Impact Of Econy By Migration Essay, Research Paper
Migration is one of the most important issues facing international politics today and is becoming
more prevalent an issue every year. In 1980 the estimated number of refugees was 8.2m, 1990 -
15m, 1992 – 20m (Castles and Miller, 1993, p 84). In our society there are a lot of preconceptions
and prejudices about immigration and its effect: “they are stealing our jobs!” “They are all
scroungers” and “we are to generous to them”. It can be argued that these all arise from institutions
such as the tabloid media and right wing political groups, but also from past Government policy
which took a hard line on immigration and old colonial ideologies of mistrust and suspicion
towards foreigners which have been passed down through the ages. So what is the true economic
impact of immigration on a receiving country? Where does it have effect? Is it substantial or
minimal? Is it positive or negative? As immigration affects different countries in different ways, and
as there are so many different forms of immigration e.g. asylum seekers, refugees, temporary
settlers, permanent settlers, illegal immigration and immigration from one part of a country to
another, it is impossible to give universal answers to these questions. However I will examine the
arguments for and against immigration to try establish a picture of whether the economic impact on
the whole is positive or negative for a receiving country. I will focus primarily on the UK and USA
for case studies but will also look at the effects of immigration on third world countries. One of the
most common arguments against immigration is that it puts a strain on government expenditure.
Some economists argue that “social capital expenditure on housing and social services for
immigrants reduced the capital available for productive investment” (Castles and Miller, 1993, p
76). In Britain, the current media scare is “bogus asylum seekers” and how they are a huge drain
on the social services. A quote from the BBC web page sums up the anti immigration feeling in
this country: “We are too soft. I’m happy for the government allowing genuine asylum seekers into
this country. However something has to be done about the scroungers who think they could make
a better life here. There’s nothing for them – our classrooms are over-crowded, our hospitals can
barely cope and our social services are on the brink of collapse such is the demand for pensions
and benefits. It’s hard enough making a life for yourself when you live here by right. Simon
Skelton, UK” (http://newsvote.bbc.co.uk/hi/english/talking_point). The British National party
claim: “The procedure of investigation of ‘refugee’ claims, together with the job of attempting
(mostly in vain) to track down the bogus claimants is, needless to say, a big drain on the public
purse” (The British National Party – http://www.BNP.net/manif11.html). Also in the USA, There is
widespread opinion among Americans that “most immigrants wind up on welfare” (47 percent,
according to a 1986 poll; New York Times, July 14, 1986, 1)”
(http://www.cato.org/pubs/policy_report/pr-imopi.html). White extremist groups, such as Combat
18 claim “Allowing illegal aliens to stay within our borders while using technicalities and legal
resources paid for by our tax dollars is bad enough, we allow them to move here, but we give them
tax-free loans, jobs, free housing and welfare!” (http://www.whitepride.com/views/#immigration)
So, just how valid is the argument that immigration puts pressure on a receiving country to look
after them? When migration occurs on a major scale it creates major problems. Almost every
conflict or war creates huge numbers of refugees. This was the case in the Kosovo conflict when
Albania and Macedonia were overwhelmed with the number of refugees, and during the Rwandan
civil war, hundreds of thousands of refugees fled to neighbouring Zaire causing major
humanitarian catastrophes. In these circumstances immigration has a considerable effect upon a
countries budget. However, in both these examples and in many other conflicts the countries that
bore the brunt of the refugee flow were neighbours. Refugees do require a certain degree of
spending from the state, but the levels of refugees in Western Europe and America are slight when
compared to the number of native persons who are dependant on welfare. However, how much an
impact does immigration on the whole make on government spending? In a 1994 study entitled,
Immigration and Immigrants – Setting the Record Straight, by Michael Fix. Jeffrey S. Passel, it is
argued that, “when all levels of government are considered together, immigrants generate
significantly more in taxes paid than they cost in services received. This surplus is unevenly
distributed among different levels of government, with immigrants (and natives) generating a net
surplus to the federal government, but a net cost to some states and most localities” (Fix, M and
Passel, J.S. Immigration and Immigrants – Setting the record straight.1994-
http://www.urban.org/pubs/immig/immig.html). They also argue that when refugees are not
included, immigrants of a working age are considerably less likely to receive welfare than natives. It
is argued that the misconception that immigrants are likely to live on welfare results from major
flaws with the way in which research is carried out. Passel and Fix argue that the research ignores
that the integration of immigrants is dynamic. That their incomes and tax contributions both
increase the longer they live in the United States, and that, incomes vary considerably for different
types of immigrants and also that the studies do not take into account the indirect benefits of job
creation from immigrant businesses or from immigrant spending. They also claim that the negative
impact of immigrants are overstated for a number of reasons, including: tax collections from
immigrants are understated, service costs for immigrants are overstated and that benefits of
immigrant-owned businesses as well as the economic benefits generated by consumer spending
from immigrants are ignored. Although it is difficult to find truly impartial data or research on the
matter, it can be argued that immigration does not have a substantial negative effect on government
spending, due to the amount of money generated by immigrants. In the USA alone, it is estimated
that annual taxes paid by immigrants generate a net surplus of $25 to $30 billion (Fix, M and
Passel, J.S. Immigration and Immigrants – Setting the record straight.
1994-http://www.urban.org/pubs/immig/immig.html). In the UK also, it is debatable as to how
many people who argue that immigrants are scroungers have tried living on the government’s
income support of ?51.40 p/w. So whilst immigration appears to have a slightly positive impact on
government spending, how does it affect the economy as a whole, in areas such as employment and
GDP? The biggest and most beneficial economic impact of immigration on a receiving country is
that it can solve labour shortage problems that a country may face. The best example of this is in
post war Europe. Immediately after World war two, the British government brought in 90,000
workers from refugee camps and Italy (Castles and Miller, 1993, p68), through the European
Voluntary worker scheme, however these were tied to designated to specific jobs and had few
rights. This scheme was operated only up to 1951, as it was easier to utilise colonial workers. As
well as the Voluntary worker scheme, a further 100,000 Europeans entered Britain on work permits
and by 1961 there were approximately 541,000 workers from the commonwealth. Some had come
as a result of direct recruitment by London transport, whilst most came spontaneously due to the
demand. In Britain almost all migrants came in a 10 – 15 year period, the introduction of such acts
as The 1971 Immigration act and the 1968 Commonwealth act has resulted in there being very little
migration since the 70`s, except for the consolidation of immigrant communities and of skilled
labour. Switzerland also made use of foreign labour in the post war period, whilst they initially
imposed a lot of restrictions on foreign workers, by the 1970s foreign workers made up almost a
third of the labour force (Castles and Miller, 1993, p69). Other countries that used foreign labour
to relive labour shortages included the Netherlands, Luxembourg and Sweden. Whilst migrant
labour made up roughly 9% of some post war European countries labour forces (Bali, 1997, p210),
in the Gulf States it made up the “overwhelming majority of the work force: 70% in Kuwait, 80%
in Qatar and 85% in United Arab Emirates” (Bali, 1997, p210) In all countries there is an
acceptable threshold of immigration, and when the number of immigrants within a country goes
over this conceptual limit, public opinion and government policy regarding immigration become
negative. It is common for this threshold to be reached during periods of recession and economic
decline. Arguments against immigration focus primarily on how immigrant labour displaces local
labour due to immigrants being prepared to work for less wages and because of quota systems.
“Nevertheless, it is true that in certain areas of employment Whites have suffered a lowering of job
expectations as a result of the ethnic minority presence in Britain. This has been aggravated by the
policy adopted by employers in the Public sector, and enthusiastically encouraged by governments,
of ‘positive discrimination’. Whereby ethnic minority members are hired according to a quota
system, which takes no account of qualification or merit, and results often in better qualified white
applicants being rejected for the jobs in question.” (www.britishnationalparty.com). However,
studies in the USA have argued that “immigrants often do jobs rejected by locals because of their
unpleasant nature or low remuneration” (Bali, 1997, p210). In another US study it is argued that:
“Studies of specific labour markets show small negative effects of immigration on low-skilled
workers in stagnant local economies with high concentrations of immigrants, but not in other types
of economies, also Self-employment is higher among immigrants than among native-born
Americans.” (Passel and Fix, www.urban.org, 1994). In almost all immigrant communities there
will be a lot of businesses and enterprises, which have been set up by immigrants. All generating
employment and revenue for the local area, good examples of this are the Southall area of London,
Rusholme in Manchester and Los Angeles where Korean immigrants have set up numerous
businesses. The argument put forward that immigrants disadvantage British labour forces is also
weak. The 1976 Race relations’ act and its successive amendments have focussed on the
elimination of direct and indirect discrimination towards people on account of their race. It could be
argued that the claims that native labour markets are discriminated against are bias and based on
questionable data Critics also argue that “importation of labour, can delay structural change in
developed economies by slowing down the move towards more capital intensive forms of
production” (Collinson, 1993, pp. 19 – 20). “Other economists have argued that immigration
reduced the incentive for rationalisation, keeping low productivity firms viable” (Castles and Miller,
1993, p75). An example of how immigration is not needed for labour shortages is Japan. Even
though it is faced with labour shortages it still resists importing foreign labour, due to concerns
about the effects on its cultural homogeneity. Instead it has developed “more capital – intensive and
less labour intensive technology, by incorporating new participants such as women to the labour
market, or by moving outside the country to areas where labour is cheaper” (Bali, 1997, p 209).
However, there are strong arguments to suggest that immigration is economically beneficial to a
society. Castles and Miller argue that it was the “high net immigration countries, like Germany,
Switzerland, France and Australia, which had the highest economic growth rates in the-1945 – 1973
period. Countries with relatively low net immigration (Britain and the USA) had much lower
growth rates” (Castles and Miller, 1993, p 76). Also the factor of migrant businesses can have a
positive effect on a economy: “Immigrants, as noted, create more jobs than they themselves fill and
recent immigrants from abroad create as much employment growth as internal migrants from other
areas of the United States. One source of the positive employment effects of immigration is the
retention of industries that would otherwise have moved overseas. If no Mexican immigration to
Los Angeles County had occurred between 1970 and 1980, for example, 53,000 production jobs,
12,000 high paying non-production jobs, and 25,000 jobs in related industries would have been
lost” (Fix and Passel, 1994, www.urban.org). So whilst immigration is not the only solution for
labour shortages, it can benefit the economy of a receiving country in many other ways. So what is
the economic impact of immigration on a receiving country? It can be both positive and negative.
Permanent settler migration can have a lot of benefits to an economy, whilst it is not necessary for
solving labour shortages and whilst it can slow down the development of less labour intensive
means of production. Immigrant labour can help national productivity, immigrant businesses
provide employment, immigrant labour can help solve skilled labour shortages such as in the
medical sector, immigrants pay taxes and the longer a immigrant community is established the
more it contributes to an economy. When immigration happens en mass in times of conflict or
disturbance such as in Kosovo it can have a serious negative economic impact on the receiving
country, however the levels of immigration which the west has seen appears to have had a positive
impact on the economy.
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BOOKS Castles, S and Miller, M. The age of Migration – International population movements in
the modern world. Macmillan Press, London. 1993 White, B (ed) Issues in World politics.
Macmillan Press. London. 1997. Chapter 10. Bali, S. Migration and Refugees. Collinson, S.
Beyond Borders: West European Migration policy towards the 21st century. Royal Institute of
International Affairs, 1993 INTERNET www.bbc.co.uk -
http://newsvote.bbc.co.uk/hi/english/talking_point www.combat18.com -
http://www.whitepride.com/views/#immigration) www.britishnationalparty.com
http://www.BNP.net/manif11.html www.urban.org The Urban Institute (USA) Reports used in
www.urban.org Fix, M and Passel, J.S Immigration and Immigrants – Setting the record straight.
1994. http://www.urban.org/pubs/immig/immig.html)