Does The Economic Evidence Bolster The Changing Stance On Immigration Laws Around The World?

– Priyanshu Ranjan and Kritika Jeswani

Introduction

The politics surrounding the phenomenon of immigration in developed countries has witnessed a rightward shift, as has been apparent from the increasing poll shares of parties with far-right ideologies who have, for decades, tried to make immigration a national issue. In this article, we explore the changing sentiments with regard to immigration laws in the developed world and the reasons behind such a transition. We further dive into the economic effects of immigration and whether the same is consistent with the reasons behind the growing number of anti-immigration regulations.

Moreover, the article also dives into the politics that contribute to the formation of immigration rules using the Public Choice theory and through the detailed works of authors like Gary P. Freeman, Ira Katznelson, etc., who have comprehensively analyzed the phenomenon of immigration in developed nations.

Immigration Through The Historical Lens 

Although there has been a steep rise in the number of international immigrants over the years (approximately 120 million since 1990), the percentage of the global migrant population to the global native population has stood stable at around 3 per cent for the past 60 years. Moreover, the IMF predicts that the global percentage of the migrant population will continue to hover around the 3 per cent mark. However, the percentage population comprising migrants has seen an increase from 7 per cent in the 1990s to 12 per cent in 2020 in the developed nations as they tend to offer, inter alia, better economic opportunities as well as a better standard of living to the migrants.

Some of the biggest categories of immigrants are the refugees and asylum seekers who have taken shelter in the receiving nation, fearing the persecution they would otherwise have been subjected to in the source country. As of 2018, the share of refugees to the global migrant population stood at 30 per cent for developing economies and 6 per cent for the developed economies.

The Decision To Migrate

At a microeconomic level, the decision to migrate is made based on considerations like the difference in the net present value of earnings between the receiving country (developed country) and the source country, and the family ties and ethnic enclaves in the receiving country. The former consideration highlights the economic aspect of making a decision to migrate, whereas the latter covers the social aspect of such decision-making. Thus, an individual, when indifferent between the economic opportunities of two or more receiving countries, would be more likely to choose a country with family ties or a cluster of migrants from the same community.

However, it is pertinent to note that this luxury of choosing a destination only lies with skilled immigrants and not with refugees.

Immigration Politics : Public Choice Theory At Play

The issue of immigration, as pointed out through the works of Ira Katznelson (1973) and Anthony M. Messina (1989), had not found a concrete place in the political sphere in the liberal democratic economies as the major political parties had a general consensus to exclude immigration-related conflicts from their agenda. The reason behind the same could be better understood using the Public Choice Theory.

The public choice theory suggests that in the political sphere, much like in the economic space, the actions of bureaucrats, politicians, etc., are governed by their personal interests and have less to do with the welfare of voters. The decisions that seem to be welfare decisions are generally taken as a response to the demands of a subset of voters who are able to organise themselves in pressure groups. Adhering to such demands corresponds with the self-interests of the bureaucrats and politicians.

Moreover, the Public Choice theory is based on the assumption that voters (or a particular segment of voters) organise themselves and put forward their demands only when the benefits from the fulfilment of the same outweigh the efforts put into the acquisition of knowledge and organising.

The arrival of immigrants in the receiving country provides employers with skilled as well as a cheap supply of labour and also translates into increased economic prosperity for the consumer sector and the housing sector. Therefore, the stakeholders that directly benefit from the inflow of immigrants find it economical to organise themselves in pressure groups to carve out-migration policies suited to them. On the other hand, as Gary P. Freeman points out, voters in general (not being directly benefitted or affected by immigration policies) are less informed and hence indifferent regarding the immigration policies and regulations of their country as it doesn’t affect them directly.

Therefore, bureaucrats in the past, owing to the pressure and demands of the stakeholders who directly benefitted from migration, have either kept migration regulations favourable to attract new and skilled immigrants or have refrained from tightening such regulations that may lead an immigrant to choose some other destination to migrate.

Changing Sentiments Regarding Immigration 

However, Freeman’s observation that public opinion with regard to immigration is slower to mobilise and crystalise in liberal democratic countries is inconsistent with the trend of growing anti-immigration sentiment around the world. Political parties that were infamous for their anti-immigrant stance have been successful in garnering popular support in several countries over the past decade.

Election of Trump in US

The USA’s election of Donald Trump as a president highlighted the growing discontent of American voters with immigrants, especially those relocating to the USA from Mexico. Trump was known for his far-right ideologies, especially in the context of migration. These immigration policies, as per Fed chair Jerome Powell, have led to a worker shortage in the American economy which is worsening the problem of inflation.

Italy’s election of the far right

Italy, too, has elected to power a political party with critical views on immigration, which is quite evident from its recent measures of increasing the detention time of illegal immigrants from 3 months to 6 months, which is even extendable to 18 months.

France’s new immigration bill

Moreover, the French Parliament has also passed an immigration bill on 19 December 2023, which, inter alia, makes it difficult for non-European immigrants to avail of welfare schemes and also puts an end to the system of automatic birthright citizenship for children of foreign residents.

Such migration policies which differentiate between immigrants from EU and Non-EU countries could lead to France becoming a less attractive destination for high-skilled immigrants from non-EU countries who contribute significantly to its growth.

Swedish government’s bid to make obtaining citizenship more difficult

The Swedish government is actively considering a policy move that makes it difficult for non-citizens to obtain Swedish citizenship. An inquiry committee set up by them is given the task of making proposals that include the period of time a foreigner needs to spend in Sweden before applying for citizenship, the aspects of the Swedish culture and society he should be familiar with to acquire Swedish citizenship, etc.

Making the process of applying for and getting Swedish citizenship could exacerbate its problem of decreasing the median age of its population, which is close to 41 years.

An immigration plan that led to the dissolution of the Dutch government

In July 2023, the Dutch Prime Minister, Mark Rutte, dissolved the government and set up a fresh election to the Dutch Parliament after the parties in his alliance refused to accept his plans relating to the reduction of migration. The Dutch Prime Minister cited that the same is a necessary move for the country’s economy.

Brexit and the UK’s new immigration bill

The UK’s move to exit from the European Union (popularly known as ‘Brexit’) in 2020 was based on several factors, one of which was the concern about the immigration policies of the European Union. Moreover, in 2023, the British Parliament introduced the Illegal Immigration Bill, which inter alia, gives the home secretary immense power to make arrangements for the detention and deportation of illegal immigrants and reduces the scope of judicial oversight over such matters. The bill has been highly criticised by UN experts who find several aspects of the bill to be in violation of the UK’s commitments to international human rights.

Why Such A Trend?

A growing anti-immigrant stance of the biggest migrant destinations could be primarily credited to the growing anti-immigrant sentiments among its citizens. This could be credited to one or more of the following reasons- Distribution of welfare benefits among the immigrants, decreased minimum wage, cultural issues, etc.

Migrants increase the beneficiary pool, among which the welfare benefit is to be distributed in a liberal democratic economy, which translates to a lesser share of the welfare pie for the natives. Moreover, citizens in liberal democracies like Italy, Spain, Greece, etc. (who have recently witnessed a net increase in immigrants over emigrants) are of the opinion that immigrants from Non- EU countries decrease the average wage for a particular line of work by doing such work for less remuneration than usual.

Despite economic challenges, issues related to the impact of immigration on the culture and values of the host country have been used (both by the citizens and governments) the most to justify the tightening of immigration rules and regulations. The majority of the countries discussed above have introduced stricter regulations citing cultural issues faced by the local demographics. Increased and prolonged migration in developed European countries after the Second World War has led to the creation of new minorities that introduced several new and complex socio-economic problems in those democracies.

However, as per the Public Choice theory, cultural issues among the natives would only cause the natives to organise themselves and demand for a regulation that checks immigration if the the loss (mostly economic) suffered is higher than the cost of organising. Therefore, cultural issues are also dependent on the economic impact of migration on the natives.

Immigration And The Economy 

Noting the economic impact of migration, both on the source country and the receiving country, is essential for policymakers to make the right regulations with regard to migration. Economists at the International Monetary Fund and the World Bank have worked extensively on migration and its economic impact.

The World Bank, in its report titled ‘Migrants, Refugees and Societies’, has explored the economic impact of migrants on the source and the receiving country under two scenarios- a) in case of a strong match between the labour supply and the skills required by employers in the receiving country, and b) in case there is a weak match between labour supply and skills required. The migrants falling in the former category have acquired some technical skills and education and make the decision to migrate after considering the economic and social considerations specified above. Moreover, the migrants falling in the latter category are either refugees who generally lack technical skills or family members of skilled migrants who migrate with them.

Economic Impact In Case Of A Strong Match 

Source Country

The source country benefitted from the emigration of its citizens to countries with higher economic opportunities through remittances sent to their families and relatives living in the source country and through their investments in the source country.

Economic growth

As per the World Bank, remittances to low- and middle-income countries have increased dramatically over the last two decades and were estimated to be around US$605 billion in 2021. They constitute a huge share (almost one-third) of the total recorded capital inflows to low and middle-income countries.

Reduction in poverty

Moreover, remittances received from immigration have helped in alleviating the problem of poverty in various countries. Remittances from GCC countries and Malaysia accounted for a 40% reduction in poverty rates in Nepal between 2001 and 2011 in Nepal. The poverty rates in the Kyrgyz Republic have declined from 30.6 per cent to 22.4 per cent of households in 2018.

The migration of low-skilled migrants from Bangladesh to Malaysia has resulted in the doubling of their family income.

Receiving Country

The economic effects of migration on the receiving economy are of more relevance for determining immigration regulations. Migrants employed in the informal sector act as competitors with the other natives who are employed in the informal sector, whereas migrants who are engaged in the formal sector are found to be complementary to the natives. Hence, the concern regarding decreased jobs among natives is primarily limited to the informal sector and not the migrants possessing higher skills and employed in the formal sector.

Skill and Employment Demands

Migration is known to satisfy the demands of local employers as they are provided with a workforce with the right skills, which eventually increases their productivity and could even lead to a decreased operating cost. As per the OECD Migrants Outlook Report 2023, migration to OECD countries (including the countries discussed above) stood the highest in 15 years with over 6 million permanent migrants which accounted for a 26% increase from the previous year. Such a trend is attributed to the increased job demands and employment rates across the OECD countries which makes a rational immigrant choose migrating to such strong-match countries.

Lower Consumer prices

Migrants with low-skill attributes were observed to have reduced the cost of domestic households in higher-income countries as they performed housework and child care in higher-income countries. Moreover, the reduced cost of household work also enabled the highly skilled married woman to move back into the labour force, which contributed to the overall economic gains in countries like Hong Kong, China, Germany, Italy, Spain, Switzerland, the UK and the US.

Fiscal impact

The fiscal contribution of a person to the economy is calculated as the difference between the taxes along with the social security supplied by him to the government and the social transfers received by such a person. The average fiscal contribution of the migrants in OECD countries between 2006 to 2018 was found to be higher than the average fiscal contributions of the natives.

Economic Impact Of The Weak Match 

As mentioned earlier, the migrants possessing low skills (primarily refugees) primarily seek employment in the informal sector and hence act as competitors for the natives who are employed in the same sector in the short run. The World Bank report suggests that implementing a responsibility-sharing regime could help reduce the burden imposed on receiving countries to provide basic necessities to the refugees and help them develop skills and participate in the formal sector. This responsibility should be shared by other countries, and the same has been acknowledged in the preamble of the 1951 refugee convention.

Conclusion

Immigration, owing to a multiplicity of factors, has acquired the central space in the policy decisions and the politics of the receiving nations. However, the economic evidence, as highlighted in the above sections, suggests that the economic impact of migration makes both the receiving country as well as the source country better off. Skilled migrants have contributed a lot to the economy of developed nations like the USA and the UK. They make a decision to migrate and also give high regard to the immigration regulations of the receiving country and are more likely to choose a country which has less stringent migration rules over its counterparts.

The Public Choice Theory helps understand the complexity of immigration politics by highlighting how policymakers may prioritize the interests of specific groups or constituents over broader societal welfare. As explained by this theory, growing anti-immigration policy has less to do with the will and interests of wider group of the local population and more to do with the interests of specific groups of people with radical take on migration. Nevertheless, the growing anti-immigration stance of major receiving countries acts as a barrier to the migration flow.

Therefore, as highlighted by data, the strong match countries are at the fore front of receiving economic benefits from the migration. The concerns related to the impact of migration on the local society and culture could be better addressed by safeguarding and protecting such interests while keeping it in harmony with the rights and liberties of immigrants as recognised globally and as is necessary for attracting strong-match immigrants. Moreover, in case of weak match, shared international responsibility for the worldwide refugee crisis could help the receiving countries safeguard the interests of their natives and at the same time, help them create a skilled workforce that contributes positively to their economy in the long run.

The authors are students of Gujarat National Law University, Gandhinagar.