In the nations that are popular destinations for immigrants, the subject of immigration is a hot topic for debate. Some citizens, like in President Donald Trump’s administration, argue that immigrants flood across borders, tax infrastructure and welfare systems, steal jobs and dilute the native culture. Others argue the opposite: immigration stimulates economic growth, generates a supply of labor, and creates dynamism.
The evidence clearly indicates that immigrants boost economic growth. However, there are several short-term and local social and economic costs. Like the debate on trade, where an industry desire for protectionism spars with a long-term need for open societies. Similarly, when it comes to immigration, defensive measures to keep migrants out jar with the economic need for migrants. A balance needs to be found that allows the benefits to outstrip the costs.
In 2015, an estimated 244 million migrants existed in the world, some 3.3% of the world’s population! This percentage has remained constant in the last 100 years. However, the global population has quadrupled, meaning there are more migrants than ever. Since the early 1900s, the number of nations has jumped from 50 to over 200. More borders create more immigrants.
The average annual actively migrating flow of about 15 million migrants can be broken down into four categories: family (2 million), student (4 million), economic (6 million), and refugee/asylum (3 million). Some 20 million acknowledged refugees exist worldwide, with about 86% of them received by nearby countries, an increase of 70% from 10 years ago.
In the United States and Europe, about a third of official immigrants are skilled, reflecting a need of those economies to find talent that cannot be internally supplied. Countries with freer borders aid their base of businesses, which become more profitable, adaptive and agile as they absorb new talent. As a result, governments collect more taxes and citizens benefit from society’s increased dynamism.
Yet, unskilled migrants are just as important as higher-skilled immigrants in the US and elsewhere. (The United States is currently one of the favored destinations of immigrants.) The former constitute a base of the services, agriculture and constructions sectors.
If immigrants play such a critical role, why the concern?
Some home citizens believe immigrants wreck economies and steal jobs. However, the evidence shows otherwise. In the US, immigrants have founded companies like Google, Yahoo! eBay, PayPal and Intel. Indeed, immigrant talent has founded over half of patents and Silicon Valley start-ups, despite making up less than 13% of the population.
Compared to the immigrant share of the US population, three times as many foreign-born residents have won Nobel Prizes, National Academy of Science recognition and Academy Awards. According to the Federal Reserve Bank of San Francisco: “immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization, which produces efficiency gains and boosts income per worker.”
At the same time, recent tax data indicates that immigrants contribute considerably more in fiscal contributions than the services and benefits they receive. World Bank numbers reveal that boosting immigration by margin equivalent to 3% of the labor force in developed countries would lead to a global economic gain of $356 billion. A few economists say if borders were fully open, with a free flow of migration, gains could be as high as $39 trillion for the global economy over 25 years.
The benefits of immigration
UCLA professor Raul Hinojosa-Ojeda, the author of The Economic Benefits of Comprehensive Immigration Reform, highlighted the benefits of immigration.
“That means a lot of good things for the economy. It means there is more money circulating in the economy. It means the economy is able to support a lot more jobs, so everybody wins,” Hinojosa-Ojeda said. “One of the reasons we grow and we have GDP growth is because we have new workers. The economy can’t grow if we don’t add these workers.”
He argued that legalizing immigrants, in particular, would be more beneficial to the economy. Not only would this generate more taxes, it would also boost consumption and allow immigrants to climb the occupational ladder. Expelling immigrants, on the other hand, would be more expensive, costing $2.6 trillion to the GDP of the United States over a period of 10 years, excluding the cost of deportation, his report states.
When it comes to the greater world population, injecting new life into the labor force consistently is important as the global population ages. In 1950, only 14 million people lived past the age of 80 in the United States. Today, over 100 million are passing that age mark with 400 million people expected to do the same by 2050.
With fewer children being born in all regions except Africa, experts estimate a fast rising dependency ratio and a fall in the OECD workforce from about 800 million to near 600 million by 2050. North America, Japan and Europe will be having especially acute problems.
With these developed regions expected to suffer from labor force shortages, progressive immigration policies can do a lot to generate economic gains for said countries.