Europe & Immigration
Up until now I have been relatively skeptical of the growth in right-wing nationalist movements of Europe. From the historic approach it has always been present in Europe regardless of the century, the shape it has taken and the consequences have changed. In this it is essential to see how this time is different.
UKIP has a growing political platform in the U.K. and the party is clearly giving rhetoric that appeals. In this we may examine that central to their platform is “leaving” Europe and moreover tightening our controls on immigration. My question is why do the main political parties ignore the clear economic potential of lowing barriers to immigration?
There are clear potential gains from reducing barriers to immigration. The table below gives a clear comparison how immigration barriers stack up against reducing trade and capital barriers. Even if we argue that these figures are exaggerated they are still so substantial that the avenue should surely be explored at the least.
This calls for a natural experiment with immigration. Israel is a country that had a very specific yet clearly open immigration policy, if one were Jewish they could commit themselves to an Aliyah and become an Israeli citizen. This option is still open to Jewish people from around the world today. Originally this had been an integral factor in the acceleration of Israeli economic growth from the 1960s, alongside the flow of capital and aid from the United States. However, more recently one can examine the sudden influx of Ethiopian Jews. Israeli media was split upon the economic affect this additional population, with essential resources such as water in the region already scarce. The skeptic’s fears were not met, with strong government intervention citizenship enabled them to find jobs and make a living. With their wages in many cases greater than the average Ethiopian.
One important aspect of this immigration is that entire families had immigrated; it was not just children or parents. This is important in the perspective of keeping the consumption within the economy. Gross national product is a popular indicator for developing countries such as the Philippines, as citizens immigrate to Western countries and repatriate their earnings. Since entire families had moved to Israel there was no repatriation of these earnings or if any it was limited, so there was increased consumption in the economy. Israel had hugely benefitted from an increase in population through immigration. All the while the country has not lost its natural identity or culture.
In regards to wages between two countries opening up to immigration we may observe the following case whereby wages in the developed country decrease, and wages in the developing country effectively increase. In this it is important to note how the marginal decrease is smaller in comparison to the marginal increase.
The affect on wages is dependent on the elasticity of demand for the wage-labor market. We can see how the mixture in quantity of labor changes through immigration in the movement from L to L’. While the shaded areas are a representation of the efficiency gained through immigration.
Immigration is not an economic evil; we tend to be averse to it due to the ignorant fear that immigrants “steal jobs”. Closing of our economies and returning to super-nationalism is not the solution, we would be stepping back 100 years.
In the wake of Charlie Hebdo there is going to be increasing support for these nationalist groups. However it is important to remember the benefits of immigration. Fox News came under heavy fire as a commentator suggested that Birmingham was a Muslim city, and a no-go zone for non-Muslims. The greatest problem with this is that the comments came from Steven Emerson who was educated in Brown University and is seen as an expert on counter-terrorism and terrorism. There is a glaring misconception of Muslim population is Western countries. They are all part of a mutually beneficial working economic society. Of course new immigrants are not going to call themselves British or French, but their children will.
There are real economic benefits to opening up to immigration and reducing barriers, especially in the case of highly skilled migrants. I am not in favor of eliminating all barriers; this would eradicate the benefits shown in the model above. It has to be a gradual process in order to allow the population to naturalise. The relatively young United States would do well to remember how it become an economic superpower through the influx of people in the early 18th century.
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