How Migration Affects the Economy
Economic Realities, Social Impacts & Political Choices
Former UN Secretary General Ban Ki-moon defined migration as “an expression of the human aspiration for dignity, safety and a better future. It is part of the social fabric, part of our very make-up as a human family”. In recent years, however, and especially in the aftermath of the global financial crisis, immigration has become a toxic issue in election campaigns and the political debate in many advanced economies, with politicians and other interested parties trading insults and soundbites but leaving a proper evaluation of the real impacts of migration on the economy and society often absent from the noise.
In this report, we have sought to take a detailed and balanced perspective on the impact of immigration on advanced economies, and particularly on those in Europe and North America where the popular concerns regarding migration appear to be especially acute. This report forms part of a wider series of work in our Citi GPS series where we have looked at complex societal issues that have a profound impact on global growth and the performance of the wider economy. The originality of this report is both in providing fresh evidence of the implications for growth and the dynamism of economies and also in our consideration of the fiscal costs and benefits of migration in terms of taxes and expenditures. In addition, we have attempted to understand, explain and analyze the political debate around migration through reviewing much of the available literature and opinion polls to assess where and how the fault lines have occurred in the public discourse on migration.
This report is focused on economic migrants who have not been compelled to migrate either as refugees or through force. Although economic migrants may come from extreme poverty, by and large they migrate as a matter of choice. Their destination countries also have a choice whether to accept them or not. In this report we use the term migrants and immigrants, or migration and immigration, interchangeably to refer to the movement of people across national borders.
To produce this report, Citi Research has partnered with Professor Ian Goldin who not only has worked with us for over five years through our research partnership with The Oxford Martin School but who is also a specialist on migration and who is an author of the highly acclaimed 2011 book Exceptional People: How Migration Shaped our World and Will define Our Future. Professor Goldin is currently the Oxford University Professor of Globalization and Development. His full biography can be found in the author block of this report.
In the preparation of this report, we have conducted a very extensive literature review of the research written on migration, updated the data sets from Professor Goldin’s 2011 work, and undertaken a number of new data modelling exercises. While some very clear conclusions emerge as we outline below in this introductory summary, we have also sought to highlight areas of acknowledged academic or public dispute in the narrative on migration. We have also tried to balance economic analysis with social impacts and an understanding of the drivers of the political debate.
Part of the objective of this report is to provide a more granular approach to throw light on the growing disconnect between public perceptions regarding migration and the actual trends. This disconnect is illustrated, for example, in the change in negative perceptions regarding immigration in different European countries, which suggests that there is almost no direct correlation between the number of migrants (and refugees) that a country accepts and the attitudes to migration.
We recognize, of course, that the implications for many other global regions, and not least developing countries as both the source and destination of migration, are also very significant, not least in terms of the implications of the so called ‘brain drain’ which suggests that the benefits migrants bring to the advanced economies may be at the cost of undermining development in their countries of origin. This need not be the case as migrants typically contribute materially to their destination country, while at the same time contributing to their dependents and countries of origin and advancing their own lives. The volume of remittances sent home by migrants to low and middle-income countries has grown rapidly in recent decades and in 2017 was estimated to exceed $466 billion, over three times foreign aid.
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