The benefits of attracting high skilled migrants

It is a matter of fact that migration is at the centre of the economic and political debate. On one side, we can find economists that regard immigration as beneficial for the country. On the opposite side, because of the large expansion of flows after 2004, public opinion is much less positive, forcing politicians to introduce measures that aim at reducing net migration 'from hundreds of thousands to tens of thousands'. The new migration policy introduced in the UK made it much harder for students, foreign workers and family members to settle in the country, causing the loss of global talents, who now prefer to move elsewhere. The policy is keeping out the most highly skilled and wealthy immigrants through excessive bureaucracy in the processing of visa applications, whilst claiming to have an open door for them. Moreover, as shown in recent research, the pool of international talents available to businesses in the UK has been reduced (Rienzo and Vargas-Silva, 2014). [1]

The Special Issue on Migration of August 2014 National Institute of Economic Review focuses on the social and economic causes and consequences of migration policies.

Are migration policies in developed countries good at attracting highly skilled migrants?

According to the review made by Giovanni Facchini and Elisabetta Lodigiani, two distinct policy approaches to attract highly skilled migrants can be identified: the employer-driven and the immigrant-driven schemes. The former admits immigrants (with some minimum requirements) under a job offer from an employer in the destination country, while in the latter the selection is made using a points-based system, where points are gained depending on the characteristics desirable at the moment in the destination country's labour market (both in the short and long term). While evidence is clear on the success of migrant-driven schemes in increasing the average level of skills among migrants, evidence for the employer-driven scheme moves in several directions, in particular showing important limitations when implemented in some European countries. These implications should be of particular interest for European countries that would probably benefit from moving towards an approach that focuses on the long-term human capital requirements of the EU labour market and less on the short term employer demand.

Which are the impacts of migration in the long-term? Is migration the solution to the demographic challenges of an aging population? Is migration just a burden on the welfare state and public services?

Katerina Lisenkova, Marcel Mérette and Miguel Sánchez-Martínez add important findings to the debate on the effects of migration by identifying the long-term impacts on the UK economy. They simulate two different migration scenarios: the ONS' baseline population projections and the alternative scenario mentioned in the introduction that models a reduction in net migration of 50% (to tens of thousands). The study finds that not only does migration have a positive impact in the short run, but also in the long-run. In particular, they show that the Conservative Party's stated policy would decrease both aggregate and per capita GDP by 2060 compared to the ONS scenario and would have a significant negative effect on public finances increasing total spending. Finally, and as a consequence, lower migration levels can reduce the average household income through the necessary increase in labour income tax rate.

What is driving anti-immigration attitudes?

What makes UK natives more pro- or anti-migration? Are these attitudes related to the economic characteristics of the region they live in? The contribution by Yvonni Markaki aims to answer these questions, and finds  that natives are more anti-migration if they live in regions with more unskilled unemployed immigrants. Moreover, the study also shows that the effect on attitudes of the size of pre-existing stocks of immigrants is heterogeneous across different ethnic groups. Interestingly, this latest result reconciles previous studies that found that the strength of the relationship between immigrants and anti-migration attitudes strongly depended on the location.

What's the role of cultural differences between countries in shaping the size and composition of migration?

Cross-societal cultural differences between immigrant source and destination countries can affect immigrant stock levels, as they represent a potential cost. These are the main findings from the article by Roger White and Nicole Yamasaki.  Greater source-destination cultural distance can inhibit international migration. However, pre-existing migration stocks have larger and more positive effect on the level of migrant stocks, if the stock is from a more culturally distant country, by reducing the role of these barriers. This effect is found to have a different intensity across skill groups: low and medium skilled immigrants are more affected by the cultural distance than high-skilled.

Concluding, market-oriented policies are more likely to attract and retain the brightest immigrants, yielding economic and social benefits. Attitudes towards migration are strongly correlated to their success in the hosting country labour market, and the probability that a migrant succeeds is greater for highly skilled individuals. Finally, cultural differences do play a role in shaping migration, yet it is of lower importance for those migrants at top of the educational attainments. Migration policies should therefore strongly consider selection on migrant skills as a top priority, but above all easing the avenues through which talents are allowed in the country.

 

[1] Rienzo, Cinzia and Carlos Vargas-Silva. “Highly Skilled Migration to the UK 2007-2013: Policy Changes, Financial Crises and a Possible ‘Balloon Effect’?.” Migration Observatory report, COMPAS, University of Oxford, July 2014

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Authors

Dr Anna Rosso Research Interests:

Economics of Migration, Labour Economics, Microeconometrics, Development Economics