, this has to be one of the most pernicious myths about how to economy works.
Tagged: economics, immigration, utilitarianism
