The fiscal consequences of unrestricted immigration from Romania and Bulgaria
Joakim Ruist18 January 2014
The lifting of transitional access restrictions for Romanian and Bulgarian workers is a hotly debated topic in the EU with big implications for public finances in destination countries. This column presents analysis of immigrants in Sweden, which never imposed access restrictions when these two countries joined the EU. Romanian and Bulgarian migrants to Sweden under this unrestricted regime make a sizeable positive contribution to Swedish public finances. Contributions can be expected to be even larger in the UK and Ireland.
Since 1 January, citizens of Romania and Bulgaria have the same freedom of movement inside the European Union as citizens of other member states. The approaching end to transnational restrictions caused intense public debate in several of the richer EU countries during the past year, stoked by fears that large numbers of poor Romanians and Bulgarians would migrate to the richer EU countries and impose a heavy burden on public finances.
The long term economic impacts of reducing migration
Katerina Lisenkova10 January 2014
Efforts to limit immigration are being implemented in many rich nations. Restricting immigration to these advanced ageing economies could be an economic boon or bane. This column presents recent work examining the labour market and fiscal impacts of restricting immigration, taking the UK government’s stated goal as an example. The results suggest that a significant reduction in net migration would have strong negative effects on the UK economy.
The large influx of immigrants following the accession of eastern European countries to the EU in 2004 brought migration policy to the forefront of the public agenda and political debate. Large net migration flows are a relatively recent phenomenon in the UK; consistent positive net migration numbers have only been observed since the 1990s. During the 2010 election campaign, the senior partner of the current UK coalition government (the Conservative Party) set their migration policy target to reduce the level of net migration from “hundreds of thousands to tens of thousands”.
Is there a way of eliminating human smuggling? This column argues it can be done that by legalising migration through the sale of visas at a price that pushes smugglers out of business. The resulting trade-off between eliminating human smuggling and controlling migration flows can be dealt with the right policy mix of traditional repressive instruments and innovative pricing tools.
Each year, an estimated 2,000 people drowned on their migrant’s journey from Africa to Europe (The Economist 2005) and many more on other routes. Not only is crossing borders illegally a dangerous operation but it also entails very high financial costs. For border crossings such as from Mexico to the US, human smugglers can charge up to $4,000, while trans-pacific crossings of Chinese immigrants to the US cost above $35,000 in the mid-90s and have since increased sharply.
Which legislators are more likely to vote for more liberal immigration policies for unskilled workers? The authors of CEPR DP8299 develop and empirically test a model which correlates the skill composition of constituent voters with their legislator's voting record on migration policy. The DP finds that representatives from districts with more high-skilled workers consistently vote for more expansive unskilled immigration policies.
Timothy J Hatton, Jeffrey G. Williamson29 April 2009
International migration rises and falls with the business cycle, as do attitudes towards migrants. History leads us to expect a global recession to increase anti-immigrant sentiments and possibly spur new barriers to migration. However, this column argues that such measures are less likely than in the past, as anti-immigrant sentiments are relatively weak and economic and demographic forces are reducing the long-run immigration trend.
Today’s global economic crisis has turned a media spotlight on immigration. Sagging labour markets have led to calls for even tougher restrictions on potential competition from immigrant workers, and ballooning fiscal deficits have heightened fears about the added burden to welfare states. Will immigration pressure increase or decline during the slump? Will we see a policy backlash? What can history tell us?
Several recent studies (Anderson and Winters 2008, World Bank 2006) have pointed out that substantial gains can be achieved from the liberalisation of international migration flows, both for sending and receiving countries.1 At the same time, recent estimates (Goldin and Reinert 2006), suggest that only 11 million individuals, i.e. just one in six hundred migrate each year. The stock of migrants is larger.
Provided that the income gap between poor sending countries and rich destination countries continues to be very pronounced and transport and communication costs have drastically declined compared to one hundred years ago, it appears that restrictive migration policies are key determinants of the limited flows actually observed. The authors of CEPR DP6835 examine the process through which individual attitudes are mapped into these immigration policy outcomes in democratic societies.
According to recent estimates, about 11 million individuals migrate each year. Although this might look as a large number, it implies that worldwide only one in six hundred individuals changes country of residence over a twelve months period. Provided that the income gap between poor sending countries and rich destination countries continues to be very pronounced and transport and communication costs have drastically declined compared to one hundred years ago, it appears that restrictive migration policies are key determinants of the limited flows actually observed.
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Europe is moving towards immigration policies that favour the acceptance of highly skilled applicants. This column summarises research showing that such policies may have some effect but cautions that there are limits to the power of selectivity.
It is widely believed that Europe admits too many low-skilled and too few high-skilled immigrants. For more than a decade, immigration researchers have championed the idea that the countries of the EU should adopt the kind of immigration points system for which Australia and Canada are famous. Britain and France have already taken steps in that direction. And last October the European Commission entered the fray when it unveiled a Blue Card scheme, along the lines of the US Green Card, with the aim of attracting highly skilled immigrants.1