The Impacts of Immigration on Receiving Countries
by
p.
,
PHIUP L. MARTIN1
March 4, 1994
Summary .......................................................................................................................
AWorldon the Move ..................................................................................................
Why International Migration ?...................................................................................
Demand Pull .....................................................................................................
Supply Push ......................................................................................................
Networks ...........................................................................................................
The Migration Challenge ................................................................................
Toward International Cooperation ?..........................................................................
Two Grand Bargains ....................................................................................................
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6
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Summary
"Man is of all sorts of luggage the most difficult to be transported ." Adam Smith
The world appears to be on the move. There are about 100 million persons
living and often working outside their countries of citizenship, making this
"nation of migrants " equivalent in size to the world 's tenth most populous
country. Second, the three factors that influence the direction and volume of
migration are evolving in ways that promise more rather than less economicallymotivated movement into the industrial democracies of Western Europe, North
America, and Asia in the 1990s. Third, these industrial democracies tend to react
in a too little and too late manner when they act to reduce economically motivated immigration , in part because too little is known about the relative
importance of the demand-pull, supply-push, and network factors that govern
Professor of Agricult ural Economics at the University of Califomia -Davis. Paper prepared for
the ECSA conference on immigration May 13-14, 1994 in Charleston , SC. I am indebted
o t Peter
Lindert, Tom Merrick, Sharon Stanton Russell, and Ed Taylor o
f
r helpful comments.
302839181Z
particular migration flows , and far too little is known about how these factors
change over m
it e .
This paper summarizes recent global migration patterns. It then turns to the
reasons why people migrate for economic reasons, and lays out twin "Grand
Bargains" that provide a basis for efforts to reduce unwanted migration in the
1990s.
AWorldon the Move
Three basic migration facts seem important
most people never cross national borders to live or work in another
country2
-- at least half of all migrant workers move from one developing country to
another, i.e., most of those who cross borders do not enter industrial
democracies
many countries have successfully made the transition from exporting
ot
importing labor, and the migration transition process seems
o t be
speeding up.
Given economic differences between nations , and established networks that
could move large numbers of people , the surprise may be how little international
migration occurs.
One starting point for considering labor migration is demography. The
world 's population in 1994 is about 5.6 billion , and almost 3.5 billion people are
in the 15 to 64 age group from which the world 's 2.5 billion workers are drawn.
Both the world 's population and its potential work force are increasing by 90 to
95 million persons annually.
Neither people nor income are distributed equally around the globe. The
World Bank divides the countries on which it collects data into 22 "high-income "
and about 100 middle and low income countries. High-income countries—the
2'Ihere is a considerable amount of internal migration , especially that associated with rural-urban
migration.
United States and Canada, Western European nations such as from Sweden to
Spain, and Asian countries such as Japan, Singapore, and Australia —include 15
percent of the world 's population , but they accounted for over three -fourths of
the world 's $22 trillion GDP in 1991.3 The average income in these rich countries
was over $21,000 annually in 1991,versus a worldwide average of $4,000.
These data suggest that an average person from one of the poorer 100
countries could increase his or her income 5 to 6 times by moving into one of the
22 richest countries . Young people are responding to the opportunity to "go
abroad" for opportunity,but most of them travel only a short distance, usually
from one developing country
o t another. Over half of the world's "nation of
migrants " is in developing countries -indicating that there is a great deal of notwell -studied labor migration between developing countries .
However, there are almost 50 million immigrants, refugees and asylees, and
authorized and unauthorized migrant workers in the industrial democracies, and
their presence there is an important socio-economic and political issue. Many are
unwanted, in the sense that their settlement was not anticipated —as with
guestworkers who settled in Western Europe or applicants for asylum whose
claims that they would face persecution at home are rejected,but who
nonetheless are allowed to stay.
The United States may be the world's major recipient of unwanted
immigrants. Of the 9 million persons who are today considered legal immigrants
who arrived since 1982, one-third were previously illegal aliens whose status was
regularized ;there are, in addition , an estimated 3 to 4 million illegal alien
residents in 1994. Opinion polls in North America and Europe indicate that a
majority of the public wants such unwanted immigration curbed.
o t the 1993 World Development Report , the 822 million people in the "high income
^According
countries" that, when ranked by GDP per capita,begin with Ireland and end with Switzerland are
15.4 percent of the 1991 world population of 5.350 billion (p289).
Why International Migration?
Migration research has identified three major factors that influence
economically -motivated international migration . They are:
demand-pull factors that draw migrants into another country,
supply-push factors that encourage migrants to leave their own countries/
and
networks of friends and relatives already settled in destination countries
who serve as sources of information and anchor communities for
newcomers .4
The relative importance of each factor changes over m
it e and in particular
migration streams. The most common pattern is that the importance of demandpull factors declines as a migration stream matures.
Demand Pull
Most labor migrations began in the industrial countries , as employers there,
with or without explicit government approval, recruited migrant workers.
During the early years of such labor migrations , demand-pull factors so
dominate that, for example, in Germany during the 1960s, the annual influx of
workers could be explained almost entirely by fluctuations in the German
unemployment rate, giving governments a false assurance that they really can
regulate with precision migrant worker flows .
However, in what has since become a familiar story in industrial
democracies, demand-pull, supply-push, and network factors evolved in a
manner that justifies
the aphorism that there is nothing more permanent than
temporary workers. In all of the industrial democracies, migration has
seemingly taken on a life of its own, with migrant workers continuing to arrive in
4Bo{h historically and o
tday middlemen recruiters and transporters have been involved in the
migration process . Today, these understudied middlemen—who might be considered as
arbitrageurs of differences between international labor markets-play a role in much of me illegal
labor migration that occurs, usually extracting a fee from migrant workers or their employers
equivalent to 25 to 100 percent of what me migrant will earn in his first year abroad .
Western Europe, the United States, and Japan despite historically high
unemployment rates. Migrant workers are often prized for their flexibility : they
are willing to accept jobs that offer low wages, unpleasant or seasonal work, or
unusual hours. As a result, migrant workers are found in the same industries
and occupations in all industrial democracies: construction , agriculture , and
service jobs that offer low wages, such as in restaurants and hotels, or night and
weekend work, such as nursing.
It is sometimes asserted that there would be little unwanted labor
immigration if the industrial countries simply opened themselves to products
from emigration nations —to paraphrase Mexican President Salinas, if the US
really wanted to keep out Mexican tomato pickers , it should open itself to
Mexican tomatoes . Their is some truth in this assertion , but careful scrutiny
suggests that relatively few migrant workers are employed in industries in which
trade in place of migration is a near -term option . Labor -intensive manufacturing
industries such as garments and shoemaking are often dependent on migrant
workers and protected from developing-nation imports,but freeing up trade in
goods would directly affect less than one-fourth of the migrant workers in most
industrial countries . Thus, while free trade is desirable as a means to accelerate
economic growth, it will not immediately curb the desire to employ migrant
construction workers,janitors , and nurses.5
5Some industrial countries are engaged in a debate over whether the best way
o t discourage their
employers from preferring
o t employ unauthori zed workerso
is t step up border and interior
enforcement so mat such workers are not available,whether it is better
o t enforce labor laws so
that migrant workers are not "exploited ," or whether both immigration and labor law
enforcement is needed . Generally, pro-migrant groups favor placing the emphasis on labor law
enforcement, while restricionist groups favor border and interior immigration enforcement
Over the past 5 years, a new element has entered the debate over immigration control , m
both North America and Western Europe, the argument is that some immigrants come to obtain
social welfare program benefits, from education to health care
o t assistance payments. Such
arguments are made most often by those who advocate reducing sodal welfare programs for
citizens and migrants alike.
Supply Push
The demand -pull of jobs in industrial democracies is matched neatly by me
supply push of low wages and joblessness in the developing countries from
which most migrant workers come. About 5 in 6 of the world 's workers are in
the world's poorer nations, and every year another 80 million workers join the 2
billion strong workforce there. This leads to an enormous job creation challenge.
Developing nations from Mexico
o t Turkey to the Philippines must create 500,000
to 1million new jobs annually for the youth who every year enter the workforce.6
In addition , they need to find jobs for the 20 to 40 percent of the workforce that is
currently unemployed or underemployed . On top of these job creation
challenges, developing nations must find jobs for ex-farmers and for workers
who are not seeking work because there aren't enough jobs .
Even though some of these newly-industrializing countries have some of
the fastest economic growth rates in the world, they have been unable to create
enough jobs for new workforce entrants, persons who would like more work,
and persons who would look for work if jobs were available. In Mexico, the
workforce is about 30 million, but only 10 million workers are in formal
employment relationships , meaning that they are enrolled in that country's
government-operated health and social security systems. Mexico has been
creating only about one-third as many real jobs each year as it needs.
Networks
Demand pull and supply push are like battery poles : both are necessary
o t
start the car,but alone, each cause no activity. The demand pull of jobs in the
industrial democracies is linked to the supply push of low wages and joblessness
^ The youthful age structure in developing nations guarantees a continuing influx of teens . In the
United States, for example, about 20 percent of the population is less than 15. In Mexico, almost
40 percent of the population is less than 15.
in emigration countries by migration networks. Migration networks encompass
everything that enables people to learn about opportunities abroad and take
advantage of them. These networks or linkages have been shaped and
strengthened by three of the major revolutions of the past generation : the
communications revolution , the transportation revolution , and the rights
revolution .
The communications revolution refers to the fact that potential migrants know
far more about opportunities abroad than did turn of the century migrants from
southern and eastern Europe who set out for North and South America and
Australia . The major source of information is countrymen already settled abroad
who can tell the migrants about opportunities in Paris or Los Angeles, and in
many cases provide advice and funds to migrate, legally or illegally. The
industrial democracies perhaps unwittingly add to their allure by portraying, in
TV shows such as Dallas and Dynasty that are exported even to the remote
comers of the globe, a life of opulence .
Some migrants have their expectations raised by these portrayals of life in
the industrial democracies, and many hope to achieve a better life for themselves
by migrating to richer areas. Others are motivated to go abroad by contractors,
labor brokers, and other often shadowy middlemen who promise, for a fee
equivalent to 1/ 4, 1/ 2, or even more of the migrant's first year 's earnings abroad,
access to the promised land.
The transportation revolution is simply the fact that the cost of traveling has
dropped enormously, while convenience has increased geometrically . Even the
most remote peasant is less than one week away from the bright lights of New
York—once he gets to the capital city of his country, the international network of
flights can take him anywhere within a day or two for less than the average
monthly earnings of even an unskilled and seasonal worker in an industrial
country, $1000 to $2000.
The third revolution that encourages migration is the rights revolution,or the
spread of individual rights and entitlements within many nations . All of the
industrial democracies have strengthened personal rights vis-a-vis government
agencies, and most have signed international treaties that, for example, commit
them to provide refuge to those fleeing persecution . One effect of this rights
revolution is that, once an migrant arrives in an industrial country, he or she can
avoid deportation for 2,3, or even 4 years.
While a migrant's case winds its way through the legal system, industrial
countries face a Hobson's choice. If they prohibit the migrant from working
because his legal right to do so is in doubt, then the government must support
the migrant . If the migrant is permitted to work, then the humanitarian righ
t t
o
due process becomes a backdoor guestworker program.
The Migration Challenge
Demand pull, supply push, and network factors are evolving in ways that
encourage more migration . In light of these easily understandable forces, the
world should be on the move, and it may seem to some that it is: the migrant
nation is 100 million strong, and it has in recent years been increasing by between
2and4 million annually in the industrial democracies .7
But the surprise to many observers is how few, not how many, migrants
move into the industrial democracies . Most people do not move: most people
will live and die within a few miles of their birthplace. International migration
remains an extraordinary event despite the evolution of demand, supply, and
^There is a considerable amount of return migration , but the proportion of newcomers who leave
is hard
o t predict and changes as a migration stream matures , m the United States, for example,
it is believed that emigrants are equivalent
oto
20 t 30 percent of immigrants.
network factors that encourage migration . Furthermore, most of those who
migrate internationally move only a short distance, so that most of the world 's
migrants move from one developing nation to another. One unlikely country,
Iran, includes almost one-fourth of the world's 19 million refugees.
The 50 million migrants in the industrial democracies are significant But it
should be emphasized that most people do not migrate despite ever more
incentives to do so. The industrial democracies are not being overrun by a tidal
wave of immigrants .8 The migration challenge remains manageable , and
responsible policymakers may not be well-served by doomsday scenarios such as
those painted in the film The March , in which desperate Africans set out for
Europe accompanied by news crews while political leaders there debate how to
stop them. The logical quick fix for such mass migrations is tight border controls
and relief outside the borders of the industrial democracies to avoid rights and
settlement, but there are medium -term steps that can be taken to avoid such
crises.
Toward International Cooperation?
Controlling who crosses a nation 's borders is considered one of the most
basic aspects of sovereignty. However, unlike defense or economic policies ,
which are coordinated in an alphabet soup of international organizations that
range from NATO to GATT, immigration policy has remained country-specific.
Indeed, economically -motivated migration is probably the major issue facing the
industrial democracies that is not being coordinated in an international economic
organization .
This lack of international coordination is evident in the responses of the
world 's three major industrial areas to today 's immigration pressures . In
®It is instructive to remember that labor migration often remains region- and village -specific,
even after decades of migration . Over two-thirds of Mexico's U.S.-bound migrants originate in
seven of the country's 32 states; they often come from specific villages within these provinces .
Western Europe, controlling unwanted immigration is a top domestic priority
.
In Germany, there were more than 10 attacks on foreigners every day in 1992 and
1993, including several arson fires that resulted in the deaths of Turkish children
born in Germany. France, Europe's traditional immigration country, has
announced that its goal is to have no immigration . The European response has
been to embark on what has proven to be a contentious process to construct an
ever higher external wall around fortress Europe so that there can be freedom of
movement within Europe.
The United States and Canada are the world's two major traditional
immigration countries : they plan for the acceptance of about 1million
immigrants annually, or 90 percent of all the immigrants that the industrial
democracies plan to accept. Even though they are nations of immigrants, most
Americans and Canadians want legal immigration reduced and new efforts
launched to curb illegal immigration . This is not a new phenomenon : only once
during the past half century, in 1953, did more than 10 percent of Americans
favor increasing legal immigration .
The American and Canadian governments have responded to antiimmigrants sentiments by taking what have proven to be largely symbolic efforts
to reduce illegal immigration . The United States in 1986 adopted sanctions or
fines on employers who knowingly hired illegal immigrants, but this
restrictionist
symbol spawned a counterfeit document industry that
paradoxically made it easier rather than harder for such "falsely documented
workers" to find US jobs . In 1990, the United States approved a cap on legal
immigration ,but made so many exceptions to the cap that legal immigration is
expected to remain at least 30 percent higher than "planned ." Controlling
immigration may be important in North America , but it ranks below creating
jobs and controlling health care costs, crime, and welfare costs on the national
agenda.
Asian industrial democracies such as Japan and South Korea are becoming ,
for the first time , destinations
for immigrants. Unlike Europe, where emigration
played a large role in nation -building, or the United States, where immigration
helped to shape the nation 's identity , neither emigration nor immigration has
played significant roles in these nations . But these countries are opening side
doors for guestworkers to enter, and they have announced their intention to
avoid the European mistake of permitting these guestworkers to become
immigrants.
The migrants living in the industrial countries send remittances to their
countries of origin. Worldwide, remittances are at least $75 billion annually, or
one and one-half times the level of Official Development Assistance provided
o t
developing nations . From Algeria to Yugoslavia, labor is the most important
export of many nations , and remittances are the most important source of foreign
exchange.
As pressures to enter industrial democracies rise during the 1990s, and
should the industrial democracies coordinate their migration polices ? Logic
suggests that they should: if Germany restricts the immigration of persons
seeking asylum, some may seek asylum in France, the United States, or Canada.
Similarly, as world trade in services grows, migration issues inevitably arise ,
since many services are delivered in person.
The industrial world is at the beginning of a new era of migration . Instead
of people moving from Europe to America, the major flow of people will be from
south to north. There is as yet little effective coordination or consultation on
immigration matters. Perhaps migration issues today are akin to energy in the
1960s. When oil was plentiful and cheap, there seemed to be no need for
international coordination . When that fact changed, international organizations
were quickly formed, and the industrial nations proved willing to coordinate
their efforts in the Gulf War of 1991.
Two Grand Bargains
Migration is likely to increase rather than to decrease in the 1990s, and there
is today only a limited basis for international cooperation to deal with
international migration . What should the industrial democracies do about rising
immigration pressures ?
No one knows whether the immigrants arriving in industrial democracies
today will be well-integrated fellow citizens or an unassimilable underclass
tomorrow . Indeed, it is often difficult to engage in a rational discussion about
immigration , especially in an immigrant country such as the United States. Past
fears that Germans, Italians , or Jews could not assimilate proved to be
groundless. Historians and social scientists cannot agree on why the United
States was able to achieve e pluribus unum—from many, one—and thus they
cannot assure a public that today fears that newcomers will be difficult to
integrate are groundless,but the fact that past fears of unassimilable newcomers
were not borne out places a high hurdle in front of today 's proponents of less
immigration .
Rather than trying to project the future success of any particular nationality
or ethnic group, it is more useful to examine the effects of immigration on the
industrial democracies. Throughout human history , most societies have had
pyramid shapes: a king on top, and the poor masses at the bottom. The great
achievement of the industrial democracies has been the development of
diamond -shaped societies : the number of rich people was limited by taxes, the
number of poor people with a social safety net, and the people in the middle
class represented the widest band of the diamond.
The immigrants arriving in the industrial democracies have an hourglass
shape. According to the US Department of Labor 's analysis of Census data, 24
percent of all immigrants 25 and older had 4 or more years of college in 1980,
versus 16 percent of the native -born population . Immigrants are also much more
likely than natives to have less than a high school education -41 percent of adult
immigrants had less than a high school education in 1980, versus 32 percent of
the native born. The hourglass or barbell shape of immigration was accentuated
in the 1980s, making immigration another factor—probably secondary compared
to deregulation , trade patterns, and other economic shifts—that is increasing
inequality in the industrial democracies, a major the socio-economic issue of the
1990s .
First generation immigrants may not mind being at the bottom of the
economic ladder. But their second and third generation children are likely to
have
i tle same aspirations as their as native children. The challenge for the
industrial democracies is to ensure that these children of immigrants have the
skills to match their expectations .
The studies and speculations about the prospects for the children of
immigrants range from very optimistic to very pessimistic . But regardless of
expectations, there is almost universal agreement that, to p
it the scales more
toward success, more should be done to help to integrate immigrants and their
children. This raises a dilemma. How can the industrial democracies devote
more resources to immigrants and their children when 70 to 80 percent of their
people think that immigration should be reduced?
The answer is the first so-called Grand Bargain. Industrial democracies
could couple renewed efforts to control immigration with expanded efforts to
promote integration . The industrial democracies have often used Grand
Bargains to deal with immigration dilemmas. The United States in 1986 coupled
sanctions on employers meant to stop illegal immigration with the world's
largest amnesty program. Western Europe in 1974 stopped the recruitment of
guestworkers,but permitted families to be unified in France and Germany.
There is also a second dimension
o t this Grand Bargain. The remittances
sent home by migrants now exceed $75 billion annually, or 1.5 times ODA. If the
industrial democracies are able to reduce immigration, they may also reduce the
remittances mat are the lifeblood of many families, communities , and economies .
The industrial democracies are going to have to be prepared
o t couple trade
concessions and aid with new get tough immigration policies in order
o t avoid
hurting developing nations that depend on international migration .
Using trade to accelerate development produces one of the many paradoxes
that bedevil rational discussion of the migration challenge facing the industrial
democracies . As industrial countries free up trade with the countries from which
migrants come, the trade and investment which in the long run produce jobs and
economic growth in the short run often lead to an economic restructuring that
increases migration pressures . The result is the so-called migration hump:
migration pressures first s
r
ie , and then fall. In the case of NAFTA, freeing up
trade an investment is expected to increase migration for a decade or more,
producing the paradox that the policies which make immigration control less
necessary in the long-run make it more necessary in the short run.
THE MIGRATION HUMP
A migration hump or transition has three important parameters . First how
big is the hump A, or how much additional migration is there during the
economic takeoff phase of restructuring? Second,when is point B reached when does migration return to its pre-take-off levels? Third, how large is C/ the
migration that did not occur because of stay-at-home development? We could
also ask a fourth question -what enables countries such as Italy, Spain, and
Korea to get to D - to be net labor importers -within two decades of economic
restructuring ?
We know very little about parameters such as A/ B, C and D -neither in
already completed migration transitions such as those of Southern Europe or
Korea, nor those underway today, such as Thailand and Malaysia . The Asian
tigers may have lessons to teach the world in both economic growth policies and
in accelerating the migration transition .
The migration hump can serve as an argument for increasing interest in and
funding for polices that promote stay-at-home development. Industrial countries
today are spending far more on immigration control and integration assistance
than on official development assistance,9 and if there were a more concrete path
that could be shown to reduce migration pressures, it may be possible to shift
funds toward such policies .
Conclusions
Grand Bargains that coupled new immigration controls with a redoubling
of efforts to integrate the nation of newcomers in the industrial democracies, and
renewed efforts to use trade and aid to accelerate development in emigration
areas, has intuitive appeal,but they are difficult for any one country
ot
accomplish. Governments are sensitive to employers who want immigrant
workers, and neither foreign aid nor rolling back individual rights are politically
popular . It is for this reason that the difficult choices that must be made in
immigration matters may gravitate toward an international organization , and it
may help individual countries to adopt effective immigration controls in the
same manner that GATT helps to prevent governments from succumbing to
domestic protectionist pressures .
It is true that difficult problems often lead to bad policies . But doing
nothing about rising immigration is likely to produce the worst of all worlds. If
the status quo continues , large numbers of unskilled immigrants will arrive in
industrial countries, and right -wing political parties in Europe and compassionfatigued publics in the United States will support politicians and parties that are
9QDA in 1991 totalled
$56 billion .
17
not likely to make integrating newcomer immigrants a top priority . Such a
political gridlock would produce yet another deficit for later generations to
grapple with: the deficit of uplifting those left behind .