THE ECONOMIC IMPACT OF MIGRANTS AND REFUGEES ON EUROPE

ЭКОНОМИЧЕСКОЕ ВОЗДЕЙСТВИЕ МИГРАНТОВ И БЕЖЕНЦЕВ НА ЕВРОПУ

Альжанов Айбек Батырбекович

магистрант КазУМОиМЯ имени Абылай хана, Казахстан, г. Алматы

Abstract. This policy brief presents some preliminary findings of a recent research regarding the economic impact of legal immigration in terms of growth and unemployment in a large panel of European countries. It sheds some light on a useful and interesting question for policy debate by explicitly distinguishing refugee and economic category immigrants. Research reveals a non-negative effect of immigration on per capita growth and on employment. The results allow us to consider particular implications for the collaboration of EU countries on the immigration issue and seek to inform more specific and actionable public policy interven-tions.

Аннотация. В данной аналитической записке представлены некоторые предварительные результаты недавнего исследования экономического влияния легальной иммиграции с точки зрения роста и безработицы в большой группе европейских стран. Она проливает свет на полезный и интересный вопрос для политических дебатов, проводя четкое различие между беженцами и иммигрантами экономических категорий. Исследование выявляет неотрицательный эффект иммиграции на рост на душу населения и на занятость. Полученные результаты позволяют нам рассмотреть конкретные последствия для сотрудничества стран ЕС по вопросу иммиграции и стремятся обосновать более конкретные и действенные меры государственной политики.

Аңдатпа. Бұл саясат туралы қысқаша ақпарат Еуропа елдерінің үлкен тобында өсу мен жұмыссыздық тұрғысынан заңды иммиграцияның экономикалық әсерін жақында зерттеудің кейбір алдын ала нәтижелерін ұсынады. Ол босқындар мен иммигранттардың экономикалық санаттарын нақты ажырата отырып, саяси пікірталас үшін пайдалы және қызықты мәселеге жарық түсіреді. Зерттеу иммиграцияның жан басына шаққандағы өсім мен жұмыспен қамтуға теріс емес әсерін көрсетеді. Нәтижелер бізге ЕО-ның иммиграция саласындағы ынтымақтастығы үшін нақты салдарларды қарастыруға және неғұрлым нақты және әрекет ететін мемлекеттік саясаттарды негіздеуге ұмтылуға мүмкіндік береді.

Keywords: Migration, Refugees, Migration Policy, Asylum Seekers, Immigration Impact.

Ключевые слова: Миграция, беженцы, миграционная политика, просители убежища, влияние иммиграции.

Тiрек сөздер: Миграция, босқындар, көші-қон саясаты, баспана іздеушілер, иммиграцияның әсері.

War, extreme violence, human right violations and persecution worldwide are prompting millions of people to be involuntarily displaced. In 2015, the number of forcibly displaced people in the world was the highest ever recorded, having reached 65.3 million. According to the UN High Commissioner for Refugees, this number has risen sharply in five years, from 42.5 million in 2011 to 45.2 million in 2012, 51.2 million in 2013 and 59.5 million in 2014. Refugees abroad represent only a fraction of the population displaced by war and conflicts (nearly 21.3 million persons in 2015). Most of the increase between 2012 and 2015 was mainly driven by the onset of the Arab Spring and thus the new or reignited conflicts as in Syria, Iraq and Libya, together with older crises as in Afghanistan or South Sudan. This has made the refugee crisis a global crisis and has created from the beginning a climate of heightened uncertainty surrounding its political, economic and societal implications in many developed countries. But much international attention has focused on asylum seekers and migrants arriving in Europe during 2015 by sea and the dramatic increase in their number. 

In the European framework, these refugees’ inflows led to controversial discussions about their long term implications and marked a shift in the European position towards the arrival of refugees. This happened at a time Europe seemed entangled in the economic crisis of 2008 with a long period of weak growth and high unemployment. Also, immigration issues have come to the forefront due to an anti-immigration sentiment that is on the rise across the continent. In this context, both forced migration and economic migration have become one of the core concerns in the public debate in many important receiving countries. As many of the key issues in the immigration policy debate are economic, the latter is often fueled by the perception that immigrants take away jobs from the existing population, thus contributing to an increase in the unemployment level, or by the concern about immigrants as a drain on public service resources. These negative perceptions risk compromising efforts to adapt migration policies to the new economic and demographic challenges facing European countries. Should European countries be concerned with the effects of immigration inflows? In order to answer this question, we examine the potential economic consequences of immigration for European economies by distinguishing between general migration, economic migrants and refugees. Labour migration represents only a fraction of all movements to Europe, and more came through other channels, including family, humanitarian and free-movement migration (Figure 1). But even though most migration is not directly driven by workforce needs, immigrants are playing a significant role in the most dynamic sectors of the economy. New immigrants represented 15% of entries into strongly growing occupations in Europe [1]. These include notably health-care occupations and STEM occupations (Science, Technology, Engineering and Mathematics). Also, in Europe, immigrants represented about a quarter of entries into the most strongly declining occupations (24%) including craft and related trades workers as well as machine operators and assemblers. 

Figure1. Immigration influx to Europe (Thousands)

Source: OECD database Notes: This figure shows the number of persons who moved for humanitarian protection is still lower compared to other forms of immigration. The countries considered are: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, United Kingdom

While special attention has been devoted to the analysis of how such inflows of immigrants have affected some aspects of host economies such as labor markets and economic growth, the distinct impacts of the different types of immigration on the receiving country’s economy have not received enough attention among policy makers and academic studies. Indeed, there are less than a handful of studies on the macroeconomic contribution of refugee inflows to the European economies. The economic effects of humanitarian migration are still understudied and not well understood because the context in which forced migration takes place is usually distinct from that of economic migration. In fact, in contrast to refugees, economic migrants notz only decide whether or not to migrate but also which country to migrate and thus weigh the benefits of this decision. And countries that host refugees do so for humanitarian not economic reasons. Due to the different characteristics of refugee and economic migrants, a potential question is to assess whether these differences have any economic implications.

What is the evidence on the economic impact of immigration in Europe?

Empirical analysis considered permanent immigration inflows toward Europe and two groups of immigrants: refugees or people fleeing war, violence and persecution in their home country, and economic migrants or people seeking an improvement in living standards. We also ask whether migration in general (workers, refugees, family migrants, etc.) can have an impact on host countries through our dependent variables economic growth and unemployment rate. The available data on immigration by category covers the period 2003-2016 for a panel of 10 countries (Belgium, Germany, Netherlands, France, UK, Italy, Spain, Denmark, Finland, and Sweden). From a methodological point of view, we use a panel quantile regression approach to explore, from a new perspective, the relationship between specific migration sub-categories and economic growth and unemployment. A major feature of the quantile regression method here is to examine whether this relationship can vary with the quantile value of the economic growth and the unemployment rate. This would in turn help to provide accurate information on the impacts of immigration (all migrants, refugees and economic migrants) depending to the economic conditions: favorable (indicated by high economic growth and low unemployment) and unfavorable (indicated by low economic growth and high unemployment). The reciprocal can be also true, since both growth and employment can affect immigration. This can occur when migrants are attracted by host countries that are enjoying current economic success (i.e., high economic growth or low unemployment rate). Therefore, there is a potential endogeneity problem of immigration inflows, taking into account by performing an Instrumental Variable Quantile regression. In fact, in this study, we seek to identify in which part of the distribution of the dependent variables (i.e. economic growth and unemployment rate), the reverse association occurs. Concretely, it may be thought that migrants do benchmarking by choosing, for example, countries that are best for them (i.e., with high economic growth and / or low unemployment). This is the first time, to our knowledge, that we determine by means of a test for endogeneity in conditional quantiles, the parts where the relationship between migration and growth (or between migration and unemployment) is exogenous, and those where this association is rather endogenous. We call this model a “hybrid” quantile regression. Such accurate assessment permits to locate the quantiles where endogeneity is supported and the specific quantiles where endogeneity can be rejected. Results show that the impact of immigration on growth is generally positive, and its impact on unemployment is negative. In particular, for all migrants, a positive (negative) linkage between migration and growth (unemployment) is shown when the growth or unemployment is low or high. But labor migration is optimal when the growth is low or at the medium level and unemployment rate is low. On the other hand, the impact of humanitarian flows on economic growth (and unemployment) is positive (negative) and significant only when the growth and unemployment are relatively modest.

The findings in this brief confirm the benefits associated with the immigration inflows. Specifically, we show a positive relationship between migration and economic growth and find that migration flows do not increase  unemployment, on the contrary it reduces whereas some heterogeneity is captured depending on the economic conditions of host countries. Accordingly, it seems to be fair to conclude that on current empirical evidence fear of negative effects of immigration on growth or employment are not easily justifiable. Such findings are consistent with the empirical evidence from international research indicating the positive impacts of immigration on the host population through provision of skills currently unavailable or engagement in entrepreneurial activities that provide opportunities to residents. Also, one could think that immigrants who have high levels of productivity and who adapt rapidly to conditions in the host country’s labor market can make a significant contribution to economic growth [1]. Research concerning humanitarian migration contributes to the existing studies in several dimensions. For many European countries, forced migration pose huge social and budgetary challenges but may also offer economic opportunities. To the best of our knowledge, this is the first attempt to address the possible impacts of some types of immigration, i.e. humanitarian and labour migration on the receiving countries. Also, most studies ignore the fact that the effect of immigration could vary throughout the distribution of the dependent variables such as economic growth and unemployment rate. Further empirical research is needed to better understand the channels through which refugee and economic category immigrants affect growth, and how these effects vary for different countries across different time spans.

The findings in this brief imply that there are realistic routes by which immigration can affect economic outcomes in European countries. Informing public opinion in this regard might influence attitudes towards immigration and discrimination practices; this seems a relevant policy recommendation. On the other hand, the complexity of migration requires a global approach to policies in Europe. Some studies highlight the low geographical mobility of European workers as central in many explanations of unemployment whereas the mobility of migrants workers within the same host country or across European countries, in response to regional economic differences in labor market opportunities, is high [2]. This indicates that migration helps address labour market imbalances. Also, when choosing where migrants may settle, it seems quite prominent to consider where appropriate jobs that match their skills can be found based on their profile such as their education level and work experience. Concerning refugees, in several countries, the programming for resettled refugees is often short-term, and the measures that aim to ease their integration into the labor market do not take into account the particularity of refugees by considering whether the goal is short or long-term integration. Also, the economic integration of refugees can be harmed by the legal constraints since there are restrictions on taking up work during the asylum application. The rapid labor market integration is also a key to reducing the net fiscal cost associated with welcoming refugees. Moreover, the implementation of European immigration policy requires taking into account the factors that attract migrants into the destination country. An example of such factors is the labour market condition in host countries that could considerably influence policy efficiency. The severity or the benevolence of this policy should be, at least, coordinated with the economic and social capacity of each European country, the degree of information dissemination in the society, and its level of anti-immigrant sentiment. Many European countries experience high levels of anti-immigrant opinions and poor boundaries of sociopolitical acceptability revealed recently when hosting a much smaller number of refugees has evoked a significant political backlash. Before ending, we want to point out that the recent refugee crisis was a wake-up call to undertake the required coordination for great future challenges. With the climate change, the political instability, and the continued conflicts in many home countries, migration pressures on Europe seem likely to increase further over the coming decades[3].

* The main source of this Policy Brief is a FEMISE Research Project (FEM 43-17) entitled: “The economic contribution of immigration on Europe: Fresh evidence from a “hybrid” quantile regression model”.

* Основным источником данной аналитической записки является исследовательский проект FEMISE (FEM 43-17) под названием: "Экономический вклад иммиграции в Европу: Свежие данные, полученные с помощью "гибридной" модели квантильной регрессии".

References:

1 Borjas, G.J. (1994). The Economics of Immigration. Journal of Economic Literature, 22, 1667-1717

2 David, Q., Janiak, A., Wasmer, E (2010). Local social capital and geographical mobility. Journal of Urban Economics, 68 (2), 191-20

3 Røed, M., and Schøne, P., (2012). Does immigration increase labour market flexibility? Labour Economics, 19 (4), 527–540. OECD (2014). Migration Policy Debates.