Let them come: why Europe needs more immigration

I published an article on the latest issue of Eyes on Europe. I republish it here for those of you who did not have a chance to read it before. The original version can be found following this link.

Migration in the last years has become a truly sensitive topic in the public debate across Europe: in the aftermath of the financial crisis the European Union has forced some member states to pursue a restrictive fiscal policy together with the approval of several “structural reforms” aimed at restoring their economic competitiveness. These reforms had severe pro-cyclical effects, plunging the Continent in a recession that does not seem to see an end: the countries hit by austerity measures have experienced a sharp increase in xenophobia and hostile attitudes towards migrants. The main result of this is that the idea of a common migration policy has become politically not feasible and the only attitude which is common to all member states is the idea that migration is a crime problem rather than an economic one: the creation and strengthening of Frontex is a logical consequence of this ideological position.

We find a recurring pattern in the history of democratic systems: very often the most efficient and effective policy is not considered viable by the policy-makers for its ambiguous impact on electoral consensus. A European migration policy is a striking example of this phenomenon: it has still to be implemented in spite of being highly beneficial for the future of the union. Why is that so? Why do we need to let migration become a federal issue?

A common policy builds a common future

There is a first order of reasons which is strictly political: whoever is interested in fostering European integration and eventually achieving a federal Europe must face the fact that the control of its boundaries and the final say on who can immigrate and who cannot are two main elements of the set of power which defines a sovereign State. There cannot be any political union without a federal foreign and defence policy: a political entity is credible only if it can force the other agents to follow its decisions: this can only be done through the control of the armed forces and of the police, that is to say through the legitimate use of force within the territory of the State and on its borders.

This argument could anyway be not really worthwhile if you are not particularly interested in federating Europe: nonetheless, I guess that you are pretty much interested in preserving your living standards, in keeping your welfare systems on track, in securing for the future a healthy workforce and a strong economy. Well, if you do care about any of these issues, you should support a more open communitarian approach to migration because immigrants have several beneficial effects on our economies.

Younger and stronger: how migration helps our economy

Immigration is indeed an opportunity for Europe rather than a threat. First of all, the claim that immigrants “steal” our jobs is false: according to the OECD, over the past ten years immigrants accounted for over 24% of new jobs in the most declining sectors in Europe. In other words, immigrants tend to accept jobs that Europeans do not want any more, generally because those jobs enjoy a low social status.

Secondly, immigrants are important because the help us slowing the decline in our population. Demographics may vary a lot across different geopolitical areas of the world but we can easily draw a general law of its dynamics, according to which developing countries generally have a younger and faster growing population than developed ones. This can be explained by different factors: better life conditions in developed countries have as a consequence a higher life expectancy, therefore a higher percentage of old people. Similarly, when economic conditions improve and social conventions on the role of women change the total fertility rate tends to become lower.

fert rate in EU

The total fertility rate is the number of children per woman and is a good measure of whether the natural population (that is to say the population which is born in the territory of the state) is growing or not: the population is said to be growing if the rate is above the so-called replacement threshold of 2. If every woman gave birth to 2 children, then we would have 2 children for each couple and the total population would be stable. As the graph shows, in the European Union the fertility rate has been constantly staying under the threshold over the last decade: this implies that in the long run European union would lose population in absolute terms, if we did not account migration.

Why is that a problem? A declining population is bad for the economy because in modern societies a great range of services has reached such a level of complexity that they require huge resources to run smoothly: only a high population and a high density/km² can allow these services to be financially sustainable. High speed trains need customers, and many of them: if they keep operating below a certain capacity they will not be profitable any more. If you care about the health of the press, the most important watchdog of our societies, you also know that it needs readers. The Anglo-Saxon press is strong and authoritative because it has a enormous market: a growing population would help the European press to counter the effects of the technological change.

Not only do we need a growing population but we also need it to be younger: our fellow citizens are ageing fast and this has several unwelcome consequences.

% over 65 pop

dependency ratio EU

As you can see, European Union population aged 65 or over was 16% of the total in 2002 and 18.2% ten years later. If we do not manage to reverse this trend, the inactive population will grow faster than the active one. The second graph shows that this has already been happening through all the last decade: the line depicted illustrates the evolution of the ratio between the inactive population and the proportion of the population which is in work age. Plainly speaking, this is the ratio between people who get pensions and people who work and therefore pay for them: if it keeps growing, it will seriously threaten the stability of the welfare system in the long run.

What we have seen so far is not just a bunch of data, indeed it should have some policy implications: our natural population is declining or it stays constant at best and is slightly increasing only thanks to immigration; our population is also ageing at a really rapid pace, and this phenomenon does not seem to be slowed quickly enough by the recent inflows of immigrants that the Union has experienced. We need millions of immigrants and we need the right federal institutions to manage the inflows. If we want to live in a growing economy, if we want to maintain our welfare systems, if we want to be part of a thriving society and to be able to face our competitors in the global economy we must reverse the current, fragmented attitude on migration and proceed to create a common European framework, that is to say a unique set of laws on immigration, a unique political entity entrusted with their making and a unique authority to enforce them.

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Comments

  • Michael  On 01/27/2015 at 2:55 pm

    Unfortunately, it seems that so far Europe has been highly successful in attracting the “wrong kind” of immigrants. That is, ones who’s contribution to the economy is negative on the long-term. Europe needs skilled, educated people, not just waves of mindless consumers. High speed trains are a tool, not an objective. And it seems that automatization reduces the numbers of employees needed in many branches (like banking). I think it would be better to spend Europe’s resources educating the existing population rather than absorbing newcomers.

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    • Lorenzo Tondi  On 01/27/2015 at 5:00 pm

      “That is, ones who’s contribution to the economy is negative on the long-term.”

      Even low skilled immigrants have a positive impact on the European economy: many of them are employed in sectors that European workers do not find attractive anymore. An increase in our efforts to educate the existing population is certainly wellcome but would not stop the huge ageing process that we are experiencing.

      Liked by 1 person

      • Michael  On 01/27/2015 at 6:25 pm

        Well, it is widely accepted that low-income persons (immigrants and natives alike) receive more from the state than they pay in taxes, so tax-wise they are a netto burden. I think we can agree that bringing in more people that will drain on the taxes rather than pay them is not a good thing.

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      • Lorenzo Tondi  On 01/28/2015 at 7:06 pm

        It is not. Low-income persons are generally younger than the average European (and much younger than the average Italian), thus needing little or no healthcare. Moreover, as I mentioned before, these persons fill some niches in the job market that are increasingly being unsatisfied, because the jobs they find are not attractive to homeborns anymore.

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      • Michael  On 01/28/2015 at 7:34 pm

        Well, yes, because these jobs are low-paying and therefore not attractive. And if your income is low, you pay very few taxes, if any. The healthcare issue is a complicated one, so I would want to see some solid support of your claim. there.

        Whether migrants are positive for the economy is a relatively understudied issue. I’ve been able to find a British study (http://www.cream-migration.org/files/FiscalEJ.pdf) that states (unsurprisingly) that well-educated migrants are the best.

        If there are jobs that people do not want, its a sign that the economy needs to be reformed, not that more stupid people to do lousy jobs are needed.

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      • Lorenzo Tondi  On 01/29/2015 at 7:51 pm

        “If there are jobs that people do not want, its a sign that the economy needs to be reformed, not that more stupid people to do lousy jobs are needed.”

        Why should these people be stupid? they are just low-skilled, which generally means that they do not have a strong educational background.

        And no, the economy does not need to be reformed, you are misunderstanding the issue: if employers offer jobs that homeborn workers do not want to do, then we can see that the demand for that kind of job is higher than the available offer. Thus, a wise policy would require the government to let foreign people in so that the unsatisfied demand can be matched with the new offer.

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      • Lorenzo Tondi  On 01/29/2015 at 7:54 pm

        “Well, yes, because these jobs are low-paying and therefore not attractive. And if your income is low, you pay very few taxes, if any. The healthcare issue is a complicated one, so I would want to see some solid support of your claim. there.”

        have a look at this recent OECD report http://www.oecd.org/migration/mig/OECD%20Migration%20Policy%20Debates%20Numero%202.pdf

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      • Michael  On 01/30/2015 at 8:16 am

        I am aware of this report. It does not differentiate between low-skilled and high-skilled immigrants. The contribution of high-skilled immigrants is very positive (as with the rest of the population, see the British study I quoted). The report states that there is “a positive but fairly small impact of the
        human capital brought by migrants”. What I conclude from this is that the skilled migrants over-compensate for the negative contribution of the unskilled ones.

        As to “let them in” – there is within the EU a freedom of movement of people and goods. There are millions of unskilled workers available within the Union that can fill the demand for unskilled labour. I see no reason to bring in external labour unless those people are really-really needed and can’t be found within Europe.

        The trouble with those unskilled workers is that they are brought in when the economy runs well, but do not leave when there’s a downturn. They and their descendants come to depend on the social services. Its a mistake of the past that needs not be repeated.

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  • Lorenzo Tondi  On 02/03/2015 at 9:02 pm

    “The contribution of high-skilled immigrants is very positive (as with the rest of the population, see the British study I quoted). The report states that there is “a positive but fairly small impact of the
    human capital brought by migrants”. What I conclude from this is that the skilled migrants over-compensate for the negative contribution of the unskilled ones.”

    Your conclusion is biased: the sentence you quoted discusses the impact of migration on economic growth, not their fiscal net position, which is treated as follows:

    “Contrary to widespread public belief, low-educated immigrants have a better fiscal position – the difference between their contributions and the benefits they receive – than their native-born peers.

    In countries where recent labour migrants make up a large part of the immigrant population, immigrants have a much more favourable fiscal position than in countries where humanitarian migrants account for a significant part of the immigrant population. Labour migrants tend to have a much more favourable impact than other migrant groups, although there is some convergence over time. On the other hand, the fiscal position of immigrants is generally less favourable in countries with longstanding immigrant populations and little recent labour immigration. ”

    That is to say, the more recent the immigration, the higher the fiscal benefits.

    “As to “let them in” – there is within the EU a freedom of movement of people and goods. There are millions of unskilled workers available within the Union that can fill the demand for unskilled labour. I see no reason to bring in external labour unless those people are really-really needed and can’t be found within Europe.”

    what part of this sentence don’t you understand? “if employers offer jobs that homeborn workers do not want to do, then we can see that the demand for that kind of job is higher than the available offer.”

    If some sectors heavily dependent on unskilled labour are now showing an oversupply of jobs and if this happens within a geopolitical area that allows free movement between member states, this means that the unskilled within the Union is either not sufficient or not willing to do these jobs, which are nonetheless needed by society since they are still offered by firms.

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    • Michael  On 02/04/2015 at 9:05 am

      I would say that “skilling” the unskilled ones within the Union or providing them with motivation (higher salary and/or cut in benefits) so that they accept the jobs available is a smarter solution than bringing in a new wave of unskilled migrants. This way, the unemployed within the EU become tax-payers rather than tax-recepients. Double bonus!

      Besides, I am not aware of a shortage in low-skilled labour. In in the Netherlands where I live, there is a demand for technical professionals in the metal industry, electrical engineers, teachers and software developers, not street-sweepers and shop salespersons (https://www.werk.nl/xpsitem/wdo_014199)

      And in the EU as a whole “the trend towards more skill-intensive jobs at all levels will continue and many traditional manual or routine jobs will decline” (www.cedefop.europa.eu/files/5526_en.pdf). So no, we do not need unskilled labour, we have plenty already.

      Like

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