Migration barriers have complex effects, among which is a cost to global economic efficiency. A recent research literature has asserted that, far from having an economic cost, migration barriers may in fact enrich the world economy. It is claimed that barriers do this by stopping the spread of impoverishing ‘culture’ or ‘institutions’ from poor to rich countries. This is the new economic case for migration restrictions. We assess the economy theory and evidence behind this claim. While it is possible in principle for such effects to arise, they would occur at orders of magnitude higher migration rates than presently observed. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.
Globalisation is not just for goods, services and capital. It is also for people. High-income countries are not only richer, but also less corrupt and more stable than others. Nothing is less surprising than the desire to emigrate to the West.
A few argue that gaps in real wages across the world are the biggest of all economic distortions. Movement of people, they say, should be seen as identical to trade; humanity would benefit from the elimination of barriers. The movement of people might be vast and the impact on high-income economies, with only one-seventh of the world’s population, correspondingly huge. But it would maximise wealth.
Yet such cosmopolitanism is incompatible with the organisation of our politics into self-governing territorial jurisdictions. It is incompatible, too, with the right of citizens to decide who may share the benefits of living alongside them.
If countries are entitled to control immigration, the criterion for immigration becomes the benefits to existing citizens and their descendants. Benefits to would-be immigrants, which are the bulk of those generated by migration, count for less.
What then are the benefits of immigration to citizens and their descendants? The arguments divide into those relating to the numbers and, more importantly, those relating to the differing characteristics.
Is it important to increase population? The answer surely is no. Merely increasing the population of a prosperous small country, such as Denmark, would not increase the standard of living of its citizens. But it would impose sizeable investment and congestion costs. The argument for size can only be that it makes defence cheaper.
Last year, there were 29 dependants aged 65 and over for every 100 people of working age. According to the United Nations, keeping this ratio below a third would require immigration of 154 million between 1995 and 2050, with far more thereafter: Immigrants age, too, after all.
Consequently, a big reduction in dependency ratios demands huge inflows. One might argue that a continent with so few children must accept such a transformation of its population.
Finally, the main beneficiaries are always the immigrants themselves.
Yet migration is not just about economics. Immigrants are people. They bring in families, for example. Over time, large-scale immigration will transform the cultures of recipient countries in complex ways. Immigrants bring diversity and cultural dynamism. At the same time, as Nobel laureate Thomas Schelling notes, substantial segregation might naturally emerge. People might then live quite separately, without many shared loyalties.
Immigration has economic effects. But it also affects the current and future values of a country, including its concern for foreigners. People may legitimately differ on the correct policies.