Impact of Immigration on the European Economy
YOURSCHOOL
Impact of Immigration on the European Economy
In the weblog (blog) assignment Hűttl and Alvaro (2015) take the position that the economic impact of immigration in Europe is quite small. The blog article cites ten sources ranging from formal peer reviewed articles such as Műnz, Straubhaar, Vadean and Vadean (2006) to popular websites such as the Huffington Post. The overall conclusion of the assigned blog post, all sources considered, is that immigration is a net benefit and therefore, can be considered healthy for the economy.
Labor impacts play an important role in the analysis of impacts of immigration. Immigrants tend to be, almost by definition, seeking a better life. This means that they tend to be relatively low educated and minimally skilled. While there are, of course, a few professionals in the ranks of immigrants, they tend to be exceptions since well educated professionals can prosper in their native land. The majority of the immigrant population is seeking manual labor or domestic employment. In other words, they seek entry level jobs. This drives down wages at the lower end of the economic spectrum. Balancing this, following the analysis presented in the assignment, is a more-or-less offsetting benefit as those at the upper end of the economic scale are able to obtain their domestic service and those functions requiring lower skilled labor (general maintenance, construction labor, janitorial service and the like) at a lower cost.
Another consideration is that younger workers infuse the labor force with drive and energy. As the workforce throughout Europe ages, this “new blood” is needed to to keep up with expansion. Moreover, there is an increase in opportunity for better educated native women. They are freed from domestic drudgery as the newly available low skilled, low wage workers who often gravitate to domestic work provide yet another benefit to the receiving country.
In the analysis presented in the assignment, welfare payments are presented as a net positive, boosting a nation’s GDP by a measurable amount. Since virtually all benefits are spent the money is circulated back into the economy. Following the traditional economic concept of the velocity of money, the host nation’s GDP is increased then as money is spent and respent throughout the economy. This is an accountant’s analysis. For the economist, the opportunity cost of every euro or pound taxed and then redistributed would likely change this picture to some extent.
Specifically addressed in the assignment is the idea that relatively unhealthy immigrants cause increases in the demand on health care facilities. This would include, the theory went, longer wait times for emergency care. Guintella, Nicodemo and Vargas-Silva (2013) found the opposite to be true. The “healthy migrant effect” combined with mobility of native born Britons meant, in effect, that those that stayed in neighborhoods being populated with newly arriving immigrants faced less competition for scarce services. Those wealthy enough to move from areas now seen as less desirable tended to be older and in need of additional health care thereby increasing the wait lines at the health care facilities serving their new neighborhoods.
Hűttl et. al. address the question of the impact of immigration on the balance of trade issue as well. Referring to Műnz et.al. they say “immigration has a small but positive impact on trade relations between migrant receiving and migrant sending countries, as shown in the UK and Spain.” It should be noted that “This paper was commissioned for the “Gaining from Migration” project co-ordinated by the OECD Development Centre, in co-operation with the OECD Directorate for Employment, Labour and Social Affairs (DELSA), the European Commission, and the Athens Migration Policy Initiative (AMPI), with financial support from the European Union.” according to the disclaimer included on the inside of the title page of the published report (Műnz, 2006). This is not, then, nor does it claim to be, a “neutral” study.
The sociological and economic divide has been altered, though, with the Muslim wave immigration resulting from the chaos in the middle east. The first waves had already begun when the tragedy of an overloaded boat sinking off the coast at Lampedusa, Italy brought it to the world’s attention (BBC, 2013). This wave is separate and distinct from previous immigrants.
Hűttl and Alvaro, for example, accept The Economist (2013) evaluation. The position of the cited article is that immigrants are net contributors to the receiving country’s economy. The contribution, though, is small. This, in turn, is attributed to the low wages of relatively uneducated and unskilled immigrants. The issue is exacerbated by a low participation among immigrant women.
This position is, however, flatly contradicted by Lebl (2015) writing in the American Center for Democracy, an avowedly anti-immigrant and anti-Muslim organization. Although clearly biased, Lebl is well sourced. Caldwell (2015) in the Wall Street Journal identifies the core problem with:
If Americans have traditionally considered immigrants the hardest-working segment of their population, Europeans have had the opposite stereotype. In the early 1970s, 2 million of the 3 million foreigners in Germany were in the labor force; by the turn of this century, 2 million of 7.5 million were.
More evidence is provided by Igler (2015) who provides a litany of such examples. Unemployment rates among the Muslim immigrant cohort are terribly high. Igler notes male unemployment rates of 50% and for women even higher at 75%. The cultural differences are clearly at work here. Given those differences, there is little hope for improvement.
Two conclusions are to be drawn. The first is the straightforward accounting conclusion. Based on the evidence presented, historically immigration has been a net plus for the receiving country. The labor force has brought drive and energy as young workers seek a better life. Those same new citizens bring a fine understanding of the wants of those remaining behind as well as a contact list for those interested in fulfilling that demand.
The second is more in the realm of sociology or political science. Traditional immigration has involved those not only seeking the proverbial better life, but also those wanting to accept and assimilate into their new society. In America this is called the “melting pot,” although the “tossed salad” might be a better description. Regardless, by the third generation traditional immigrants have seen themselves as American (or German or French or Danish or whatever). The new wave though presents a new face. Muslims do not see themselves as Spanish immigrating to Britain or as Libyans immigrating to France. Rather, they see themselves as Muslims. Period. And it is becoming more and more apparent that there is no particular interest among this group in assimilation.
This latest wave is a very recent event and it is too early to draw conclusions. Setting aside the question of “radical” Islam or “mainstream” Islam, it is apparent that this is a culture that is not seeking to become part of their newly adopted nation. Whether or how much this will impact the economic and accounting issues addressed above remains to be seen.
References
Caldwell, Christopher. (2015 January 16). Immigration and Islam: Europe’s Crisis of Faith. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/europe-immigration-and-islam-europes-crisis-of-faith-1421450060
Gould,D. (1994) Immigrant links to the home-country: empirical implications for U.S. bilateral trade flows. The Review of Economics and Statistics 76: 302-316. Retrieved from http://www.jstor.org/stable/2109884?seq=1#page_scan_tab_contents
Guintella, O., Nicodemo, C. and Vargas-Silva, C. (2013, October 13). Immigration may reduce the time you wait to see the doctor. The London School of Economics and Political Science. Retrieved from http://blogs.lse.ac.uk/politicsandpolicy/immigration-may-reduce-the-time-you-wait-to-see-the-doctor/
Hűttl, Pia and Alvaro, Leandro. (2015, October 19), How will refugees affect European economies? [Weblog Brueget]. file:///home/chronos/u-3cc53129652b8769381c3efb67b433622f1f0fa4/Downloads/Refugees%20affect%20European%20Economies.html
Igler, George. (2015, November 18). The True Cost of Europe’s Muslim Enrichment. Gatestone Institute International Policy Council. Retrieved from https://www.gatestoneinstitute.org/6915/europe-muslim-enrichment
Immigration and the Public Finance: Boon or Burden? (2013, June 15). The Economist. The Economist Newspaper Limited. Retrieved from http://www.economist.com/news/finance-and-economics/21579482-new-study-shows-fiscal-impact-migration-broadly-neutral-boon-or
Italy boat sinking: Hundreds feared dead off Lampedusa. (2013, October 3). BBC News. Retrieved from http://www.bbc.com/news/world-europe-24380247
Lebl, Leslie. (2015, March 27). Muslim Immigrants Draining European Social Benefits*. American Center for Democracy. Retrieved from http://acdemocracy.org/muslim-immigrants-draining-european-social-benefits/
Mundra, K. (2010) Immigrant Networks and theU.S. Bilateral Trade: the Role of Immigrant Income. Rutgers University Newark Working Paper #2010-006. Retrieved from file:///home/chronos/u-3cc53129652b8769381c3efb67b433622f1f0fa4/Downloads/2010-006.pdf
Műnz, R., Straubhaar, T., Vadean, F. and Vadean, N. (2006). The Costs and Benefits of European Migration. Hamburg Institute of International Economics. Retrieved from http://www.hwwi.org/fileadmin/hwwi/Publikationen/Research/Report/HWWI_Policy_Report_Nr__3.pdf
Second-Generation Americans: A Portrait of the Adult Children of Immigrants. (2013, February 7). Pew Research Center. Retrieved from http://www.pewsocialtrends.org/2013/02/07/second-generation-americans/
[Weblog Muslim Statistics]. Retrieved from https://muslimstatistics.wordpress.com/
