Economic Benefits of Open Borders

Here is a must-read article by Philippe Legrain on the New York Times. A few key points:

  • When borders are open, migration is circular rather than permanent, as shown by the relatively low levels of migration from Eastern Europe when new countries were admitted.

“only about four million Eastern Europeans have migrated since 2004, while many come and go.” Also in the US.  “Until the 1950s, when the United States scarcely controlled its border with Mexico, Mexicans crossed to do seasonal work, but few settled. …  American efforts to close the border led to a surge in permanent settlement: People rushed to move before controls tightened, then stayed for good.”

  • Sudden increases in migration are likely to lead to economic growth, as it happened in Israel in the early 1990s. There is no fixed number of jobs to go around (lump of labour fallacy!)

The newcomers raised Israel’s working-age population by 8 percent over just two years, and by 15 percent over seven. This would be equivalent to 50 million foreigners of working age arriving in the European Union. Did unemployment soar and wages collapse?  No; after seven years, the unemployment rate was lower and wages were at their previous levels. This is because there isn’t a fixed number of jobs to go around, and new arrivals create additional demand for others’ work. The labor influx also stimulated an investment boom that soon restored wages.

  • Local workers in Western Europe have not been harmed by Eastern European migration, as shown by a recent European Commission study.
  • Migrants are net contributors to public finances, as shown by a OECD study.

More on the lump of labour fallacy by LSE Jonathan Wadsworth here and by Jonathan Portes here.

Here is the full article.

This entry was posted in economy, EU, global, labour market, lump of labour fallacy, migration, opinion, US and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s