In economic terms, migration makes sense, despite the political debate it generates. According to a recent IMF study, both low-skilled and talented people who move over time help host nations by raising per capita income and raising quality of living. While low-skilled immigrants do vital positions when there is a shortage of native labor, enabling the country’s population to fill jobs requiring more skills, skilled immigration provides talent and expertise. Furthermore, the entire population benefits from these widely dispersed advantages. Consequently, it would be worthwhile to cover the initial expenses of integrating these new employees.
Migration is not a new concept:
In recent times, opinions toward immigration have become increasingly negative. However, migration is hardly a brand-new issue. Advanced economies already had sizable and expanding immigrant populations, despite the fact that the recent wave of refugees has brought it to light (Figure 1). In many developed economies, they account for 15–20% of the working-age population; in some Anglo-Saxon nations, including Australia and New Zealand, they make up almost 30%. Immigration accounted for half of the growth in working-age populations in advanced economies between 1990 and 2015; in most advanced economies, working-age populations will decline in the next ten years without immigration.
Skilled labor is traveling more and more, even if low-skilled workers have migrated the most and have stayed relatively steady as a share of the adult population over time. Compared to countries in continental Europe and the Nordic region, Anglo-Saxon countries typically have a larger percentage of skilled migrants.
Immigrants contribute to the growth of the working-age population, which is the most well-known way that they raise per capita income because, on average, they are younger than the native population. However, as this recent study demonstrates, it’s not the most significant.
Moving can be quite beneficial:
The study’s conclusions indicate that higher labor productivity is the primary way that immigration affects per capita income.
Immigration raises productivity and GDP per capita: In industrialized economies, a one percentage point increase in the proportion of immigrants in the adult population eventually raises GDP per person to 2%. Rather than a rise in the labor-to-population ratio, the primary cause of this improvement is an increase in labor productivity.
Migrants with both low and high levels of skill increase productivity: The contributions of highly trained workers, with their varied skill sets, are not the only advantages of immigration. Immigrants with low levels of education also significantly affect total production by enhancing the population’s skill set:
(a) Immigrants with low skill levels fill vital jobs that the native population struggles to fill, which makes the economy run more smoothly.
(b) The native population tends to move to more complicated occupations that demand language and communication skills—areas in which they have a competitive advantage—when low-skilled immigrants switch to more manual regular tasks.
(c) A remarkable example of complementarity occurs when low-skilled immigrants take care of homes and kids (the “nanny effect”), freeing up host country women to return to the workforce or put in more hours. In actuality, there are more skilled women in the labor force in nations where low-skilled migrants are more prevalent.
There is universal prosperity: An increase in the percentage of immigrants raises the average income per person for both the top 10% and the lowest 90% of earners, albeit the most skilled immigrants have the greatest positive impact on the average income of the highest-paid group. Furthermore, the 90% of the population with the lowest wages does not appear to have their disparity worsened by the presence of immigrants.
Work still has to be done
In terms of increased GDP per capita and better living standards; immigration can have a significant positive impact on advanced economies. The general populace shares in these advantages to a greater or lesser extent. However, the secret to reaping them is to deal with the immediate problems brought up by migration, specially making sure that newcomers assimilate into the workforce.
In order to do this, it’s important to encourage language acquisition, assist with job searches, properly acknowledge the education and professional background of immigrants, and encourage entrepreneurship. These measures allow immigrants to find and maintain jobs at a level appropriate with their talents and to contribute more and more to public finances, even though their integration may temporarily increase the strain on the fiscal cost.
Simultaneously, the indigenous people require assistance in adapting, including learning new skills. In order to prevent social tensions from getting worse, the government must exercise caution when it comes to overloading public services like healthcare and education.