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If this is the sum total of the economic effects of migration on the indigenous population, it is surely difficult to understand why there is an overwhelming consensus among economists that migration
has been such a good thing. Perhaps we are missing some important effects? I now turn to some that have been suggested and some others that I think have as yet been unjustifiably neglected.
The Effects of Immigrant Exceptionalism
An argument often invoked in favor of migration is that big benefits accrue in the long term. The proposition is that migrants are disproportionately innovative, or at least sufficiently different that they think out of the box, and so accelerate the overall pace of innovation. A commonly cited figure is that in the United States immigrants and their children account for a disproportionate number of patented inventions. In short, immigrants tend to be exceptional. This is an important argument: immigration of the innovative may increase the rate of growth out of proportion to immigrant numbers. However, the American experience may be due more
to the exceptional nature of America, as a magnet for innovative entrepreneurs, than to the exceptional nature of migrants globally.
Further, even if migrants are self-selected to be exceptional, then the gains for high-income countries are offset by losses for poor countries of origin. A talent transfer from poor societies to rich ones is not necessarily something that should be cause for global celebration. For completeness, it is just possible that even if migrants are disproportionately innovative, it is not because innovative people are more likely to migrate, but because the very experience of immigration makes people more innovative. For example, there is some evidence that the challenge of bilingualism raises
intelligence.3
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The long-term growth effects of immigration are difficult to measure. Immigrant exceptionalism is itself likely to persist only for the medium term: in the long term the descendants of migrants merge into the general population. So the one clear long-term effect of migration is that the population is larger. At high income levels there is virtually no relationship between the size of a country’s population and its income, so we should not expect much of a
long-term economic effect from migration one way or the other.
Luxembourg, Singapore, Norway, and Denmark all have small
populations yet provide among the highest incomes in the world for their citizens. Hence, whether a larger population is a benefit or a cost depends primarily upon whether the country was under- or overpopulated relative to its usable geographic area. A likely contender for underpopulation is Australia, an entire continent with only 30 million people. Max Corden, the distinguished Australian economist, sets out a convincing case that Australia would benefit
from a substantially larger population. 4 At the other end of the spectrum, England and the Netherlands are the most densely populated countries in Europe and, indeed, among the most densely populated in the world. At such high densities open space is scarce.
As population rises, not only does that space become yet more heavily used, it contracts absolutely due to the extra need for housing and infrastructure, so substantial net migration is unlikely to
deliver net long-run benefits and is ultimately unsustainable. 5
The tendency of immigrants to succeed helps, in the medium
term, to drive the economy forward, and this is a gain for the indigenous. But as with migration more generally, at sufficient scale even the disproportionate success of immigrants can become a problem.
Among the least successful part of the indigenous population the success of immigrants can demoralize, rather than inspire. In America, the children of immigrants on average have higher education and
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wages than the children of the indigenous population. 6 In Brit-
ain the overarching perennial social problem has been the low aspirations of children from the working class—a trait precisely opposite to that of immigrants. Both traits tend to be self-fulfilling. Faced by decades of frustration of hopes, the dominant narrative of the indigenous underclass has evolved as fatalism: avoid disappointment by not trying. Being overtaken by immigrants can deepen a sense of the inevitability of failure. Even those children of immigrants whose home language is not English now outperform the children of the bottom half of the indigenous working class. Demoralization may be compounded by competition: those working-class children who buck the social pressure to conform to expectations of failure are, in effect, competing for space on the escalators—colleges and training programs—with the children of aspiring migrants. Further, the problems faced by the children of immigrants—language and
discrimination—are concrete and addressable by sufficiently active policy, and so they indeed get addressed. Yet this can tend to crowd out the more nebulous and difficult-to-address problems of low aspirations by sections of the indigenous population.
Even toward the top of the spectrum of achievement, the hyper-success of immigrants can cause problems. Famously, East Asian
“tiger mothers” drive their children to attain outstanding accom-plishments. Their methods are controversial because some consider them to sacrifice the normal pleasures of childhood—daydreaming and play. So the immigration of East Asians into a society with less effective childrearing practices has the predictable result that the cream of selective educational places will be taken by this particular segment of immigrants. For example, in Sydney, the main city of Australia, the school that has traditionally been considered the best in the city is now around 90 percent East Asian. In New York the premier publicly funded schools, such as Stuyvesant and Bronx
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Science, are similarly around 70 percent Asian. The smart children of the indigenous population have been displaced. Of course, the rising generation of Australians and Americans is likely to be even smarter than it would have been without this competition from motivated immigrants. In some meaningful sense, Australians and Americans will benefit overall from this brilliance. Yet it is also meaningful to say that fewer children of the indigenous population will achieve the “glittering prizes” of outstanding success.
Whether the indigenous population regards this as a net gain or a net loss is in principle an open question. One below-the-radar response of many North American universities has been to impose de facto quotas on East Asians. Some British private schools appear to be racially discriminatory in the opposite direction: such is the competition to excel in exam league tables that admitting a high proportion of East Asians is a temptingly easy route to success.
Decentralized surreptitious discrimination by universities and schools is surely unethical, though it is a natural response to a vacuum in government policy. In turn, this vacuum is a consequence of the taboo on public discussion.
The same process is occurring in Canada but on a larger scale, and scale can matter. East Asians now occupy around half of the university places for subjects such as law. So, quite probably, in the next generation around half of Canadian judges will be of East Asian origin. Whether such a composition of the judiciary is a matter of concern for the host population depends upon how well East Asians integrate into Canadian society. At one end of the spectrum, East Asians simply become Canadians: that half the judges are of East Asian origin is of no more consequence than if half of them were left-handed. But at the other end of the spectrum, suppose that encouraged by multiculturalism, East Asians were to form into a hermetic community, clustered together, with endogamous
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marriage, and a distinct culture of values and beliefs. It might then quite reasonably be troubling to the host population that such a high proportion of court cases were being judged by a group that had remained culturally distinct.
A further respect in which immigrants tend to be exceptional i
s their assets. While most migrants from poor countries come with fewer assets than the indigenous population and hence compete for social housing, wealth has become one of the rationing criteria for the right of entry. As a result, the wealth distribution of migrants is skewed relative to the indigenous at both ends: not only more poor, but also more rich. The popular rationale for the policy of admitting the wealthy is that the extra capital they bring will raise productivity and wages. Economists should be skeptical of this argument.
Capital flows easily between the high-income countries, so that the additional capital brought by migrants is likely to be offset by an outflow that restores equilibrium in financial markets. But because the direct inflows of wealth are highly visible, whereas the offsetting outflows are unnoticed, politicians have increasingly used wealth as an entry criterion. The immigration of the wealthy does, however, have consequences for the housing market: wealthy people buy
expensive properties. For example, in London around 70 percent of elite housing is now being bought by migrants. This might rebound on society. Fred Hirsch coined the concept of “positional goods”: those goods that confer social prestige but are in fixed supply. 7 He was concerned that rising prosperity would breed frustration as people found themselves priced out of such goods despite higher incomes. If Hirsch was right, then even the apparently benign, albeit demeaning, national mission statement “Give me your rich”
might be questionable.
While the immigration of the superrich may be less benign that it seems, the anti-migration lobby makes play with another respect in
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which migrants tend to be exceptional, namely their criminality. The data on migrant criminality is surprisingly limited, but a measurable proxy is the representation of foreigners in the prison population.
Across Europe, for a variety of reasons, foreigners tend to be heavily overrepresented in the prison population. France is fairly typical, with foreigners constituting around 6 percent of the overall population and 21 percent of the prison population. This tendency is not general beyond Europe: in America migrants have significantly lower rates of criminality than the indigenous population. I discussed this evidence with the chief scientific officer of the British Home Office, and there seem to be four distinct influences. One is the culture that
migrants bring with them from their society of origin. 8 Professor Sampson, a sociologist at Harvard, explains the below-average criminality of migrants to the United States by some salient social characteristics of Mexicans. He likens their strong family structures, work ethic, and religious commitment, all of which tend to reduce criminality, to the American culture of the 1950s. Since cultures vary enormously between different immigrant groups, this influence is determined by the composition of migration rather than by its scale.
A second influence is the legitimate opportunities that migrants face in their host country. If they have few skills and face discrimination in the job market they are more likely to opt for criminality. Whether this influence produces a strong link between migration and criminality thus depends on both the skill composition of migration and labor market policies. A third influence is demographic: most crime is committed by young men, so if immigration rules disproportionately favor those who are young and male, migrants will be overrepresented in the prison population. A fourth influence is social bonds to other people in the society. Being antisocial, criminality is easier to reconcile with self-respect: the weaker the attachment is to potential victims, the weaker the mutual regard will be.
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Pulling together the effects on the incomes of the indigenous over different time horizons, the short-term effects depend upon who you are. There seems to be reasonable evidence that at the bottom of the income spectrum indigenous workers face slightly lower wages, reduced mobility, and larger losses on social housing, but most workers gain. In the medium term the tendency of immigrants to succeed raises incomes but may squeeze indigenes out of glittering prizes. In the long term any economic effects are trivial.
The one clear long-term effect is that there is less open space per person.
Are Immigrants Needed to Offset an Aging Population?
A further common argument in favor of migration, especially in
Europe, is demographic. 9 This is the notion that “We need immigrants because we’re aging.” A few societies have contrived, as a result of grossly incompetent social policies, to have peculiar demographic profiles for their indigenous population. One of the most extreme is Russia, where the post-Soviet catastrophe of mismanaged economic transition led to a collapse in the birthrate and higher mortality. The Russian population has been declining and is now just starting to recover. An implication is that there will be a phase during which the dependency ratio—the number of dependents per person of working age—rises quite sharply. One way for Russia to correct this imbalance would be to encourage the immigration of young workers. Less dramatically, Italy and China have the same problem. Immigration, if permanent, is a rather drastic way to correct a temporary demographic imbalance. There are several alternatives, such as emigration of some of the elderly: for example, many Norwegians now retire to southern Europe. Or the society can spend some of its assets, just as individual people do
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once they retire. By spending assets the society would be able to import more goods than it exported. In turn, this would release workers who could instead cater for the needs of the elderly. Such a rundown of assets would be feasible for Russia, which has huge foreign exchange reserves and vast natural resources.
However, the mere fact that a society is aging is not a reason to need extra workers. One of the most encouraging achievements of the interplay between science and public policy is the rapid increase in global life expectancy, by about two years each decade. Born four decades after my father, I have a life expectancy around eight years longer. Given the tendency of the media to pessimism, this is sometimes reported as though it were a problem: a looming liability of the aged infirm. But actually, years of active life are expanding about as rapidly as years of total life. The only reason that aging might give rise to a problem is because of policy ineptitude. When legal retirement ages and pensions were introduced, typically around the mid-twentieth century, politicians lazily fixed the age of retirement at a specific number such as sixty-five or sixty, rather than relative to average life expectancy. Each decade two more years are added to life expectancy and all of this, by default, is added to the period of retirement. As a result, societies go into a frenzy of angry disappointment on the rare occasions when politicians muster the gumption to raise the age to offset some of the increase in life expectancy. With life expectancy rising so rapidly, assigning the entire increase to longer retirement is unaffordable.
As a society gets richer, it can gradually afford to reduce the retirement age relative to life expectancy, but the default option should not be set at a particular age.
Given the ineptitude of governments in fixing the retirement
age, why not bail ourselves out by some youthful immigration?
Why not: because such a strategy would be unsustainable. An influx
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of immigrants of working age gives a society only a temporary fiscal windfall, whereas increased life expectancy is a continuing process.
Economics has developed an unambiguous analysis of how a
temporary windfall should be handled: it should be saved. For example, the government could use a temporary increase in revenues from youthful immigration to reduce the public debt. What it should categorically not do is use them to incur new, ongoing obligations for spending, such as pensions. Yet that is what the argument “We need immigrants to counter an aging population”
amounts to.
Further, the demographic argument presupposes that migrants
reduce the r
atio of dependents to workers: being young, they are in the workforce and so balance the expanding retired indigenous population. But working migrants have both children and parents.
One of the distinctive norms of low-income societies is the number of children that women want: until they adjust to high-income norms, migrants from low-income societies tend to have disproportionately large numbers of children. Whether migrants bring their dependent parents to their host country will depend largely upon host-country migration policy. In Britain, by 1997 the desire among migrants from low-income countries to bring in dependent relatives was so considerable that only 12 percent of migrants were coming for work. Taking into account both children and parents, there is no presumption that migrants even temporarily reduce the dependency ratio. A series of recent research papers by Torben Andersen, a Danish professor of economics, investigates the likely effect of immigration on the sustainability of Scandinavian-type generous welfare systems. His conclusion is that far from helping to maintain them, migration may make them unviable because of the combination of the higher dependency ratios and lower skill levels
of migrants. 10
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Are Immigrants Needed to Fill Skill Shortages?
Another potential benefit of immigration is to fill skill shortages.
From time to time, particular skill niches may become underprovided by the indigenous population and are most readily met by selective immigration. In the 1990s Germany found that it was short of IT workers and tried to encourage temporary immigration of skilled Asians to rectify it. In the 1950s France found itself short of construction workers and brought them in from North Africa. In the 1970s Britain found itself short of nurses and recruited them from the Commonwealth. Over a longer period the British Medical Association, the country’s politely named trades union for doctors, has limited the supply of doctors (ostensibly to maintain standards, more plausibly to produce the scarcity that would justify high wages). As a result, British doctors are among the highest paid in Europe. In response, the British health service has recruited immigrant doctors. No society can anticipate all its needs for skills.
Paul Collier Page 12