Impact Of Econy By Migration


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” ( 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 – 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)”

( 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!” (

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 ImmigrantsSetting 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- 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- 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.” ( 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,, 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, 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.


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 - - The Urban Institute (USA) Reports used in Fix, M and Passel, J.S Immigration and Immigrants – Setting the record straight.


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