Essay on Benefits of Immigration in the Economy

Immigration refers to a feature of the economic, as well as social life across different countries. However, the nature of this group varies significantly. In part, the differences results from the migration sources, for instance, in most of the European countries, citizens of the member states enjoy the right to free movement across the borders. In New Zealand, Canada and Australia, the labor laws play a critical role in the management of migration. Other sources of this activity are inclusive of the humanitarian grounds and family. Regardless of the causes of migration, it has a significant effect on every society and the economic impact is not an exception. Many policymakers have attempted to evaluate if immigration is a burden or beneficial to the societies. This question has raised controversies among the legislators and other governmental, as well as the non-governmental organizations. To answer this question, this paper will evaluate its effects in three key areas, these are the public purse, the economic growth and the labor market.

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According to the critics of immigration, it has negative effects on the economies in most of the countries across the world. They argue that as the population increases it puts pressure on the natural and man-made resources. For instance, in Australia, there are debates about how the farmers can acquire water to undertake irrigation, to address this problem, there is a likelihood of installing dams on the Northern side instead of letting the water through the open channels to cater for all people regardless of whether they are immigrants or not. Also, they have argued that this alternative is an environmental and economic cost in comparison to the techniques used in the past (OECD, 2). This trend implies that with immigration, there is an increase in population, which requires the government to raise the cost of addressing the needs of the immigrants.

About the impact of this activity in the cities, critics have identified two cost-related effects as people move from their home to the foreign countries because of various reasons. At first, it leads to overburdened infrastructure, this implies that as the federal and state governments offer support to population growth, they ignore other costs associated with population growth caused by immigration such as high demand for the public hospitals and schools, water supply problems, and increased traffic. Also, they argue even if the natives support the growth in population, it is logical to solve the infrastructural problems in the country before admitting huge numbers of migrants from the overseas. Focusing on the labor market, economists and politicians such as President Donald Trump during his presidential campaign last year, argued that it results to an decline in the wages and raises the unemployment levels (Hunt, 19). The basis of their argument is that increased labor supply through immigration relative to the growth of capital, which in the long-term is expensive to increase and fixed in the short-run is fixed leads to falling wages in the market. Moreover, if this trend persists relative to the supply of the natural resources then the results are the same. About the unemployment, some of the policymakers are against the movement across the borders as it causes the natives to lose their opportunities in the labor market since the immigrants demand low wages and there is a likelihood for the local and the multinational corporations existing in the country to demand their services.

Regardless of the critics pointing out the negative effects of immigration in the economy, the positive impacts outweigh them on various grounds. Based on the data from the United States National Bureau of Statistics, for the last decade, immigrants have represented approximately 47% of the workforce. Also, they make up 70% of the semi and non-skilled workers in Europe. In these countries only a small percentage came through via the managed labor migration, being a representative of a proportion of the movements. Other immigrant workers passed through other channels inclusive of the free movement, as well as the humanitarian immigration. About the transformations occurring in the tertiary-educated labor force, research studies have identified that the education type of this group varies significantly. Similar to the relationship between the older and the younger natives, the young immigrants are more educated in comparison to those almost in the retiring age. This is the same case for the immigrants joining the labor force. From the beginning of the 21st century, there has been an increase in the immigrant workers who are highly educated by approximately 31% in Canada, 14% in Europe, and 21% in the United States (OECD, 4). The following graph reflects the distribution of immigrants in jobs in the U.S.

Even if there is no direct relationship between the needs of the workforce and migration, 22% of the newly educated immigrants have taken their positions in the highly growing occupations in U.S, as well as 15% in the European nations.

In the same way, this group represents approximately 25% of the entries in the jobs regarded as strongly declining in the United States and Europe with 28% and 24% respectively. These occupations are inclusive of assemblers, machine operators, trade workers and craft in the European nations. In the United States, there are concerns in the repair, maintenance, installation and production jobs. It is clear that in all these fields, the immigrants are fulfilling the needs of the locals by taking the positions taken to lack the career prospects or are unattractive to them. On the other hand, the labor market imbalances have been addressed by free movement of people across the borders in Europe. Following the enlargements of the European Union in 2007 and 2004, there was an increase in the work mobility within the EFTA and EU regions (Liebig and Mo, 13). This change was included in the labor markets adjustment ability. The most recent estimates have showed that approximately 25% of the asymmetric shocks in the labor markets are absorbed by migration every year. While some of the analysts state that immigration results to a decline in the wages because of the increased labor supply, the data from the past ten years show that the low-skilled immigrants who are undocumented in the United States assist the skilled workers, specifically, through relieving them to undertake more high-value tasks and raise their wages. Moreover, in 2014, a study on the prospects of immigration established that an increase in the population of the skilled immigrant employees by approximately 10% raises the natives wages by 2.6%.

Considering the fiscal impacts of immigration on the economies, from the data from derived from most of the OECD countries, it is clear that the migrants make more social contributions and taxes in comparison to what they acquire in personal benefits. The most recent study on the fiscal effect of migration for the United States, Canada, Australia, and the European OECD nations has offered new internationally evidence about this issue. According to the findings of the research, the effect of the cumulative waves of this activity in the last 50 years is close to zero and rarely passing 0.5% of the Gross Domestic Product in either the negative or the positive terms. This effect is high in Luxembourg and Switzerland, where this group offer an estimated benefit of 2% of the GDP regarding the public contributions. Therefore, the immigrants are not a barrier for the governments to address the fiscal challenges or a burden to the public. Apart from the nations having a large proportion of the older immigrants, in others they make more social contributions and taxes than what they receive in benefits.

While critics against immigration in the United States have a feeling that this group receives social reimbursements without payment of the taxes, in reality this is not true because the existing data shows that they lead to budget surplus in most of the states. According to the Texas poll in 2006, an estimated 1.5 million immigrants residing there added almost $18 billion to the economy of the state while they received only $1.2 billion regarding their benefits. Based on a research study conducted in the state of Tennessee by the legislators in 2012, it was established the illegal immigrants generated $37 million surplus in the agricultural sector. These findings have been the same across the U.S since this population pays all the payroll, property and sales taxes while it is difficult for them to apply for the social welfare benefits because of having fear that their legal status will be exposed (Liebig and Mo, 22). According to the statement of Milton Friedman, It is one thing to have free immigration to jobs. It is another to have freedom to welfare and it is difficult to have them both. This quote reveals that there are fiscal benefits associated with immigration not only in the United States, but also other parts of the world.

Migration also spurs economic growth and innovation in different countries. If an individual evaluates the documented immigrants, it is clear that they enhance economic growth in countries such as U.S. Based on the 2016 Forbes ranking of the billionaires in America, offering evidence of their contribution to entrepreneurship, out of the 400 wealthiest personalities, 43 was from the overseas (Hunt, 31). International migration has indirect and direct benefits on the economic growth. Through the expansion of the labor force, the aggregate demand increases because more goods and services are generated in the economy. The graph below reflects the number of businesses established by migrants in comparison to the native Americans.Es

Moreover, the migrants enter the foreign countries with abilities and skills necessary to supplement the human capital. In most of the OECD countries, research shows that skilled immigrants enhance innovation, technological progress, as well as research locally. A study focusing on how the economic growth is affected by immigration between 1986 and 2006 in 22 OECD countries, it was established that it had a positive but a small effect as derived from the human capital. The impact was negligible because of the counteraction of the mechanical dilution.

According to this analysis, the opponents of the migration across the borders are against it because of the economic and social problems it causes such as straining the natural and the man-made resources as the population increases. However, the positive impacts inclusive of adjusting the conditions in the labor markets, generating of budget surplus and fostering economic growth outdo the former in all aspects.

Works Cited

Hunt, Joseph. Skilled Immigrants: Contributions to Innovations and Entrepreneurship in the US. Paris: OECD Publishing, 2010.

OECD. "Migration Policy Debates: Is Migration Good for the Economy?" 2014.

Liebig, T., and Mo J. The Fiscal Impact of Immigration in OECD Countries. Paris: OECD Publishing, 2013.