Why Migrants Are Good for the Global Economy
WHY YOU SHOULD CARE
Because newcomers are a smart investment for nations.
By Devon Van Houten Maldonado
Populists, nationalists and xenophobes have it all wrong when it comes to immigration. The arguments for building border walls, reducing legal immigration (or eliminating it), deporting illegals and turning away migrants cost taxpayers in rich countries a lot of money, but eliminating these barriers could increase gross domestic product and wealth for everyone.
Despite populists’ passionate and tenacious opinions, decades of research show that more immigration, not less, creates prosperity for wealthy nations, and that the plus side of people flow extends to nonimmigrants. According to a 2016 McKinsey Global Institute report:
Migrants make up just 3.4 percent of the world’s population but contribute nearly 10 percent of global GDP.
In economic terms, it’s all about labor mobility. Contrary to popular belief, immigration barriers cost trillions in potential GDP. Economists agree that more newcomers equals more wealth, including for native-born workers, because immigrants occupy both the lowest-skill jobs and some of the most specialized, creating a more productive and competitive workforce.
“For the elimination of trade-policy barriers and capital-flow barriers, the estimated gains amount to less than a few percent of world GDP,” says Michael Clemens, a senior fellow at the Center for Global Development, a think tank in Washington, D.C. “For labor mobility barriers, the estimated gains are often in the range of 50 to 150 percent of world GDP.”
Immigrants are catalysts for innovation, resulting in more patents per capita.
Rather than indiscriminately providing foreigners residency status, says Clemens, streamlining the work visa process is a viable alternative that would create more wealth. In the United States, even some Republican lawmakers, such as House Judiciary Committee Chairman Bob Goodlatte (R-Va.), support the expansion of work visas. His immigration proposal would provide funding for increased border security, dramatically reduce the number of permanent residency visas and vastly increase temporary work visas. “It’s clear that greater international labor mobility would greatly raise global GDP by making workers more productive,” says Clemens. “I mean not just migrant workers but also non-migrant workers.”
Historically, immigrants work some of the least skilled and lowest-paying jobs, which, in theory, frees up nonimmigrants for more specialized work. In his 2016 paper for the Penn Wharton Public Policy Initiative, “Walls or Welcome Mats? Immigration and the Labor Market,” economist Howard F. Chang suggests that immigration barriers especially affect women and families by driving up the cost of domestic services like child care and housekeeping. “Low-skilled immigration allows women in the United States to spend less time on household chores and more time working in the labor market,” writes Chang.
Nonimmigrants in rich countries fear that their wages will be affected by cheaper immigrant labor, and politicians fuel these fears for political gain. But “when measured over a period of more than 10 years, the impact of immigration on the wages of natives overall is very small,” according to a 2017 report published by the National Academy of Sciences, a collaboration between dozens of leading economists and sociologists.
Furthermore, immigrants are catalysts for innovation, resulting in more patents per capita, according to the same study. “Most of that gain is reaped by native workers, not the immigrants,” says Clemens, because immigrants are also consumers. So migration barriers actually make rich countries less competitive by artificially blocking the influx of working-age, tax-paying laborers — the ones necessary for a dynamic economy.
- Devon Van Houten Maldonado, OZY Author Contact Devon Van Houten Maldonado