Immigrants Benefit Countries that Accept Them, Say Economists

Immigration has dominated recent elections and referendums around the world. Anti-immigrant sentiment influenced the outcome of the Brexit referendum, powers the campaign of Marine Le Pen in France, and propelled Donald Trump to a surprise victory in the U.S. presidential election. The politicians behind these efforts and the voters who support them believe that immigration harms native-born populations. According to these groups, closing  borders to outsiders, or even deporting those already inside their countries, will improve prospects for the population as a whole. Yet this argument has no real economic support.

Canada, Japan, and the United Kingdom exemplify different receptions of immigrants.  Instead of sending immigrants away, these nations have enacted policies to welcome immigrants and integrate them into their own communities.

Canada believes strongly in multiculturalism. In 1971, the Canadian government  adopted multiculturalism as its official state policy. Polls show that the vast majority of Canadians support Canada’s policies that welcome all people and ethnicities. Moreover, a majority of Canadians believe that immigrants help build “a stable Canadian economic future.” This openness to immigration has brought Canada notable benefits. Demographically, immigration into Canada has ensured that the population of working age Canadians, specifically those in the 20-44 year-old age bracket, continues to grow, boosting social programs and the economy. In addition, studies show that immigrants are more likely than native-born Canadians to open up businesses. Such evidence shows the rewards available to those nations the embrace immigration.

Japan provides a noteworthy contrast. The country has achieved a level of notoriety for its strict immigration policies. Among OECD countries, Japan has one of the lower levels of foreigners as a percentage of its population—all of 2 percent. The Japanese government has indicated a preference for further labor participation among women and the elderly over increased immigration. Moreover, recent polls indicate that the majority of Japanese are “not sure” how they feel about immigration. Foreign workers and migrants face considerable discrimination and exclusion; even ethnically Japanese individuals born in other countries face significant hurdles. This has made a clear economic impact: Japan’s population continues to decline, creating a demographic trend that harms future economic output and undermines Japan’s social welfare system. This only exacerbates the problems of a country facing total economic stagnation and an extreme labor shortage. If Japan does not open its doors to more immigrants, its future economic prospects look grim.

The United Kingdom finds itself somewhere in between. Scholars and bureaucrats agree that immigration, especially immigration originating in the EU, has benefited the UK. A few months before the Brexit vote, the Bank of England released a statement pointing to the economic gains made by the UK as a result of EU immigration. The gains add up to around fifteen percent of annual GDP growth for the United Kingdom, as well as billions of pounds in government revenue. Yet despite this, the majority of voters chose the leave the European Union, largely because of immigration worries. The British Prime Minister, Theresa May, has promised a full break from the EU, including immigration restrictions sought by those on the side of ‘Leave’. Depending on the scope and speed of these restrictions, the UK could suffer economic damage and budgetary strain, as well as the loss of skilled, university educated immigrants. Such a maneuver would do little more than appeal to xenophobic sentiment at the expense of the country.

The three examples above highlight a well-known fact among economists: immigration benefits countries, both in terms of economic growth and government revenue. Yet despite this, various governments, like that of the Trump administration, seek to restrict immigration on the basis of unsubstantiated claims of damage caused to native populations. Such measures will only fail to have their intended effect and damage the countries who impose them. These policies will also create a more closed isolationism reminiscent of the height of the economic crisis of the 1930’s. Governments should not aim to recreate these conditions, but should seek to maintain the openness that has transformed the world and increased global welfare since end of World War II.