Populist and nationalist parties fuel people’s fears about the impact of migrants on jobs and economies. However, numbers show that such an impact can be very positive. In the United States, for example, skilled immigrants account for over half of Silicon Valley start-ups and over half of patents, even though they make up less than 15% of the population.
According to some researches, immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization. Others stress that immigrants contribute more in taxes than the benefits and services they receive in return. According to the World Bank, increasing immigration by a margin equal to 3% of the workforce in developed countries would generate global economic gains of $356 billion.
At the same time, it is true that an emergency situation can imply a scaling up of the public expenditure in the short-term to welcome refugees and process asylum applications. However, the net direct fiscal impact decreases as the national labour market integration improves. Therefore, the estimates of the overall fiscal impact of total immigration are usually small.
What about the impact on European economies? In the main EU countries affected by the present inflow of asylum seekers, the additional expenditures have been relatively small so far. Germany has projected an additional 0.5% of GDP support per annum in 2016 and 2017. Hungary has announced additional spending of 0.1% of GDP in 2015. Sweden has budgeted for additional spending of 0.9% of GDP per annum in 2016. The European Commission has announced additional funding of €9.2 billion over 2015-16 (0.1% of EU GDP). These additional fiscal measures should provide a modest boost to aggregate demand, provided they are not offset by other budgetary cuts.
With reference to the labour market, the impact of asylum seekers will mainly depend upon the following factors: a) the success of them in gaining refugee status, b) the length of the application process, and c) whether or not they will enter the labour force. These are factors which can vary considerably by country and over time.
According to recent studies, the refugee inflow on European labour market is expected to have an overall limited impact. However, several factors may temperate this positive forecast: the level of unemployment; the concentration of the inflows in some areas with potentially huge local effects; the decision – or not – of rejected asylum seekers to return to their home countries (otherwise they may swell the ranks of the informal labour market). Finally, the positive or negative economic impact of migrations will depend on the success of medium and long-term labour market integration.
