‘Immigration boosts wealth, does not increase inequality’

David Lipton, first deputy managing director of the International Monetary Fund. (Reuters)

BRUSSELS: Immigration has a generally positive economic impact on receiving countries but the benefits depend on how well the migrants are integrated, said David Lipton, first deputy managing director of the International Monetary Fund (IMF).
Speaking at a seminar in Brussels on Monday, Lipton noted that the politics and economics of migration were at odds with each other because like trade, immigration created winners and losers and required time for societies and businesses to adjust.
“We have found that immigration has significantly increased GDP per capita in advanced economies because skill levels ... boost labor productivity and because in some places an influx of working-age migrants helps counteract labor shortages arising from demographic developments,” Lipton said.
“Although the top 10 percent benefit most, the gains from migration are shared across all income groups. Moreover, inequality does not increase as a result of the entry of migrants into the workforce,” he said.
“We find no significant negative effects on the middle or lower income groups in receiving countries,” he said.
Europe is struggling to contain a migration crisis started in 2015 when more than a million people entered the 28-nation EU from the Middle East and Africa seeking safety and better economic prospects.
Immigration has triggered a popular backlash in the EU that has boosted far-right and nationalist parties and was one of the main factors in Britain’s vote in June 2016 to leave the EU.
“People may be placing less value on the economic benefits of migration because they dislike the social and cultural change that they fear inevitably comes with immigration,” Lipton said.
“Second, they may not perceive the real benefits that economists have shown to exist. Or third, economists may not have figured everything out. Perhaps there is an element of truth to all three,” he said.
For the economic benefits of migration to show, the migrants should be well integrated into the labor markets of the countries they enter.
“This process of integration is critical if countries are to secure maximum economic benefits from migration,” Lipton said.
“We already know that the eastern Europeans ... by and large have integrated rapidly. But policymakers will now need a clearer understanding of the assimilation experience of refugees and migrants from the Middle East and Africa,” he said.