Welfare does not attract migrants

Corrado Giulietti (IZA) found that contrary to the welfare magnet hypothesis, empirical evidence suggests that immigration decisions are not made on the basis of the relative generosity of the receiving nation’s social benefits. Even when immigrants are found to use welfare more intensively than natives, the gap is mostly attributable to differences in social and demographic characteristics between immigrants and non-immigrants rather than to immigration status per se. Moreover, evidence in some countries suggests that immigrants exhibit less welfare dependency than natives, despite facing a higher risk of poverty.

Here’s the research.

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Legalisation of migrants increases income of native workers

Economists Andri Chassamboulli and Giovanni Peri have found that:

“increasing deportation rates and tightening border control weakens low-skilled labor markets, increasing unemployment of native low-skilled workers. Legalization, instead, decreases the unemployment rate of low-skilled natives and increases income per native.

Here’s the abstract of their paper:

A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the 2000–2010 period. As immigrants – especially illegal ones – have a worse outside option than natives, their wages are lower. Hence, their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effects our model shows increasing deportation rates and tightening border control weakens low-skilled labor markets, increasing unemployment of native low-skilled workers. Legalization, instead, decreases the unemployment rate of low-skilled natives and increases income per native.

Link to paper.

Posted in economy, global, lump of labour fallacy, Mexico, migration, unemployment, US, wages | Tagged , , , , , | Leave a comment

Migration, housing & planning

This paper by John Burnett of the Institute of Race Relations examines the likely impact of the recent UK legislation on housing, planning and migration (Housing and Planning Bill 2015 and the Immigration Bill 2015) on the inner-city communities of multicultural Britain.

The discussion paper argues that:

• The legislation appears aimed at a rapid social restructuring. This culmination of attempts by Labour-and Conservative-led governments to codify social entitlements in Britain, link rights to responsibilities and exclude certain categories of people from rights altogether, will see multicultural neighbourhoods increasingly broken up and displaced.

• Extremes of poverty in inner-city neighbourhoods will be exacerbated, leaving children among those increasingly vulnerable to destitution. Local authorities will have no duties to assess provision for Gypsy and Travellers when assessing housing need.

• The extension of the ‘hostile environment’ principle which underlies immigration policy will lead to a deterioration in the quality of life for BAME communities. A climate of suspicion and mistrust will develop as those from BAME communities are forced to prove immigration status before receiving services.

• Vast new powers will be accumulated by government agencies responsible for administering the legislation. At the same time, mechanisms to scrutinise and hold measures which will expand the powers of immigration officers yet further, continue a commitment to integrating immigration enforcement within mainstream services and criminalise undocumented workers, rendering them ever more vulnerable to exploitation.

• The housing bill includes measures which will end secure tenancies, force the sale of property – transferring public land into private hands – and ultimately force rents higher in an upward spiral. Whereas the former is focused on addressing who can reside in the country, the latter addresses who can reside where. And in doing so, the impact of the act on the poor and marginalised will be devastating. The elderly, victims of domestic violence and those with health problems will be left vulnerable by the phasing out of secure tenancies. Some 60,000 people, it is estimated, may be unable to remain in their home as a result of ‘payto-stay provisions’. Families will be separated. People in receipt of disability allowance, for example, may be penalised.

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Recession and Migration

A couple of studies on recession and migration.

D’Amuri and Peri write that:

“In this paper we analyze the impact of immigrants on the type and quantity of native jobs. We use data on 15 Western European countries during the 1996–2010 period. We find that immigrants, by taking manual-routine type of occupations pushed natives towards more “complex” (abstract and communication) jobs. This job upgrade was associated to a 0.7% increase in native wages for a doubling of the immigrants’ share. These results are robust to the use of an IV strategy based on past settlement of immigrants across European countries. The job upgrade slowed but did not come to a halt during the Great Recession. We also document the labor market flows behind it: the complexity of jobs offered to new native hires was higher relative to the complexity of lost jobs. Finally, we find evidence that such reallocation was larger in countries with more flexible labor laws.”

In this article, Professor Philip Martin writes that:

“Comparisons with past recessions suggest that the global nature of the 2008-09 recession could affect migrants differently than in the past for three major reasons. First, during this recession one region is not benefiting economically at the expense of another, so that migrants cannot shift to alternative destinations, as when high oil prices attracted migrants to the Gulf countries while doors to migrants closed to Western Europe.

“Second, the first effects of recession are being felt in cyclically sensitive industries such as construction and manufacturing, where last-hired and often male migrants may be among the first to be laid off. What is less certain is whether laid-off migrants will remain in destination countries or return to their countries of origin, as with jobless migrants in Spain, and whether female migrants in service jobs will be laid off or have their wages reduced.

“Third, there is far more interest in remittances and their contribution to development in migrant-sending countries than during previous recessions. Remittances are far higher than in the past, and are expected to remain high even as foreign direct investment and other flows of funds to developing countries slow (Ratha et al, 2008). The governments of migrant-sending countries may develop financial instruments to attract more remittances, such as offering migrant bonds with attractive returns, or use the specter of more unauthorized migration in a bid to preserve jobs for migrant workers or to request financial aid from industrial countries (Chamie, 2009). Many international organizations have urged countries employing migrants not to quickly shut their doors.

“Fourth, immigration is less likely to be affected significantly in the United States than in other traditional immigration countries because a higher share of US immigrants enter under family unification preferences (Papademetriou and Terrazas, 2009). Immigration to Australia, Canada, and New Zealand, on the other hand, may be more affected by the recession because half or more of the immigrants are admitted under economic criteria that give priority to those most likely to obtain jobs.”

Posted in economy, global, labour market, migration, remittances, unemployment, wages | Leave a comment

Migration and the 2008 financial crisis

This Migration Policy Institute‘s report explores the impacts of the global financial crisis that began in September 2008 on migration flows, immigration policies, remittances, and on migrants themselves. The report first takes a look at the recession’s effect on differing migrant streams — unauthorized, temporary, permanent, and humanitarian — and offers inflow and return migration data trends for major migration corridors around the globe: United States and Mexico, United Kingdom/Ireland and the Accession 8 countries, Spain and Romania/Morocco, Gulf States and India/Bangladesh/Philippines/ Nepal, and between rural and urban regions of China.

Authors then turn their attention to the various ways in which immigrant-receiving countries have responded to the economic crisis. Features and outcomes of such policies are examined: Examples from Taiwan, South Korea, Australia, and the United States show how some nations have tightened admission requirements, and eliminated or reduced the number of work permits and admission grants for economic migrants. Case studies from Spain, Japan, and the Czech Republic shed light on “pay-to-go” schemes which offer economic incentives to migrant workers who voluntarily withdraw their residence and work rights.

The impact of the recession on remittance flows is examined next. While the overall picture is one of sharp remittance decline, the report found significant variances in remittance “shocks” among recipient countries. By grouping top remittance recipients by world region, the report examines these shocks in greater detail, identifies regional trends in remittance flow, and offers possible explanations for differences.

The final section of the report describes how the recession has affected the financial well-being of immigrants.

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Migration and recession

A Migration Policy Institute report shows that immigrants, particularly men and youth, have been disproportionately hit by the global economic crisis that began in fall 2008 and now confront a reality of dwindling budgets for public services and immigrant integration programs, this report prepared for the BBC World Service reveals. The report, which has a particular focus on five North Atlantic countries—Germany, Ireland, Spain, the United Kingdom, and United States—finds that the unemployment gap between immigrant and native workers has widened in many places. It offers analysis of a number of trends, including the fact that some immigrant-destination countries that historically have been countries of emigration such as Ireland, Greece, and Portugal, may be reverting to earlier trends.

Overall immigration to developed countries has slowed sharply as a result of the economic crisis, bringing to a virtual halt the rapid growth in foreign-born populations over the past three decades. The number of foreign workers caught attempting to enter illegally at EU maritime borders fell by over 40 percent from 2008, 2009, and 2010, while apprehensions at the U.S.-Mexico border since 2007 have declined by almost the same magnitude.

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The slavery of migrant domestic workers

Dr Virginia Mantouvalou conducted an empirical study, a series of interviews with 24 migrant domestic workers who arrived in the UK on this visa. She reports the following:

“Since 2012 migrant domestic workers arrive in the UK under very restrictive visa conditions. The Overseas Domestic Worker visa does not permit them to change employer and ties them to the employer with whom they arrived for a non-renewable period of six months. Domestic workers, particularly when they live in the employers’ household, are a vulnerable group of workers. They are also often excluded from labour protective laws. The UK visa has been heavily criticised by many for creating further vulnerability, and has even been linked to slavery. Between 15,000 and 16,000 such visas are issued each year, according to the Home Office, which does not provide any further information on arrivals but produces data on the nationality of the employers. About 80 per cent come from a very small number of countries in the Middle East.”

“Before arrival, workers’ salaries were reported to range between £100-250 per month, but could be as low as £50 per month. Interviewees reported working between 12 and 20 hours a day with no day off. Almost all interviewees said that they were not allowed out of the house unaccompanied. Many said that they did not eat at the same time as the employers and that nutrition was not always sufficient.”

“The employers still kept the workers’ passports and sometimes threatened them that, if they escaped, the police would imprison and deport them. … Almost all interviewees escaped their employers and became undocumented. One of the workers said that she asked her former employer to return her passport to her, but the employer asked her £2,000 for it. The majority of the interviewees said that they only learned after they escaped that they had no right to remain in the UK or work for another employer.”

“In 2015 the UK adopted the Modern Slavery Act. … An independent review by barrister James Ewins was published in December 2015. Ewins recommended a universal right to change employers for overseas domestic workers, as well as two and a half years maximum stay.”

The full article here.

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