“The concept that a job filled by an immigrant takes a job away from a native is wrong”
Giovanni Peri (1969) is Professor of Economics at the University of California, Davis, where he is the Founder and Director of the Global Migration Center. Born and educated in Italy, he is recognised for his research on the economic impact of immigration in the US and Europe. A specialist in labour and urban economics, he has also focused on the economic determinants of international migrations. He is a Research Associate of the National Bureau of Economic Research, one of the leading US economic research organisations.
After the refugee crisis of 2015, have there been significant changes regarding immigration in Europe?
Looking at the last 40 years, one important thing that has happened is that migration from developing to advanced countries has increased steadily. It’s not so much the total number of migrants in the world, but the number of people moving from relatively poor to relative rich countries, and it’s been so for a while. The largest receivers are Europe and North America and to a lesser extent Australia. This is a long-term trend. In fact, total migration into Europe was larger in the period between 2000 and 2010 than between 2010 and 2020. The reason for these migration flows is mainly economic. However, migration from very poor countries is small; there aren’t many coming from sub-Saharan Africa. Medium-income countries generate a larger flow of migrants: as income grows people have a little bit more money that can be used to migrate as they learn about opportunities. In high-poverty countries people don’t even have the means to move out. So, migration from medium-income countries to richer countries has increased. The intention is to find better economic opportunities.
This must be the case in the US, as most of the immigrants are from Latin America, but for Europe the area of origin is Africa, including the poorest countries such as those south of the Sahara. Hence the argument that Europe should invest more on overseas development aid to reduce immigration.
It’s incorrect to think that with more aid there will be less migration. Indeed Africa is a major source of immigrants to Europe but the very large majority are from North Africa and the Middle East (Algeria, Tunisia, Morocco, Egypt) and these aren’t the poorest countries. Although there are some immigrants from Congo or Nigeria, those are minorities. There isn’t much evidence that foreign aid is particularly effective in generating growth. Foreign aid is small in amount; countries normally grow due to internal economic dynamics. Also, if countries in sub-Saharan Africa go from really poor to medium-income, this change will likely be associated with an increase in immigration rather than a decrease. The level of income typical of Latin America is roughly the level of countries where income growth results in lower emigration. But in sub-Saharan Africa the level of income per capita is very low, so growth would likely be associated, at least for a while, with more rather than less migration.
Let’s return to Europe. Tough contention and deterrence policies are being put in place for the refugees. Should we make any distinction between refugees and immigrants?
Most legal immigrants in rich countries are let in for jobs requiring high qualifications or professional skills. There are very few channels for people who do relatively low-skilled or manual jobs to enter legally. Rich countries have denied economic immigration from poor countries and only accepted refugees if they are declared such by the Geneva Convention or if there are international crises in their countries of origin. This is a very myopic way of dealing with immigration.
In Europe there has been no planning and no looking ahead. Let me give an example: the biggest recent immigration crisis in Europe has been the Syrian refugee crisis of 2015, with hundreds of thousands of people coming to Europe as the result of a war, but the war in Syria started in 2012, and in the intervening years there were refugees in the nearby countries. Europe ignored the problem until refugees arrived on its shores. An alternative policy would be to monitor the crisis points around Europe and think about immigrants to allow entry in a more gradual and organised way, potentially also having a presence or a contact with the governments of some of these countries.
The bottom line is this: rich countries should have an immigration policy, set numbers on how many immigrants the economy needs and can absorb. And refugees should have a different status because they are fleeing from immediate violence. A more pro-active policy would avoid such a massive wave when the crisis strikes.
You talk of needs and the numbers that can be absorbed; what does that mean? What is an absorbable number?
Europe has a coordination problem on immigration policy, as there are many countries within the EU and within the Schengen area. It’s not easy. Even in the US, different states have different approaches and they would want different numbers of immigrants. There are states that are much more pro-immigration, like California or New York, and states that are much less. The federal government tries to aggregate those preferences.
Europe is even more problematic, but as there’s full mobility there needs to be a common immigration policy. On this, speaking as an economist, a very good place to start would be an immigration policy for economic and demographic success: what are good immigration policies from the economic point of view?
We should acknowledge that the labour force of European countries has started to shrink because of demographic decline. In countries such as Italy, Spain and Greece, the fertility rate has dropped far below replacement, and the population will decline by several millions in the next decades. Germany and France are in a slightly better position, but the same phenomenon is coming. Hence one can calculate the number of jobs that will not be replaced by new young workers and consider the number of immigrants needed to keep the size of employment constant.
Also, one has to decide what kind of immigrants should be allowed into the country to do those jobs. Another reasonable way of thinking about this is to allow more workers in those economic sectors and regions that have stronger demand. Think for instance of the growing need for workers assisting the elderly, a job already done largely by immigrants. One can forecast the need for these types of jobs and then admit immigrants from North Africa, the Philippines and Latin America to fill them. Aggregating the demand, one can generate a figure representing a reasonable number of entry visas that could translate into jobs. Focusing more on the economics and the demographics and less on the ideology would be a good base for immigration policies.
You’re saying start with an economic proposal. However, current narratives are saying the more they come the less local people get to work. Should there be a change of narrative?
Yes, we need to pay attention to data and research. A lot of research in the US – and in Europe – emphasises two things. First, although there are many low-skilled immigrants there are also many high-skilled ones, especially in countries such as the US, Canada and Australia. Balance is crucial; you can’t only admit low-wage, low-skilled immigrants, but professional and highly skilled ones too. The UK and Germany have this combination. The Mediterranean countries have attracted the low-skilled more, so some rebalancing and attracting higher-skilled workers is important. Among low-skilled jobs, assistance of the elderly, jobs in agriculture, manually intensive jobs in construction… are all occupations with a low native supply of labour and for which there is demand. Those jobs help the local
economy to grow and are connected with and create other jobs, often taken by natives.
The concept that a job filled by an immigrant takes a job away from a native is wrong and there is a lot of research that proves it, and this should be the prevailing narrative. The average person thinks: if a job is done by an immigrant it’s not there for a native. The reality is that the labour markets of a complex economy are continually creating and destroying jobs. And such an economy needs many different types of jobs.
For instance in a sector like agriculture, production needs farm workers, but also managers, supervisors, sales people, people connecting with retail and the restaurant industry. Companies that can hire farm workers grow and create other jobs, so that immigrants filling some types of jobs will create demand for other types of jobs, filled by natives. Economic growth is important and an immigration policy that allows growth and development in Europe is going to be a part of it.
From a political point of view, a balanced and larger inflow of immigrants may also improve the sentiment of natives towards them. There is research showing that often people fear what they don’t know. The biggest aversion to immigrants is not in London, Milan, New York, or San Francisco, which attract large numbers of immigrants, but in smaller towns with fewer, often less skilled, immigrants. In these places there may be cultural aversion to immigrants but a way to change this attitude is by creating a connection between immigrants and prosperity and growth for natives. If high-skilled immigrants contribute to local growth, this positively affects the attitudes of natives.
Yet most of them are kept illegal.
One important reason for the large number of illegal immigrants in the US has been the lack of legal opportunities while the economic demand for them was high. By introducing legal ways of entry a country will reduce the pressure of undocumented immigrants. Many European countries, on the other hand, have had big waves of undocumented immigrants followed by legalisation.
Spain has had two amnesties, and Italy as well. This is a rather haphazard way of realising immigration policies and goals. It generates the idea that people can come undocumented and will then be regularised, feeding false expectations and encouraging risky journeys from Africa to Europe. European countries would do better to allow immigrants to enter legally to do needed jobs, following rules and selecting skills and labourers that they need in their companies and cities. Moreover, southern Europe in particular should attract high-skilled immigrants. Talented people from Africa and India will be happy to come if given opportunities. The US has been very effective in attracting a mix of high and low skills, helping the economy and projecting an image of immigrants contributing to society. In this, the American model can help.
Are we now on the wave of saying no immigrants, we don’t want them here? Might there be another wave saying yes we need them?
Currently the political pendulum in Europe and the US is swinging towards anti-immigration sentiments. Possibly this is a consequence of very large immigrant waves in the 90s (in the USA) and during the 2000s (in Europe). Countries were unprepared and now there is a backlash. Populist options have won elections in the US, Hungary, Poland, Italy and the UK. However, economic pressures and demographic forces will continue to generate migration opportunities and benefits from immigrants in Europe. At some point people may see the need for more open and reasonable immigration policies.
In the end, however, more open immigration is a political decision. Some countries have decided to remain closed, despite the fact that the demographic and economic case for immigration is incredibly strong. The clearest example is Japan, where aging is already shrinking the labour force, but where opposition to immigration remains extremely rigid. People from the Philippines, Indonesia and China would have strong economic incentives to migrate to Japan for work reasons, but the Japanese are very jealous and protective of their identity and don’t really allow immigration on a significant scale. The Japanese economy, one of the fastest growing in the 80s, has been stagnating for decades. As the shortage of workers is becoming severe, Japan has developed robotic solutions. Of course, robotics is great, but how crazy is it to have a robot nurse that costs millions of dollars, when there are hundreds of immigrants that will do the job better and for a lower price while contributing to the economy? The economic and demographic costs of not allowing immigrants may be very large but they will not, per se, guarantee that Europe will take a different path from Japan.
Policy and Global Development Director, Barcelona Institute for Global Health