Is Economic Migration Still Sustainable?

29/07/2014 16:57 | Updated 28 September 2014

Migration has always been part of the human experience. As the world's population has grown, so too has the number of people migrating. But have we reached the point where the developed world is no longer seeing a benefit from the economic migration of people from the developing world?

From the 18th Century onwards, 55million Europeans went overseas, many to the USA, peaking at nearly nine million arrivals in the first decade of the 21st Century. By 1910, the total number of people worldwide - including legal and illegal international migrants and refugees - living in a country not the one they were born in was estimated to be about 215million. Today, the influx of migrants to Western countries approaches in absolute terms the scale of 19th Century emigration. When Europeans migrated in the 1800s however they generally filled up territory occupied by few indigenous people. The problem we now have is that today's migrants tend to go to places with already relatively high population densities.

No one can deny that migration has positive aspects. Diasporas spread information and ideas and facilitate trade. They can, and often do, generate money flows to poor countries. A recent study by Duke University showed that immigrates make up an eighth of America's population but have founded a quarter of the country's technology and engineering firms. Generally, however, migration works best when sending and receiving countries have roughly the same standard of living, not when there is a steep economic gradient to be traversed.

It's not surprising that people want to move from poorer countries to richer ones. Migrants who move for economic reasons are by far the largest category. They move because they believe that they can better their life chances somewhere else, although the data consistently show that when families move, women's employment opportunities are apt to be less favourable than they had been. And there are other even more distressing issues; migration often means leaving some family members behind and though sometimes a large degree of integration is easily achieved, sometimes immigrants may experience almost total exclusion from the host country.

But who benefits from economically driven migration? Undoubtedly the migrants generally gain from the process. The bigger the gap been the migrant's earning power in their country of origin and that to which they have moved, the greater the gains will be. So, with travel as cheap as it is today, movement from poorer to richer countries can be expected to increase in proportion to the size of the gap in living standards between developed and developing nations. With economic migration only set to increase, the key issue then is whether on balance the overall gains from large-scale migration outweighs the benefits. To assess this we need to look at the pros and cons of migration generally.

First, it is consistently argued in the UK and elsewhere that there are large numbers of jobs here that the indigenous labour force doesn't want but that migrant works are happy to fill. This may be true. But employing large numbers of low-skilled people on low wages is not the only way of getting necessary work done. By sticking to the low-skill, low-wage tradition of using large-scale immigration to do essential work we are only discouraging investment in labour-saving machinery and the productivity improvements that go with this. Furthermore, the losers in such a situation tend to be those indigenous workers competing with the new arrivals.

Secondly, it is often argued that immigrants are required to redress imbalances in the age structure of developed countries with aging populations and low birth rates. This argument is used particularly in Europe and Japan. But there are two problems with this approach: one is that immigrants get older too and sooner or later they become part of the dependency problem and the second is that immigration on the scale required to fill population gaps is completely impractical; the number of immigrates required to bring this about would be far greater than any estimates of the host countries' capacity to absorb them.

Thirdly, it is maintained that immigration provides otherwise absent cultural diversity. There is something in this argument but it needs to be balanced against the resentment which large cultural and lifestyle differences can easily bring about. Finally, it is argued that because immigrants tend to be extremely hardworking, positively motivated and entrepreneurial, they have a lot to offer. There is considerable weight to this argument too. Many immigrants have done extremely well in the UK, making a significant contribution to our economy and country. But the obverse of this is that the benefits we have gained from the contributions of these talented people have been lost from their country of origin; benefits which these countries can ill-afford to lose.

In summary, while large-scale migration for economic reasons has some merit for the migrant, the implications and benefits for everyone else are less clear. Those in the developed world with a low income tend to find their earning capacity reduced while the pressure generated on housing and infrastructure and other social resources generally increases, especially in countries or urban environments where the population density is already high. At the same time the poorer countries from which migrants tend to come can ill-afford to lose the skills and abilities of the type of people who most want to migrate.

It is also clear that, as the scale of migration increases, the strains in all directions get greater and the tolerance of those in host countries is stretched. We can see this happening right now in the UK and across Europe. So if migration is to be kept within reasonable bounds, as far as possible, the living standards between rich countries with low birth rates and poor countries with high birth rates must be kept as small as possible and reduced rather than increased. It's clear that the wider the gap in living standards between the poorest and richest nations, the greater the incentive to migrate for economic reasons.

If the poorest countries are to become better off, it is even more important that the rich countries do enough to provide trading opportunities and aid. We need to ensure our economy is strong enough to weather any coming storms. If the West falters, the result over the coming decades is likely to be more, not less, migration.

There are already signs that developed countries now have limited capacity to absorb immigrants from poor countries before tensions rise to an intolerable level. The rise of populism in the UK and across Europe is an outward manifestation of this. If we are to tackle the likely further increase in economic migration - or stem that flow - it is in Britain's interest to look evermore carefully at policies which will deliver sustainable economic growth and raise the living standards of all workers in the UK, not just those in the South of England or in service industries. Only then will we have the capacity to cope with economic migration and help the developing world raise its own living standards too.