Over the past decade or two, concerns about the economic impacts of immigration on high-income countries have shifted from fears that incomers are taking the jobs of existing residents to worries that the low (or no) pay of arrivals will place a growing financial burden on the host country.
This shift is reflected both in heated commentary and in the increasing use of economic modelling to forecast immigrants’ fiscal impact, but both are subject to faulty assumptions that can make for a frustrating debate.
On the one hand, official modelling by organisations such as the UK’s Migration Advisory Committee tends to assume all immigrants share similar economic trajectories; meanwhile, some commentary on the right argues that fiscal impacts are determined by immigrants’ countries and cultures of origin. Both miss the fact that the nature of a country’s fiscal system and its policies shape the extent to which immigrants with different economic characteristics are a net cost or net contributors.
Posted by adappergentlefolk
2 Comments
Submission: immigration is the issue of the decade for Europe, threatening to unwind the current political order. The widespread opposition to migration also from the fiscal angle is a huge challenge for current liberal parties and politicians and deserves further examining to see what kind of signal the electorate is actually
sending, and what policies can be implemented to accommodate the outcome of the democratic process.
One thing these financial impact calculations never take into account is the effect of low wage immigrants on the native workforce productivity, just like with trade, outsourcing low value necessary jobs lets you focus on higher value work and be more productive, both at work and at home. Those effects are never calculated.