Sunday, April 10, 2016

Migration is good for everyone

The current issue of New Scientist has as its theme migration and as usual it has important information to convey for people to understand about why we are often on the move. One of the dominant, but empirically unjustified images is of masses of people flowing in… taking away jobs, pushing up housing prices and overloading social services,” writes Stephen Castles at the University of Sydney, Australia, and two colleagues in their book, The Age of Migration. They argue that an increase in migration is often the result rather than the cause of economic changes that harm natives – such as neoliberal economic policies. “The overwhelming majority of research finds small to no effects of migration on employment and wages,” says Douglas Nelson of Tulane University in New Orleans. “On purely economic grounds, immigration is good for everyone.” You would expect anti-immigrant views to run high where jobs are scarce. Yet a 2013 study of 24 European countries found that people living in areas of high unemployment tended not to have negative views of migrants.

More than 240 million people worldwide are international migrants. Refugees account for fewer than 10 per cent of the total and, in theory, they are the least contentious group, because many countries have signed international commitments to admit them. The rest are moving to work, or to join family members who have jobs. When such people travel with refugees, they are often derided as “just” economic migrants.

This is unfair, says Alex Betts, head of the Refugee Studies Centre at the University of Oxford. Whether or not they meet the official definition of a refugee, many are escaping dire conditions that pose a threat to their survival. Although globalisation of the world’s economy has lifted millions out of poverty, it has not been able to create enough jobs where there are people in need of work. That’s why some see migration as a crisis. The 2008 financial crash spawned insecurity about jobs and concerns about economic migrants. Several populist parties took the opportunity to warn of a flood of freeloaders at the gates, increasing the issue’s political visibility and hardening the policies of some mainstream parties, including in the UK. The US government decided not to bail out firms that hired too many immigrants. Spain paid migrants to leave – even after they had stopped coming as jobs disappeared. And feelings of insecurity remain.

“The logic driving this is the idea that migrant workers present additional competition for scarce jobs,” says Ian Goldin at the University of Oxford. Indeed, it is probably part of our evolved nature to think that more for you means less for me. But that’s not how modern economies work. If economies really were zero-sum games in this way, wages would go down as labour supply increased and natives might well lose jobs to immigrants. But no modern economic system is that simple, says Jacques Poot at the University of Waikato, New Zealand.
“More people expand the economy,” says Goldin, because people are moving from where they cannot work productively to where they can. In a survey of 15 European countries, the UN’s International Labour Organisation (ILO) found that for every 1 per cent increase in a country’s population caused by immigration, its GDP grew between 1.25 and 1.5 per cent. The World Bank estimates that if immigrants increased the workforces of wealthy countries by 3 per cent, that would boost world GDP by $356 billion by 2025. And removing all barriers to migration could have a massive effect. A meta-analysis of several independent mathematical models suggests it would increase world GDP by between 50 and 150 per cent.

But who gets those billions? Much of the extra wealth goes to the migrant’s home countries. In 2015, migrants sent home $440 billion, two and a half times the amount those countries received in foreign aid – promoting development and jobs at home.

It has been difficult to tease out the effect of free movement of workers from other economic results of membership. However, a study of non-EU member Switzerland is illuminating. Different parts of Switzerland allowed free access to EU workers at different times, enabling Giovanni Peri of the University of California, Davis, to isolate the effects. He found that while the workforce grew by 4 per cent, there was no change in wages and employment for natives overall. Wages increased a little for more educated Swiss people, who got jobs supervising newcomers, while some less educated Swiss people were displaced into different jobs. Peri has also looked at the situation in the US. “There is no evidence that immigrants crowd out US-born workers in either the short or the long run.” Natives instead capitalise on language and other skills by moving from manual jobs to better-paid positions. Peri calculates that immigration to the US between 1990 and 2007 boosted the average wage by $5100 – a quarter of the total wage rise during that period.

Further evidence comes from a meta-analysis Poot did in 2010, which collated all the research done up until that point. It reveals that rises in a country’s workforce attributable to foreign-born workers have only a small effect on wages, which could be positive or negative. At worst, a 1 per cent rise caused wages to fall by 0.2 per cent, mostly for earlier generations of immigrants. The impact on the availability of jobs for natives is “basically zero”, he says. Any tendency for wages to fall with an increase in immigration can be counteracted by enforcing a minimum wage.

The UK Migration Advisory Committee came to a similar conclusion in 2012. “EU and non-EU migrants who have been in the UK for over five years are not associated with the displacement of British-born workers,” it reported. Very recent migrants do have a small impact, but mainly on previous migrants. What’s more, the ILO notes that low-skilled migrants do “dirty, dangerous and difficult” jobs, which locals do not want – crop picking, care work, cleaning and the like. Meanwhile, highly skilled migrants plug chronic labour shortages in sectors such as healthcare, education and IT. Nearly a third of UK doctors and 13 per cent of nurses are foreign-born.

Another presumption made about migrants is that they put a strain on benefit systems. This is also not borne out by the evidence. “It is widely assumed that economic migrants are mainly poor people out to live off the tax money of the relatively rich,” says human rights expert Ian Buruma. “Most of them are not spongers. They want to work.” A lot go not to countries offering generous benefits, but to where there are jobs. Some 82 million people, 36 per cent of the world’s current migrants, have moved from one developing country to another, especially from Haiti to the Dominican Republic, Egypt to Jordan, Indonesia to Malaysia and Burkina Faso to Ivory Coast.

Those who do end up in wealthier countries are not the burden people sometimes assume. The Organisation for Economic Co-operation and Development, which represents 34 of the world’s wealthiest nations, calculates that its immigrants on average pay as much in taxes as they take in benefits. Recent research shows that EU workers in the UK take less from the benefits system than native Brits do, mostly because they are younger on average. Moreover, they bring in education paid for by their native countries, and many return to their homeland before they need social security. Based on recent numbers, Britain should conservatively expect 140,000 net immigrants a year for the next 50 years. The Office for Budget Responsibility, the UK’s fiscal watchdog, calculates that if that number doubled, it would cut UK government debt by almost a third – while stopping immigration would up the debt by almost 50 per cent.

Illegal migrants make a surprising extra contribution, says Goldin. While many work “informally” without declaring income for taxes, those in formal work often have taxes automatically deducted from their pay cheques, but rarely claim benefits for fear of discovery. Social security paid by employers on behalf of such migrants, but never claimed by them, netted the US $20 billion between 1990 and 1998, says Goldin. That, plus social security contributions by young legal migrants who will not need benefits for decades, is now keeping US social security afloat, he says.

Apart from the so called economic downside of immigration many especially on the right highlight the supposed cultural threat to social cohesion. In particular, immigrants are often associated with crime. But here again the evidence doesn’t stack up. In 2013, Brian Bell at the London School of Economics found no change in violent crime in Britain linked either to a wave of asylum seekers in the 1990s, or eastern EU migrants after 2004. The asylum seekers were associated with a small increases in property crime such as theft – boosting existing local crime rates some 2 per cent – perhaps because they were not allowed to work, suggest the authors. But areas where eastern Europeans settled had significantly less of any crime. Another study found that immigrants had no impact on crime in Italy. And immigrants in the US are much less likely to commit crimes and are imprisoned less often than native-born Americans. Tim Wadsworth of the University of Colorado has even suggested that a rise in immigration in the 1990s may have driven an overall drop in US crime rates since then.

Nevertheless, immigrants can put pressure on local communities. High rates of arrival can temporarily strain schools, housing and other services. “That is what people tend to see,” says Goldin. He says investment is required to mitigate these problems. “Governments need to manage the costs, which tend to be short-term and local,” he says. That’s a challenge, but it can be done. Bryan Caplan of George Mason University in Fairfax, Virginia, points out that since the 1990s, 155 million Chinese have moved from the countryside to cities for work. “This shows it’s entirely possible to build new homes for hundreds of millions of migrants given a couple of decades.” China may be managing the biggest mass migration in history, but there’s one problem it mostly doesn’t face. Perceived threats to national identity often top natives’ list of concerns about immigrants. It can even be an issue when such identities are relatively recent constructs.

But countries with a clear ethnic identity and no recent history of significant immigration face the biggest problem, says Nelson. “It’s tricky for Sweden, which went from essentially no immigrants to 16 per cent in half a generation,” he says. And Denmark is another nation where anxiety over the loss of cultural homogeneity has been blamed for a backlash against immigrants.

Elsewhere, there has been a hardening of attitudes. Ellie Vasta of Macquarie University in Sydney, Australia, is trying to understand why Europe, which embraced multiculturalism in the 1970s, today calls for cohesion and nationalism, demanding that immigrants conform and testing them for “Britishness” or “Dutchness”. She blames an increasing loss of cohesion in society due to “individualising” forces from mass media to the structure of work. As people rely more on their own resources, they have a longing for community. The presence of foreigners appears to disrupt this, creating a “desire to control differences”, she says.

Robert Putnam at Harvard University finds that increased diversity lowers “social capital” such as trust, cooperation and altruism. However, this can be overcome in societies that accommodate, rather than erase, diversity by creating “a new, broader sense of ‘we'”. In other words, success lies not in assimilation, but in adaptation on both sides. Canada has tried to achieve this by basing its national identity on immigration. This view is shared by complex systems analyst Scott Page at the University of Michigan, Ann Arbor. He argues that culturally diverse groups, from cities to research teams, consistently outperform less diverse groups due to “cognitive diversity” – exposure to disagreement and alternative ways of thinking. “Immigration provides a steady inflow of new ways of seeing and thinking – hence the great success of immigrants in business start-ups, science and the arts,” he says.

One way to prepare for this would be to take a more coordinated and strategic approach to the global workforce. As it is, it’s hard to track migration amidst a mess of non-standardised data and incompatible rules. Countries do not agree on who is a migrant. Even the EU has no common policy or information for matching people to jobs. Migrants are usually managed by foreign ministries, not labour ministries that understand the job market. “What could be of real value would be for governments, companies and trade unions to get together and look at where the labour shortages are, and how they could be filled, with natives or migrants,” says Michelle Leighton, head of migration at the ILO. Amazingly, says Goldin, there is no global body to oversee the movement of people. Instead, each country jealously guards its borders while competing for workers.

In the coming days the SOYMB blog will be returning to the research on migration New Scientist have turned up. 


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