ESSA

ESSA

Immigrants are not stealing your jobs


Suvi Lokuge

By

May 12th, 2017


Using economic models, Suvi Lokuge examines immigration policy and attempts to answer the age-old question – do immigrants steal jobs from native workers?


Politicians throughout Europe, America and, most recently, Australia, have enforced stricter immigration policies in attempts to prioritise employment of native workers. However, we must question whether these policies are based on objective evidence of immigrants stealing jobs? More often than not, this is not the case.

Economic literature suggests that immigrants are only a threat to native workers if they act as substitutes – if immigrant workers can perfectly replace native workers. Due to immigration, the supply of workers increases, which reduces both the employment and wages of native workers [1]. This is the case most commonly mentioned by politicians when discussing immigration policy. However, is there an alternative possibility?

If immigrants complement native workers, they will bring a new range of skills that were previously inaccessible to the host country, providing new goods and services. The demand for workers would increase, which would increase both employment and wages of native workers [2]. This is the case that is not usually discussed, but needs to be if there is to be objective analysis on immigration policy.

It becomes obvious that, based on this model of economic reasoning, not all immigrants are stealing jobs.

What happens if immigrants do steal our jobs?

As discussed previously, if immigrants replace native workers, in the short run there will be reduced employment and lower wages. However, in the long run, wages will return to original levels as demand for labour increases [3]. So in the long run, there will in fact be no change in wages.

Having established that not all immigrants steal jobs, what is the economic impact of immigration?

The Roy Model argues that the economic impact of immigration depends on whether the immigrant is a high skill or low skill worker, with high skill immigrants being more beneficial for the economy [4]. This theory is supported by numerous empirical studies [5] resulting in immigration policies which promote skilled migration and the prevention of ‘brain drain’; the loss of skilled professionals. There is a stream of economists, led by Card, who advise against immigration. Their work has a greater focus on the costs of immigration to the host country [6], which is a genuine concern.

For or against immigration?

­At the end of the day, economists would much prefer case-by-case analysis of objective facts, than politicians, sometimes xenophobically, using immigrants as scapegoats for economic downturns. Whether to promote or scale back on immigration really depends on a multitude of factors. There is no definite answer. So next time you hear the catchphrase ‘immigrants are stealing our jobs’, you’ll know it’s not the whole truth.

 

[1] Borjas, G. J. (2016) Labour Economics (Seventh edition). New York, NY:McGraw-Hill.

[2] ibid

[3] ibid

[4] Roy, A.D. (1951). Some thoughts on the distribution of earnings. Oxford Economic papers. Oxford University Press, 3(2), 135-146.

[5] Chung, C., & Labrent Chrite, E. (2014). Internal application of Blacks in South Africa: An application of the Roy Model. South African Journal of Economics, 81(1), 81-98.

[6] Card, D., & Dustmann, C. (2012). Immigration, wages and compositional amenities. Journal of the European Economic Association, 10(1), 78-119.

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

Founding sponsors

 

 

Partner

Gold sponsors

 

 

Silver sponsors

 

 

 

 


Affiliates