Why rich countries should open their borders to less-skilled migrants.

Philippe Legrain | April 2007 issue
We take it for granted that restrictions on the movement of people should exist. In particular, we assume that it is normal and desirable that people in poor countries should be confined within their national borders, just as medieval serfs were once tied to the land. We never stop to think that perhaps we would all be better off if the latter-day serfs were set free, because they would be vastly more productive if they were not confined to their poor native lands.
Just as feudal lords never questioned whether their system made sense because they were comfortable at the top of the pile, people in rich countries tend to assume that immigration controls benefit them by offering protection from the poor in the rest of the world. The controls do protect them – but at what cost? Might we have as much to gain from setting people in poor countries free as we did in shifting from feudalism to capitalism?
The advantages of freer migration could be huge. Rich countries have much more capital – machinery, buildings, infrastructure and so on – and far better technology than poor ones. This makes workers in rich countries far more productive than their equivalents in poor countries. But when workers from poor countries move to rich ones, they can make use of rich countries’ superior capital and technology, so they become much more productive. This makes not only them but the world as a whole much better off.
In 2004, Jonathon Moses and Bjšrn Letnes, both at the Norwegian University of Science and Technology in Trondheim, concluded that the gains from free migration could be as high as $55 trillion U.S. They found that even a small relaxation of immigration controls would yield disproportionately big benefits. Even skeptics on the subject admit as much. George Borjas of Harvard University, the leading critic of immigration on economic grounds in the U.S., once wrote, “The principles of free trade … suggest that the world would be much richer if there were no national borders to interfere with the free movement of goods and people. By prohibiting the immigration of many persons, the United States inevitably shrinks the size of the world economic pie, reducing the economic opportunities that could be available to many persons in the source countries.”
It is obvious that migrants would gain by moving to the rich world, because they would earn much higher wages. If for some reason they did not, they could always go home. It is also generally true that migrants’ countries of origin benefit too, as their citizens send some of their earnings back home. But the big question for rich countries is not whether immigrants, poor countries or the world as a whole would gain from freer migration, but how much rich countries themselves would gain economically from allowing in more immigrants – and whether any of their citizens would lose.
Economic fears about immigration rest mainly on three common misconceptions:

Myth 1: There are only so many jobs to go around, so every job an immigrant takes is one less for the locals.

Over the past 50 years, the U.S. population has risen sharply. If the number of jobs in the economy were fixed, surely there would now be mass unemployment? Clearly, there isn’t – yet the belief that jobs are finite remains pervasive, leading critics to assume that any job filled by an immigrant would otherwise be done by a native. In fact, each person creates work for others, so the more people there are, the more work needs doing. People don’t just take jobs; they make them too. The problem for immigrants is that while the jobs they take are visible, the jobs they create for everyone else are largely invisible. Through their willingness to do unskilled work at lower wages than local people would accept, immigrants fill jobs that would otherwise not exist: When nannies cost 5 euros an hour, there will be far more nanny jobs than when they cost 10 euros an hour.
What’s more, when immigrants spend their wages, they increase the overall demand for goods and services, which in turn boosts the demand for workers, some of them highly skilled, to produce these goods and services. Far from taking jobs, immigrants generally create new jobs for the existing population.

Myth 2: Immigrants and locals are competing for the same jobs.

Only if immigrants were more or less identical to us would they compete directly for the same jobs. But everyone knows that a Mexican peasant with a poor command of English is no competition in the job market for an American who has finished high school. Immigrants with different skills and abilities allow us to consume goods and services that were not previously available to us or consume existing goods and services at much lower prices. Thus some Vietnamese immigrants have introduced us to their cuisine, while others have boosted the supply of nannies, making childcare more available and affordable.
Immigrants whose skills complement those of native workers will also make them more productive. A Vietnamese childcare worker may not only relieve the burden on a hard-pressed mother, she may also allow her to return to work at her high-flying job in investment banking. Filipino nurses boost the level of care that British and American hospitals can deliver to patients as well as increase the number of patients they can treat. Since it is clear that immigrants are different from us in many respects, there is good reason to believe we could benefit greatly from migration.

Myth 3: Immigrants often come not to work but to live like parasites off the host country.

If people from poor countries can claim more in welfare benefits in rich countries than they can earn working at home, it is certainly conceivable that this would spur some of them to migrate. But there is no evidence for this.
It should be clear that if migration is costly and risky, it does not pay to move to a rich country to try to claim comparatively low welfare benefits when you could earn much more by working instead. In any case, migrants are typically not entitled to most welfare benefits in rich countries. And last but not least, even if rich countries made it easier for people in poor countries to work, and there were signs this was attracting migrants who were coming to claim welfare benefits, governments could restrict the availability of those benefits to citizens or long-term residents.
Here’s a bold generalization: Immigrants tend to be younger, fitter, harder-working and more enterprising than local people. Why? Because migrants are a self-selecting minority. Young people have their whole lives ahead of them and so have the most to gain from migrating, while the old and the sick are generally not able to do so. While more than half of the foreigners in the U.S. – and nearly three-fifths of the immigrants who have arrived since 2000 – are in their 20s or 30s, that number drops to one-quarter for natives. More than four-fifths of the East Europeans who have applied to work in Britain since 2004 are between18 and 34.
Just as people who are willing to incur the costs and risks of starting their own businesses tend to be more enterprising and harder-working than most, so too are those who are willing to incur the costs and risks of seeking better job prospects abroad. Hard-working people have more to gain from migrating than lazy people, and enterprising people are more willing to take the risk. For any given wage, in any given job, they are likely to be more industrious. So immigrants directly make an economy more productive – to the benefit of employers and local people who consume the goods and services they produce.
But the major reason why rich countries should let in migrants with fewer skills is that there is a growing shortage of workers to do the jobs that almost anyone can do but Americans and Europeans no longer want to do: dirty, difficult and dangerous jobs. Someone has to clean toilets, collect rubbish and do casual labour. If we do not let in immigrants to perform these tasks, Americans and Europeans will have to be paid much more to induce them to do jobs they do not want to do when they could be doing more pleasant and highly skilled work instead.
A gap is opening between the skills and aspirations of most North Americans, Europeans and Australians and the jobs available in advanced economies. Educated and ambitious workers want to do higher-skilled jobs that offer higher pay and increased social status.
So who is going to do this low-skilled work? To some extent, machines can replace less-skilled workers: We can buy a can of Coke from a vending machine rather than a person. Security guards can be replaced by security cameras; the feeds could even be monitored from abroad. In Japan, where one in four people will be over 65 in 2015 but foreign nurses are steadfastly barred from entry, companies are developing gadgets that keep an eye on – albeit not care for – old people from remote locations. One company has developed an electric kettle, the i-pot, which keeps water hot all day for tea or broth and transmits a message to a computer server when the water-dispensing button is pressed. Twice daily, the usage record is sent to the designated mobile phone or email address of a family member or friend.
Even so, many services in rich countries will continue to be provided by people. London streets, hotels, hospitals and homes can only be cleaned on the spot. New York cabs and buses can be driven by people who live in New Jersey but not by those in New Delhi. The kids of Silicon Valley entrepreneurs can only be looked after by nannies in the Bay Area. Tables in Toronto restaurants can only be waited on by workers who make their homes there; sending the dishes to be washed overseas would hardly be cost-effective. Streetlights in Sydney can only be repaired by someone on a ladder under the lamp. Old people in Munich cannot be assisted in cooking and washing over the Internet. Building materials can be imported, but houses must be built where they will stand. Parking tickets must still be given on the spot. Lawns cannot be mowed remotely.
To some extent, teen-agers and students can help with these tasks, although because Americans and Europeans are having fewer children, the number of young people in rich countries is set to fall too. In short, if North Americans, Europeans and Australians are to specialize in higher-skilled jobs, these lower-skilled jobs must primarily be filled by immigrants.
But isn’t it demeaning to bring in immigrants to do the dirty, dangerous, ill-paid jobs that natives refuse to consider? Nigel Harris, author of Thinking the Unthinkable, has an eloquent response: “To insist on protecting someone’s welfare by not allowing them to work when they are willing to, the work needs to be done and people gain both in the country where the immigrant works and where he or she is from, is perverse. One might as well argue that native workers should be less educated so that they would be willing to do the lousy jobs.”
Adapted from Philippe Legrain’s new book: Immigrants: Your Country Needs Them (Little Brown, 2007). This book will be published in the U.S. by Princeton University Press in September 2007. Legrain is a British economist and author of Open World: The Truth about Globalisation (Ivan R. Dee, 2004). More information:
http://www.philippelegrain.com, www.philippelegrain.com