How immigration benefits natives despite labour market imperfections and income redistribution
Michele Battisti, Gabriel Felbermayr, Giovanni Peri, Panu Poutvaara 08 August 2014
Immigration continues to be a hotly debated topic in most OECD countries. Economic models emphasising the benefits of immigration for natives have typically neglected unemployment and redistribution – precisely the things voters are most concerned about. This column analyses the effects of immigration in a world with labour market rigidities and income redistribution. In two-thirds of the 20 countries analysed, both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels. The average welfare gains from immigration are 1.25% and 1.00% for high- and low-skilled natives, respectively.
A fierce policy debate with little insight from economists
Labour markets Migration
Labour Markets, unemployment, wages, immigration, redistribution, welfare, Skill Complementarities
Culture: Persistence and evolution
Francesco Giavazzi, Ivan Petkov, Fabio Schiantarelli 16 June 2014
The persistence of cultural attitudes is an important determinant of the success of institutional reforms, and of the impact of immigration on a country’s culture. This column presents evidence from a study of European immigrants to the US. Some cultural traits – such as deep religious values – are highly persistent, whereas others – such as attitudes towards cooperation and redistribution – change more quickly. Many cultural attitudes evolve significantly between the second and fourth generations, and the persistence of different attitudes varies across countries of origin.
Are a person’s values and beliefs persistent, or do they evolve – possibly rather quickly – in response to the economic and institutional environment? This is a central question, for instance, if one is interested in assessing the likelihood of success of reforms that change rules within a country. Are such reforms doomed because a country’s culture cannot be changed, or can they succeed because they can change cultural attitudes by altering incentives, and if so, over what time horizon?
Frontiers of economic research Institutions and economics Migration
US, immigration, religion, values, Culture, attitudes, beliefs
Public opinion on immigration: Has the recession changed minds?
Timothy J Hatton 07 June 2014
In the recent European Parliament elections, right-wing populist parties made significant gains. Commentators have linked the rise of these parties to growing anti-immigration sentiment in the wake of the crisis. This column examines the extent to which public opinion has in fact shifted against immigration. Survey data shows that there was no Europe-wide surge in anti-immigration opinion between 2006 and 2010, although there was a marked change in Spain, Greece, and Ireland. This suggests that populist parties’ success cannot be attributed to anti-immigration sentiment alone.
Migration Politics and economics
democracy, immigration, politics, populism, European parliament
How highly educated immigrants raise native wages
Giovanni Peri, Kevin Shih, Chad Sparber 29 May 2014
Immigrants to the US are drawn from both ends of the education spectrum. This column looks at the effect of highly educated immigrants – in particular, those with degrees in Science, Technology, Engineering, or Mathematics – on total factor productivity growth. The authors find that foreign STEM workers can explain 30% to 60% of US TFP growth between 1990 and 2010.
Immigration to the US has risen tremendously in recent decades. Though media attention and popular discourse often focus on illegal immigrants or the high foreign-born presence among less-educated workers, the data show that immigrants are drawn from both ends of the education spectrum. At the low end, immigrants grew from 5% of workers with a high school degree or less in 1970 to 20.8% in 2010. At the high end, the figure rose from 7.3% to 18.2% for those with graduate degrees over the same period.1
Labour markets Migration Productivity and Innovation
US, growth, productivity, wages, immigration, innovation, complementarities, STEM
New evidence on the durability of social norms
John Helliwell, Shun Wang, Jinwen Xu 12 March 2014
Social norms have been shown to have important effects on economic outcomes. This column discusses new evidence showing that social norms are deeply rooted in long-standing cultures, but do evolve in reaction to major changes. It draws on a fully global sample involving migrants in more than 130 countries, using seven waves of the Gallup World Poll.
Recent studies find that individuals’ social norms – as evidenced by their opinions and behaviour – can be transmitted from one generation to the next within the same cultural setting (Algan and Cahuc 2010, Bjørnskov 2012, Dohmen et al. 2012, Guiso et al. 2006, Rainer and Siedler 2009, Rice and Feldman 1997). Studies also find that the current environment – such as institutions – plays an important role in shaping an individual’s social norms (Dinesen 2012, Nannestad et al. 2014, Alesina and La Ferrara 2002, Bjørnskov 2007, Glaeser et al. 2000, Helliwell and Wang 2011, Kosfeld et al.
Frontiers of economic research Migration
institutions, immigration, social attitudes, trust, migration, Culture, social norms
Migration and wage dynamics: Evidence from the Mexican peso crisis
Joan Monras 22 December 2013
The impact of low-skilled migration on US wages is high on the US economic and political agenda. This column discusses new evidence on the migration-wages link that is based on a natural experiment – the unexpectedly large inflow of Mexican immigrants to the US following the 1995 peso crisis. States that received large inflows of Mexican immigrants saw low-skilled wages decrease significantly in the short run. These local shocks spread rapidly across the US due to interstate labour reallocation.
Despite the large inflows of immigrants experienced in a number of OECD countries, there is no consensus among economists about the causal effect of low-skilled immigration on native labour market outcomes. The reason is simple. Migrants decide when and where to go, and the implied changes in labour market outcomes determines how natives respond to immigration inflows. Overcoming this reverse causality problem is difficult. A natural experiment turns out to help.
Labour markets Migration
immigration, peso crisis
The fiscal effects of immigration to the UK
Christian Dustmann, Tommaso Frattini 13 November 2013
The immigration debate has focused on immigrants’ net fiscal impact – whether they receive more in welfare payments and other benefits than they pay back in taxes. This column summarises recent research showing that – contrary to popular belief – immigrants who arrived in the UK since 2000 have contributed far more in taxes than they have received in benefits. Compared with natives of the same age, gender, and education level, recent immigrants are 21% less likely to receive benefits.
The impact of immigration on the tax and welfare system and the net fiscal consequences is perhaps the single most prominent economic issue in the public debate over the pros and cons of immigration. Accordingly, it is the debate about the fiscal effects – and not so much the effects on wages – of immigration that is currently dominating the debate not only in the UK, but also in other countries (see Boeri 2010).
Migration Welfare state and social Europe
welfare state, immigration, migration, benefits, UK, fiscal burden
Language barriers? The impact of non-native English speakers in the classroom
Charlotte Geay, Sandra McNally, Shqiponja Telhaj 14 September 2013
Are children who are non-native speakers making education worse for native speakers? Presenting new research on England, this column uses two different research strategies showing that there are, in fact, no spillover effects. These results support other recent studies on the subject. The growing proportion of non-native English speakers in primary schools should not be a cause for concern.
In the UK, as in other countries, there has been a rapid increase in the number of non-native speakers. In England the number of non-native speakers has increased by a third in the last decade. Now, roughly one in nine children between the ages of five and 11 do not speak English as a first language. A significant driver of this change has been immigration, though the trend has also been influenced by higher birth rates among ethnic minority groups.
Immigration, elderly care and labour-force participation: Can immigration help women retire later?
Giovanni Peri, Agnese Romiti, Mariacristina Rossi 08 September 2013
Elderly people assisted by immigrant carers, rather than by their sons and daughters, has become a common feature of many European countries. This column presents evidence from Italy suggesting that the immigrant presence in the home-care sector has allowed women, especially those with elderly parents, to retire from their jobs later. Increasing the retirement age has to happen over the coming decades to ensure the sustainability of developed countries’ pension systems.
During the last decade immigrants have increased their presence in the labour force of many rich countries. In several of those countries manually intensive occupations, such as those in the household service sector, have employed many of them. Particularly in Italy, immigrants have disproportionately staffed the long-term care sector for elderly people. The demand from that sector has grown substantially due to the needs of an ageing population. In a recent study (Peri, Romiti and Rossi, 2013) we analyse how immigrants have replaced women in caring for older family members.
Gender Labour markets
Immigrants reduce geographic inequality
Brian C Cadena, Brian Kovak 12 August 2013
In the US, fewer and fewer people are moving long distances to pursue job opportunities. Presenting new research on Mexican immigrants in the US, this column argues that there are large welfare gains from the efficient spatial allocation of labour. However, welfare gains from the movement of labour are woefully understudied. If immigrants are more willing to move for a job than natives, policymakers should allow them to do so with ease. Workers should be free to move to markets offering better opportunities.
Recently, economists have noticed some disturbing trends in the US economy. Job creation, job destruction, and job-to-job switches are all in decline (Davis, Faberman, and Haltiwanger 2012; Hyatt and Spletzer 2013). Further, fewer and fewer people are making long-distance moves in order to take better jobs (Molloy, Smith, and Wozniak 2011). This slowdown is problematic because labour mobility, especially across geography, is a key contributor to the dynamism of an economy, and it tends to reduce inequality in economic outcomes across space (Blanchard and Katz 1992).
US, immigration, Mexico