The Economic Impact Of Immigration

Faced with the question that gives title to this article, we have seen how the economy encourages immigration, although other “non-economic” motivations for it to occur are also revealed.

But on the other hand, is immigration good for the economy?

A study about the economic impact of immigration was carried out by the OECD in 2014, describes the benefits caused by immigration in host countries.

In this study, he reveals the following aspects:

Immigration has generated 47% of the total increase in the labor force in the US, and 70% in the EU, feeding the same sectors of the economy that are booming, as well as others in decline, and a new flow of workers to replace the aging population.

It can produce a drop in real wages in the host labor market, due to the increase in the labor supply, although this effect is only short-term, and only occurs in specific sectors, highly labor-intensive, and not in the entire economy.

An increase in people working, with recurring income, stimulates the aggregate demand of the economy, economic growth and growth of the per capita income of the host country.

The study qualifies the high degree of training of these immigrants who are favoring the technological development of society.

The OECD shows that emigrants with higher education in OECD countries have increased by 70% in the last 10 years, reaching a total of 30 million in 2010-2011.

Most of the mass of immigrants who enter the host countries are of working age, this being one of the main reasons for their change of residence, which means that the immigrants who remain in the country are for work reasons. This means that they are fiscally profitable for the host country, that is, they pay more taxes and social insurance to the host State, than social benefits from it. It is true that the impact of these fiscal surpluses has little impact on the GDP of the host countries, since they are a minority proportion of the total population, the OECD measures an average impact of 0.5%, increasing to 2% in Switzerland and Luxembourg.

Finally, it clarifies that the entry of immigrant workers complements the labor market of the native population, does not replace it, and allows greater mobility of the labor market in general.

An economic study of these characteristics should never omit the economic impact of migration in the countries of origin. We can find the following parameters:

Demographic pressure is reduced and the labor market frees up as there is less labor supply, but at the cost of losing the probably younger and more qualified population.

Aggregate domestic demand decreases, as there is less population in the country, which could negatively impact its economic growth.

There is an increase in the inflow of foreign currency sent by the emigrated population to the country of origin.

Finally, a massive departure of the working-age population can negatively impact generational replacement and generate a fiscal deficit in the country, by generating less tax and social income from the working class, and creating more public spending through pensions and benefits. retirement from an older society.

In short, immigration is an increasingly logical phenomenon in an increasingly globalized world.

Globalization that has generated many more economic differences between countries, encouraging and motivating the process even more.

Migratory flows produce population readjustments in an increasingly dynamic economic world.

Countries should be more open to this increasingly global phenomenon, and to a greater tendency to encourage and regularize it.